Find the Best ETFs in Europe (2025)

Summary

Tom Crosill, a professional investor, guides viewers through a detailed, step-by-step process of selecting ETFs in Europe. He demonstrates how to use the JustETF tool, filters ETFs by asset class, region, strategy, and sustainability, and explains key technical factors like accumulating vs. distributing ETFs, fund size, and replication methods. Emphasizing the importance of taxes, risk management, and costs, Crosill walks through the decision-making process to narrow down over 3,000 ETFs to a manageable selection. The video offers insights for investors seeking to make informed choices when building a diversified ETF portfolio.

Takeaways

• 😀 Choose JustETF as the best ETF search tool for European investors.
• 😀 Select your country first to view ETFs available in your region, but expanding the selection to Germany gives a wider choice.
• 😀 ETFs can be categorized by asset class, including equities, bonds, commodities, and real estate, with equities being a common choice for beginners.
• 😀 Focus on broad market ETFs for diversified exposure, but sector-specific ETFs are available for more targeted investments.
• 😀 Sustainability filters allow you to select environmentally and socially responsible ETFs, but you must do research to understand what 'sustainable' means for each fund.
• 😀 Accumulating ETFs reinvest dividends, while distributing ETFs pay dividends to investors. In most European countries, accumulating ETFs are tax-efficient.
• 😀 Larger ETFs (over €100 million) are less risky and tend to offer better liquidity than smaller funds.
• 😀 Replication methods vary: physical ETFs buy all or a sample of the stocks in an index, while synthetic ETFs use financial instruments to replicate the index. Choose based on risk and understanding.
• 😀 Irish-domiciled ETFs may offer tax benefits, especially when investing in U.S. stocks through physical replication.
• 😀 Currency-hedged ETFs remove currency risk, but for stock investments, leaving currency exposure is often a better strategy for diversification.
• 😀 Actively managed ETFs and leveraged ETFs are generally not recommended for most investors due to higher risks and costs. Stick with low-cost, passive options for long-term growth.

Q & A

What is JustETF and why is it recommended for ETF selection in Europe?

JustETF is an online ETF screener that helps investors easily find and compare ETFs available in Europe. It is recommended because it offers a comprehensive selection of ETFs, allows filtering by various criteria, and provides a user-friendly interface to help narrow down investment choices.

Why are SPY and QQQ not available in most European countries?

SPY and QQQ are popular US-based ETFs that are not available in many European countries due to regulatory and distribution restrictions. European investors have access to different ETFs that may track similar indices but are subject to European laws and tax regulations.

What are the main types of asset classes you can invest in using ETFs?

You can invest in several asset classes using ETFs, including equities (stocks), bonds, commodities (like gold and silver), real estate, cryptocurrencies, and money markets. Each offers different risk and return profiles depending on your investment goals.

What is the difference between accumulating and distributing ETFs?

Accumulating ETFs reinvest dividends back into the fund to purchase more assets, leading to faster portfolio growth. Distributing ETFs, on the other hand, pay out dividends to investors, providing regular income. Accumulating ETFs are often more tax-efficient in Europe.

What factors should be considered when choosing between accumulating and distributing ETFs?

The key factors to consider when choosing between accumulating and distributing ETFs are tax efficiency, your income needs, and your country’s specific tax rules. In most European countries, accumulating ETFs are preferable because they allow dividends to be reinvested without incurring immediate taxes.

Why is it recommended to choose larger ETFs over smaller ones?

Larger ETFs (over €100 million in assets) are more liquid, meaning they can be bought and sold easily at a fair price. They are also less likely to be shut down by the fund provider, which can be a hassle if you invest in smaller ETFs.

What is the difference between physical (full replication) and synthetic ETFs?

Physical ETFs replicate an index by directly holding the assets within the index, while synthetic ETFs use financial instruments like swaps to mimic the index's performance. Physical ETFs are simpler and less risky, whereas synthetic ETFs may have tax advantages but are more complex and carry more risk.

Why is it important to consider the fund domicile when selecting an ETF?

The fund domicile is important because it affects the tax treatment of the ETF. Most European ETFs are domiciled in Ireland or Luxembourg for tax reasons. For US stock ETFs, Irish domiciled funds often have slight tax advantages, which can improve after-tax returns for European investors.

Should you use currency-hedged ETFs when investing in global markets?

Currency-hedged ETFs are useful for reducing currency risk when investing in bonds, but for stock market investments, they are generally unnecessary. Exposing your portfolio to a variety of currencies can actually help reduce overall risk and increase diversification.

What are the potential risks of using short and leveraged ETFs?

Short and leveraged ETFs are highly risky as they amplify market movements, which can lead to significant losses in a short period. These types of ETFs are generally considered inappropriate for most investors, particularly those with long-term investment goals, as they are designed more for speculation.

What is the significance of the Total Expense Ratio (TER) when selecting an ETF?

The Total Expense Ratio (TER) represents the annual cost of managing an ETF as a percentage of its assets. A lower TER means lower ongoing costs, which can significantly impact long-term returns. When selecting an ETF, it's important to choose funds with a competitive TER to minimize fees and maximize returns.