Handpicked Selection of Best Equity ETFs
The Definitive Guide to Equity Index Investing - Best ETFs
This is the ETF selection part of our definitive guide to Equity Index Investing.
For someone who is unfamiliar with ETF benchmarks and criteria, selecting an ETF has become a headache. Comparison websites generally list thousands of ETFs.
Here is where we step in. Investing should be simple. The below selection covers most needs well. While we may have a marginal preference for some ETFs, we list suitable alternatives to account for investors’ tax situations, and preferences.
Let’s dive into the Best Equity ETFs.
KEY TAKEAWAYS
- We selected the Best UCITS ETFs from reputable Asset Managers, large enough to reduce closure risk, with established track record, liquid, cheap and widely available.
- The Best Global ETF is Vanguard FTSE All-World UCITS ETF, but iShares MSCI ACWI UCITS ETF is a strong challenger.
- The Best Developed Markets ETFs are iShares Core MSCI World UCITS ETF and HSBC MSCI World UCITS ETF.
- The Best S&P 500 ETFs are synthetic funds from Invesco, Xtrackers, Lyxor and Amundi.
- The Best European Equity ETFs are Lyxor Core STOXX Europe 600 UCITS ETF and Vanguard FTSE Developed Europe UCITS ETF.
- The Best Emerging Markets ETF is iShares Core MSCI EM IMI UCITS ETF.
- The Best Socially-Responsible ETFs are also included. We avoid screening based on ESG Ratings.
- Best non-UCITS ETFs suitable for certain investors that UCITS does not bind are listed as well.
Here is the full analysis
How we rank ETFs
Our Selection Criteria
- Reputable – Only Established Asset Managers with a preference for Tier 1 players like BlackRock (iShares), Vanguard and State Street (SPDR). Strong performance from local players, including DWS (Xtrackers), Amundi (and Lyxor) or HSBC, justifies consideration.
- Large – A minimum Fund size $200m (unless justified) to reduce the commercial risk of ETF closure. We combine distributing and accumulating share classes.
- Established – Unless justified, a 3-year ETF Performance track record is required.
- Cheap – Tracking Difference is a comprehensive backwards-looking measure. A positive 3-Year Tracking Difference below, from Institutional Data sources, including Bloomberg, reflects outperformance against Net Tax Index. In practice, this outperformance is lower as the most punitive tax treatment is applied to benchmarks, but it helps in the relative ranking of ETFs. TER is a forward-looking measure, but less comprehensive.
- Available and Liquid – All ETFs should be available from some of the most used brokers like Interactive Brokers or DEGIRO. We also monitor industry flows to give preference to funds with high daily volumes.
Our Prioritisation
The below tables list the Top 3-5 Funds. Our prioritisation is based on Portfolio Management experience and is a balancing act between the above overarching and asset-specific criteria. For example, we may override marginal Tracking Difference outperformance with reputation or liquidity considerations.
For instance, we prefer the iShares MSCI World UCITS ETF to the marginally better-performing competitors due to brand, higher liquidity, and the fund being the reference name in its asset class.
ADVERTISEMENT
Book a coaching session with us
Beginners often ask us:
- How do I reach my goals – What investments do I need to take into consideration when e.g. Taking a Sabbatical, buying a House or saving for Early Retirement?
- When should I invest – I fear that investing a lump sum in this market may have a negative impact on my returns. How can timing of buying ETFs affect my performance?
Advanced investors may avoid costly mistakes:
- Challenge my Portfolio – Here is my portfolio – what am I missing? What could derail my strategy? What can I do to protect my portfolio from shocks?
- Help me quickly understand – What makes Inflation Linked Bonds outperform? Bond Ladder or Bond ETFs? Why do some investors add Small Cap Value stocks to their portfolios? How can I exclude Tobacco companies from my portfolio? Are the synthetic ETFs I screened safe? What is Factor Investing?
By signing up for a financial coaching session you support our website and our investment research. Here are other ways to help.
Ad
Book a coaching session
Beginners often ask us:
- How do I reach my goals – What investments do I need to take into consideration when e.g. Taking a Sabbatical, buying a House or saving for Early Retirement?
- When should I invest – I fear that investing a lump sum in this market may have a negative impact on my returns. How can timing of buying ETFs affect my performance?
Advanced investors may avoid costly mistakes:
- Challenge my Portfolio – Here is my portfolio – what am I missing? What could derail my strategy? What can I do to protect my portfolio from shocks?
- Help me quickly understand – What makes Inflation Linked Bonds outperform? Bond Ladder or Bond ETFs? Why do some investors add Small Cap Value stocks to their portfolios? How can I exclude Tobacco companies from my portfolio? Are the synthetic ETFs I screened safe? What is Factor Investing?
