It has been a volatile time for US shares in the last few weeks as investors get used to the idea that the tariffs trade war between the US and a number of other countries could cause negative knock-on effects. Investing in European shares could be a way to diversify the portfolio.

For the last 15 years, I'd say the US share market has been the place to be in terms of exchange-traded funds (ETFs).

But, Trump himself has indicated that the coming period could be an "adjustment period" for the US, while the US stock market is not his measure of success.

With that in mind, the European share market may appeal to investors wanting exposure to international shares, without including US shares. That's why the following European shares ETFs could be the answer.

Vanguard FTSE Europe Shares ETF (ASX: VEQ)

The idea of this ETF is that it provides low-cost exposure to companies listed in major European markets.

A number of countries are represented within the portfolio, which I think provides useful diversification. That includes the UK (24.4% of the portfolio), France (15.8%), Switzerland (14.3%), Germany (14%), the Netherlands (6.4%), Sweden (5.7%), Italy (4.8%), Spain (4.2%), Denmark (4%), Finland (1.6%), Belgium (1.6%), Norway (1.3%), Poland (0.7%), Austria (0.5%), Ireland (0.4%), and Portugal (0.3%).

As you can see, there's a significant geographic diversification – the businesses are not just from one country like the US.

There are more than 1,200 businesses in this portfolio, so there are more than twice as many holdings as the iShares S&P 500 ETF (ASX: IVV) gives exposure to.

While it doesn't own US tech giants, there are still compelling businesses in the top holdings that have global growth aspirations.

Here are some of the biggest European share holdings in the fund: SAP, ASML, Novo Nordisk, Roche, Nestle, AstraZeneca, Novartis, Shell, HSBC and LVMH Moet Hennessy Louis Vuitton.  

While the VEQ ETF is not as low-cost as some other options, its annual management fee is still relatively low, in my view, at 0.35%.

The dividend yield is quite pleasing at 3% as of 31 January 2025, according to Vanguard. That's not huge, but large enough to be noticeably superior to the US share market. The IVV ETF had a dividend yield of 1.06% as of 7 March 2025.  

While this fund may not deliver huge returns, I think it could be a useful option to consider for diversification purposes to reduce the reliance on US shares for Aussies to get international share exposure.