Vanguard FTSE Developed Europe ex UK ETF: June 2026 update

• Vanguard is a pioneer in index investing and launched its first ETF in 2001

• This ETF provides exposure to hundreds of companies across Europe, excluding the UK

• It’s a simple and low-cost way to track the FTSE Developed Europe ex UK Index

How it fits in a portfolio

An ETF is a basket of investments that often includes company shares or bonds. They tend to track the performance of an index such as the FTSE Developed Europe ex UK Index and trade on stock exchanges, like shares. This means their price fluctuates throughout the day.

The Vanguard FTSE Developed Europe ex UK ETF invests in a range of large and medium-sized companies across developed markets in Europe but excluding the UK.

An ETF is one of the simplest ways to invest and can be a low-cost starting point for an investment portfolio aiming to deliver long-term growth. ETFs that track stock markets in Europe could help diversify a global portfolio or one focused on smaller companies or bonds. As this ETF doesn’t invest in any UK companies, it could sit alongside UK funds to provide some balance to a portfolio.

Manager

Vanguard is a pioneer when it comes to passive investing, having created the first retail index fund 50 years ago. It now runs some of the largest index funds and ETFs in the world. Given its size, it has a big investment team with the expertise and resources to help its ETFs track indices and markets as closely as possible, while having scale to keep costs down.

Vanguard ETFs are run by a large, global team. They’re spread across three investment hubs around the world – the US, UK and Australia. This team-based approach means there’s no named manager on the ETF. As a collective team, Vanguard has run this ETF for nearly 12 years.

Vanguard also has a trading analytics team, which is responsible for ensuring that the ETFs buy and sell investments efficiently and at a competitive cost. This involves analysing data from different brokers and banks. Lower costs should help the ETFs track their benchmarks as tightly as possible.

Process

This ETF aims to track the performance of the FTSE Developed Europe ex UK Index. It does this by investing in every company in the index and in the same proportion. This is known as full replication and helps the ETF track the index closely.

The ETF is currently made up of 416 companies spread across 15 countries in Europe but excluding the UK. Investments in France, Switzerland and Germany made up the largest portion of the ETF at the end of April 2026, at 19.3%, 18.7% and 17.8%, respectively. In terms of sectors, financials, industrials and healthcare make up over half of the fund.

Reducing costs is a key part of keeping the tracking difference between the ETF and the benchmark to a minimum. In any ETF, factors like taxes, dealing commissions and spreads, and the cost of running the ETF all drag on performance. To help keep these costs down, the team aims to make large investments in companies instead of lots of small transactions.

Vanguard will also lend some of the investments in the ETF to other providers in exchange for a fee, which can be used to offset some of the costs. It will lend securities to only a limited number of high-quality approved dealers. Vanguard indemnifies the fund against any loss from this process, meaning there should be no negative impact on investors. However, stock lending adds risk.

As this ETF is listed offshore, investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.

Culture

Vanguard is currently the second largest asset manager in the world and runs around $12trn of assets globally. The group aims to put the client at the forefront of everything it does, which drives its focus on quality, low-cost index products.

Jack Bogle founded Vanguard in 1975, and it’s owned by investors. This allows Vanguard to redirect its profits to investors in the form of lower fees, instead of paying dividends to external shareholders. Bogle believed in creating products that simply track the performance of a market rather than taking a shot at picking individual companies which may beat them.

The team running this ETF works closely with other equity research and risk departments across the business. They have daily and weekly meetings to discuss ongoing strategy, which could add good support and challenge on how to run the ETF effectively.

ESG Integration

Vanguard is predominantly a passive fund house. Although it has offered exclusions-based passive funds for many years, it has lagged peers in offering passive funds that explicitly integrate Environmental, Social and Governance (ESG) criteria by tracking indices that tilt towards companies with positive ESG characteristics, and away from those that don’t.

Vanguard’s Investment Stewardship team carries out most of the firm’s voting and engagement activity. Its stewardship activity is grounded in the firm’s four principles of good governance: board composition and effectiveness, board oversight of strategy and risk, executive pay, and shareholder rights.

The Investment Stewardship team produces frequent insights on their engagement activity at both a corporate and governmental level. Investors can also access fund-by-fund proxy voting records, although voting rationales are not provided. That said, voting and engagement case studies can be found in the firm’s annual Investment Stewardship report and quarterly Engagement and Voting reports.

Vanguard courted controversy in 2022 when it left the Net Zero Asset Managers’ Initiative, a group of asset managers that have committed to achieving net zero carbon emissions by 2050. Vanguard claimed that its decision would improve clarity for investors and allow it to speak independently. We view this as a disappointing backward step. Furthermore, in 2024 and 2025, it was reported that Vanguard failed to support a single shareholder proposal requiring more action from investee companies on environmental and social matters.

The Vanguard FTSE Developed Europe ex UK ETF tracks an index that doesn’t specifically integrate ESG considerations into its process. The ETF can therefore invest in shares issued by companies in any sector in line with the benchmark.

Cost

The ETF currently has an ongoing annual fund charge of 0.10%. The annual charge to hold ETFs in the HL ISA, SIPP or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold ETFs within the HL Junior ISA. As ETFs trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes

Performance

Since this ETF launched in September 2014, it has tracked the FTSE Developed Europe ex UK Index closely. As expected of ETFs, it has fallen behind the benchmark over the long term because of the costs involved in running it. However, the management tools used by the team have helped to keep performance close to the index.

The performance of stock markets in Europe has been mixed over the past 12 months. During this time, the ETF gained 20.04%*. Remember, past performance isn’t a guide to future returns.

The Netherlands was the largest contributor to returns, driven by the technology sector, particularly ASML, a key supplier to the semiconductor industry. It builds the machines used to manufacture advanced computer chips and has benefited from strong demand linked to artificial intelligence (AI).

Switzerland was the next largest contributor, supported by its large healthcare sector, which performed well over the past year.

On the other hand, Denmark was the biggest detractor from returns. This was mainly due to weakness in Novo Nordisk’s share price, following a series of disappointing trial results for its new obesity drug and increasing competition from rival treatments. Given Novo Nordisk makes up nearly 40% of Denmark’s stock market, its performance has a significant impact on the broader market.

Given Vanguard’s size, experience and expertise running ETFs, we expect this ETF to continue to track the FTSE Developed Europe ex UK Index closely in the future, though there are no guarantees.