By signing up for a financial coaching session you support our website and our investment research. Here are other ways to help.
1. FUND OF FUNDS
Vanguard Lifestrategy
GLOBAL ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- Tax efficient – Irish Domiciled ETFs reduce US Companies’ Dividend Tax from 30% to 15%.
- Simple – For Global exposure, Investors choose physical replication.
Global ETF SELECTION
| Rank | Global(World) ETF | 3Y TD | TER | Acc. | Dist. | Replication | Size | Inception | Domicile | Benchmark | Acc ISIN | Dist ISIN | Rank Category |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Vanguard FTSE ALL-World UCITS ETF | 0.0% | 0.22% | ✓ | ✓ | Physical | 13.9 | 05/2012 | Ireland | FTSE All World Net Total Return Index | IE00BK5BQT80 | IE00B3RBWM25 | Large & Mid Caps |
| 2 | iShares MSCI ACWI UCITS ETF | -0.1% | 0.20% | ✓ | ✘ | Physical | 6.3 | 10/2011 | Ireland | MSCI All Country World Net Total Return Index | IE00B6R52259 | ✘ | Large & Mid Caps |
| 3 | SPDR MSCI ACWI IMI ETF UCITS ETF | 0.1% | 0.40% | ✓ | ✘ | Physical | 0.5 | 05/2011 | Ireland | MSCI ACWI IMI Net Total Return Index | IE00B3YLTY66 | ✘ | With Small Caps |
Best Global ETF
Vanguard FTSE All-World UCITS ETF
Best Alternative
iShares MSCI ACWI UCITS ETF
The iShares MSCI ACWI UCITS ETF is leading in TER. BlackRock also has the strongest Brand Name among Institutional Investors and the biggest Asset Manager in the World in terms of Assets Under management. Up until 2021, this ETF was the most expensive in terms of TER and didn’t rank that well in terms of Tracking Difference. As of February 2021, the TER decreased from 0.6% to 0.2%. This change is expected to bring Tracking Difference on par with Vanguard.
State Street provides the option of investing in World’s small caps through the SPDR MSCI ACWI IMI UCITS ETF. But, you will rely on a correct sampling, and the TER is 0.4%. SPDR also has an MSCI ACWI ETF, not tracking small caps, but it is much smaller than rivals and has a worse TD.
Developed Markets ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- Tax efficient – The U.S. Markets account for over 65% of the overall exposure, and avoiding a 15% withholding tax by using Synthetic replication could be advantageous in the future.
- Simple – We also provide the best selection for Physical replication.
Developed Markets ETF SELECTION
| Rank | Developed_Markets ETF | 3Y TD | TER | Acc. | Dist. | Replication | Size | Inception | Domicile | Benchmark | Acc ISIN | Dist ISIN | Rank Category |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | iShares Core MSCI World UCITS ETF | 0.08% | 0.20% | ✓ | ✘ | Physical | 43.7 | 09/2009 | Ireland | MSCI World Total Return Net Index | IE00B4L5Y983 | ✘ | Physical |
| 1 | HSBC MSCI World UCITS ETF | 0.22% | 0.15% | ✘ | ✓ | Physical | 4.5 | 12/2010 | Ireland | MSCI World Total Return Net Index | ✘ | IE00B4X9L533 | Physical |
| 2 | Vanguard FTSE Developed World UCITS ETF | 0.10% | 0.12% | ✓ | ✓ | Physical | 2.9 | 09/2014 | Ireland | FTSE Developed Net Total Return Index | IE00BK5BQV03 | IE00BKX55T58 | Physical |
| 3 | SPDR MSCI World UCITS ETF | 0.14% | 0.12% | ✓ | ✘ | Physical | 1.9 | 02/2019 | Ireland | MSCI World Total Return Net Index | IE00BFY0GT14 | ✘ | Physical |
| 4 | Xtrackers MSCI World UCITS ETF | 0.07% / 0.05%* | 0.19% / 0.12%* | ✓ | ✓ | Physical | 9.2 | 07/2014 | Ireland | MSCI World Total Return Net Index | IE00BJ0KDQ92 | IE00BK1PV551 | Physical |
| 1 | Invesco MSCI World UCITS ETF | 0.15% | 0.19% | ✓ | ✘ | Synthetic | 3.0 | 04/2009 | Ireland | MSCI World Total Return Net Index | IE00B60SX394 | ✘ | Synthetic |
| 1 | Lyxor MSCI World UCITS ETF (Luxembourg) | 0.14% | 0.20% | ✓ | ✘ | Synthetic | 3.3 | 11/2008 | Luxembourg | MSCI World Total Return Net Index | LU0392494562 | ✘ | Synthetic |
| 2 | Lyxor MSCI World UCITS ETF (France) | 0.06% | 0.30% | ✓ | ✓ | Synthetic | 0.2 | 05/2014 | France | MSCI World Total Return Net Index | FR0011869353 | FR0014003IY1 | Synthetic |
Best Developed Markets ETFs
iShares Core MSCI World UCITS ETF & HSBC MSCI World UCITS ETF
Depending on the dividend distribution policy, current leaders are:
- iShares Core MSCI World UCITS ETF (Accumulating) – is investor’s favourite, despite its marginal underperformance due to (i) being managed by BlackRock (ii) the Fund being a reference (x4 larger than its closest competitor) and having (iii) the highest Liquidity (5-10x more flows).
