The iShares Core MSCI Europe ETF (IEUR) has emerged as a standout performer in 2025, boasting a remarkable year-to-date (YTD) return of 33.85%. This figure significantly eclipses the 18.7% return of the S&P 500, represented by the Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF (SPY), which recorded returns of 18.6%. The surge in IEUR’s performance can be attributed to a combination of factors, including tariff concerns and a weakening US dollar, which have steered institutional investors towards European markets.
As of now, IEUR comprises 992 stocks from various sectors across Europe, with ASML Holding as its largest holding at 2.87%. The ETF, which tracks the MSCI Europe Investable Market Index, has an expense ratio of just 0.10%, making it an attractive investment option.
Market Dynamics and Economic Factors
Despite ongoing challenges such as waves of illegal migration, energy dependence on Russia, and internal conflicts within the European Union, the European markets have displayed unexpected resilience this year. The momentum for IEUR began in April, when it was valued at $53, and since then, it has climbed to new highs, reflecting a positive shift in investor sentiment.
The strengthening of European markets is linked to several geopolitical and economic factors. The election of Donald Trump in November 2024 raised concerns about US trade policies, particularly the introduction of new tariffs. This uncertainty led to a global market sell-off, prompting investors to seek safer alternatives in Europe.
Another significant factor has been the decline of the US dollar, which fell by 11% in the first half of 2025. This decline has been exacerbated by the rise of the BRICS nations—Brazil, Russia, India, China, and South Africa—pushing for de-dollarization and increasing trade in their own currencies. Meanwhile, the Federal Reserve, under the leadership of Jerome Powell, faced criticism for delaying rate cuts, putting the US at a disadvantage compared to other industrialized nations.
Investment Opportunities in European Markets
The convergence of these factors has made European markets more appealing to investors, especially given the relative stability compared to the volatility seen in other regions. The IEUR ETF’s performance has attracted attention as it started its impressive bull run in early April, coinciding with the decline of the US dollar and the sell-off in the S&P 500.
In addition to its impressive YTD return, IEUR also offers a yield of 2.85% and has net assets totaling $6.9 billion. The ETF’s beta stands at 1.08, indicating a slight volatility compared to the broader market. Over the past year, its return has been 28.40%, and it has posted 10.27% over five years, showcasing its potential for long-term growth.
Among its top ten holdings are major companies such as AstraZeneca PLC (1.89%), Roche Holding AG (1.88%), and HSBC Holdings (1.72%). These firms represent a diverse cross-section of the European economy, spanning the healthcare, finance, and consumer goods sectors.
While the outlook for IEUR remains positive, it is crucial to remain vigilant regarding potential risks, including the ongoing conflict in Ukraine and its implications for energy prices in Europe. Any escalation in geopolitical tensions could impact market stability and investor confidence.
In conclusion, the iShares Core MSCI Europe ETF (IEUR) has proven to be an exceptional investment vehicle in 2025, outperforming major competitors. As European markets continue to show resilience, investors may find value in considering IEUR as part of a diversified portfolio strategy.
