IEV: European Stocks Remain Attractively Valued Going Into 2026
The iShares Europe ETF has significantly underperformed the S&P 500 over the past decade, with dividend growth standing at just 2.41%. Sentiment on European equities has shifted in 2025, with outperformance relative to the S&P 500 driven by a weak dollar and cheaper valuations. Looking ahead to 2026, I expect another solid year for IEV as valuations remain notably lower even if we account for modest GDP growth.
Investing In Europe: IEV Or EZU?
European equities are rebounding in 2025, outperforming US stocks, driven by a stronger euro, increased defense spending, and pro-growth German policies. IEV and EZU are both strong ETF options for European exposure but differ in country allocations—EZU excludes the UK and Switzerland, focusing on the Eurozone. EZU offers higher weighting to Germany, more diversification, and a lower expense ratio compared to IEV, which has significant UK exposure and higher fees.
IEV: Attractive Valuation Makes Up For Sluggish Growth
The iShares Europe ETF invests in large-cap European corporates primarily in the UK, France, Switzerland, and Germany. European equities offer an attractive earnings premium relative to the S&P 500 which more than offsets slower growth expectations. A number of political events in 2025 may provide a boost to earnings growth in 2026. Cheaper valuations and monetary policy normalization make the case for increased share repurchases.