- HSBC MSCI World UCITS ETF (Distributing) – is the best-performing fund over the past 3 years and one of the cheapest among the largest ETFs. However, there are good alternatives.
Best Alternatives
Synthetic ETFs from Lyxor or Invesco
- For Accumulating ETFs – Both Lyxor and Invesco Accumulating ETFs are worth considering, as synthetic ETFs are rapidly gaining a performance edge. Amundi ETFs are much smaller and with a worse track record. They may be merged with Lyxor at some point.
- For distributing ETFs – Xtrackers offers a solid alternative and may challenge HSBC in the future, given a lower TER. Synthetic options exist for distributing funds but are domiciled in France, and designed for local investors through PEA tax wrappers.
Vanguard lags behind the leaders, but offers a low TER and the advantage of slightly broader coverage in small caps.
Emerging Markets ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- Diverse – We prefer the MSCI EM IMI Index, which also includes Small Caps.
- Simple – Synthetic ETFs have not demonstrated any edge, thus physical replication is preferred.
Emerging Markets ETF SELECTION
| Rank | Emerging_Markets ETF | 3Y TD | TER | Acc. | Dist. | Replication | Size | Inception | Domicile | Benchmark | Acc ISIN | Dist ISIN | Rank Category |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | iShares Core MSCI EM IMI UCITS ETF | -0.01% | 0.18% | ✓ | ✓ | Physical | 15.4 | 05/2014 | Ireland | MSCI Emerging Markets IMI Net Total Return Index | IE00BKM4GZ66 | IE00BD45KH83 | With Small Caps |
| 2 | Vanguard FTSE Emerging Markets UCITS ETF | -0.38% | 0.22% | ✓ | ✓ | Physical | 2.3 | 05/2012 | Ireland | FTSE Emerging Net Total Return Index | IE00BK5BR733 | IE00B3VVMM84 | Large & Mid Caps |
| 3 | Xtrackers MSCI Emerging Markets UCITS ETF | -0.22% | 0.18% | ✓ | ✓ | Physical | 4.6 | 06/2017 | Ireland | MSCI Emerging Markets Net Total Return Index | IE00BTJRMP35 | IE000GWA2J58 | Large & Mid Caps |
Best Emerging Market ETF
iShares Core MSCI Emerging Markets IMI UCITS ETF
iShares Core MSCI Emerging Markets IMI UCITS ETF largely dominates this asset class. The fund is three times larger than its closest competitor, includes small caps (IMI Index), has the performance measured by Tracking Difference and is amongst the cheapest by TER. It is also the most liquid fund.
Best Alternative
Xtrackers MSCI Emerging Markets UCITS ET
S&P 500 ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- Tax efficient – By avoiding a 30% tax on US Companies’ dividends, ETFs with Synthetic replication outperform.
- Simple – We also provide the best selection for Physical replication.
