The Vanguard exchange-traded fund (ETF) Vanguard FTSE Europe Shares ETF (ASX: VEQ) offers virtually everything that I'd want to see to fit a portfolio with any goal in mind.
For readers who haven't heard of this fund before, it aims to provide low-cost exposure to companies listed in major European markets.
I'm going to run through what makes it such an effective investment for all types of investors.
Diversification
One of the best reasons to like investing in ASX ETFs is that they can provide strong levels of diversification in just one investment, rather than needing to go and buy a whole portfolio of stocks ourselves.
Diversification, if used correctly, can allow us to reduce investment risks without necessarily reducing our returns.
The VEQ ETF has excellent diversification, in my view.
Firstly, there are a number of countries represented in the portfolio. The following markets have a weighting of more than 1%: the UK, France, Germany, Switzerland, the Netherlands, Sweden, Italy, Spain, Denmark, Belgium, Finland and Norway.
There are also a lot of holdings in the portfolio, which means a good level of diversification. At the end of May 2025, the Vanguard ETF had more than 1,200 positions. That's more than enough to tick the diversification box, in my view.
Dividends
Most global ASX ETFs are not known for having a high dividend yield, largely because of the underlying companies themselves not providing a large dividend yield.
But, there are plenty of businesses in the VEQ ETF portfolio that do have a solid dividend yield, such as Shell and HSBC.
According to Vanguard, this ETF had a dividend yield of 3.1% at the end of May. That's a solid yield for a fund that isn't designed to target passive income.
If the dividend payments of the businesses continue growing, then the distribution from this Vanguard ETF could continue rising too.
Returns
Ultimately, investing is all about making returns, however you do it.
The VEQ ETF has done very well for investors in the last few years. Over the last three years, it has delivered an average return per year of 15.7%. Over a five year period, its average return is still commendable, at 12.8%.
Past performance is not a guarantee of future performance. However, I think companies like SAP, ASML, Roche, Novartis and Novo Nordisk are capable of producing strong returns in the foreseeable future.
When you put all of these elements together, it's a very compelling Vanguard ETF, in my eyes.