S&P 500 ETF SELECTION
| Rank | S&P500_UCITS_FUNDS | 3Y TD | TER | Acc. | Dist. | Replication | Size | Inception | Domicile | Benchmark | Acc ISIN | Dist ISIN | Rank Category |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Invesco S&P 500 UCITS ETF | 0.48% | 0.05% | ✓ | ✓ | Synthetic | 12.7 | 05/2010 | Ireland | S&P 500 Net Total Return Index | IE00B3YCGJ38 | IE00BYML9W36 | Synthetic |
| 2 | Xtrackers S&P 500 Swap UCITS ETF | 0.47% | 0.15% | ✓ | ✓ | Synthetic | 6.0 | 03/2010 | Luxembourg | S&P 500 Net Total Return Index | LU0490618542 | LU2009147757 | Synthetic |
| 2 | Lyxor S&P 500 UCITS ETF | 0.45% | 0.09% | ✓ | ✓ | Synthetic | 2.0 | 03/2010 | Luxembourg | S&P 500 Net Total Return Index | LU1135865084 | LU0496786657 | Synthetic |
| 2 | Amundi S&P 500 UCITS ETF | 0.48% | 0.15% | ✓ | ✓ | Synthetic | 2.8 | 03/2018 | Luxembourg | S&P 500 Net Total Return Index | LU1681049018 | LU2391437253 | Synthetic |
| 3 | BNP Paribas Easy S&P 500 UCITS ETF | 0.44% | 0.15% | ✓ | ✓ | Synthetic | 1.9 | 06/2008 | France | S&P 500 Net Total Return Index | FR0011550177 | FR0011550680 | Synthetic |
| 1 | iShares CORE S&P 500 UCITS ETF | 0.22% | 0.07% | ✓ | ✓ | Physical | 61.5 | 03/2002 | Ireland | S&P 500 Net Total Return Index | IE00B5BMR087 | IE0031442068 | Physical |
| 1 | Vanguard S&P 500 UCITS ETF | 0.23% | 0.07% | ✓ | ✓ | Physical | 31.8 | 05/2012 | Ireland | S&P 500 Net Total Return Index | IE00BFMXXD54 | IE00B3XXRP09 | Physical |
Best S&P 500 ETF
Invesco S&P 500 UCITS ETF
Synthetic ETFs dominate this market, and Invesco S&P 500 UCITS ETF is the largest (over twice the size of its closest competitor) and most liquid synthetic fund.
Best Alternatives
Synthetic ETFs from Xtrackers and Amundi/Lyxor
The difference in performance between runners-up is anecdotal. Also, with the merger of Lyxor and Amundi, the combined assets of these two ETFs will be equivalent to Xtrackers. There is no clarity how these ETFs may be merged, though.
iShares synthetic ETF, not listed in the above table, is much smaller, because BlackRock was opposed to synthetics until recently. Its fund has been quite successful since launch, though. So how should you choose from the list? For similar performance, a tie-breaker may be more comfort around certain operational risks.
iShares Core S&P 500 UCITS ETF remains the largest fund at c. 5x Invesco, but the physical replication implies lower performance.
EUROPEAN EQUITIES ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- Diverse – We prefer STOXX Europe 600 and FTSE Developed Europe Benchmarks.
- Simple – Synthetic ETFs offer no advantage, thus we prefer physical replication.
European Equities ETF SELECTION
| Rank | Developed_Europe ETF | 3Y TD | TER | Acc. | Dist. | Replication | Size | Inception | Domicile | Benchmark | Acc ISIN | Dist ISIN | Rank Category |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Lyxor Core STOXX Europe 600 UCITS ETF | 0.25% | 0.07% | ✓ | ✘ | Physical | 5.4 | 04/2013 | Luxembourg | STOXX Europe 600 Net Total Return Index | LU0908500753 | ✘ | With Small Caps |
| 2 | Vanguard FTSE Developed Europe UCITS ETF | 0.25% | 0.10% | ✓ | ✓ | Physical | 3.1 | 05/2013 | Ireland | FTSE Developed Europe Net Tax Total Return Index | IE00BK5BQX27 | IE00B945VV12 | With Small Caps |
| 3 | iShares STOXX Europe 600 UCITS ETF | 0.14% | 0.20% | ✘ | ✓ | Physical | 6.0 | 02/2004 | Germany | STOXX Europe 600 Net Total Return Index | ✘ | DE0002635307 | With Small Caps |
| 4 | Xtrackers STOXX Europe 600 UCITS ETF | 0.14% | 0.20% | ✓ | ✘ | Physical | 1.7 | 01/2009 | Luxembourg | STOXX Europe 600 Net Total Return Index | LU0328475792 | ✘ | With Small Caps |
| 1 | iShares Core MSCI Europe UCITS ETF | 0.26% | 0.12% | ✓ | ✓ | Physical | 11.4 | 07/2007 | Ireland | MSCI Europe Net Total Return Index | IE00B4K48X80 | IE00B1YZSC51 | Large & Mid Caps |
| 2 | Amundi MSCI Europe UCITS ETF | 0.20% | 0.15% | ✓ | ✓ | Physical | 2.0 | 11/2016 | Luxembourg | MSCI Europe Net Total Return Index | LU1437015735 | LU1737652310 | Large & Mid Caps |
| 3 | Xtrackers MSCI Europe UCITS ETF | 0.17% | 0.12% | ✓ | ✓ | Physical | 3.3 | 01/2007 | Luxembourg | MSCI Europe Net Total Return Index | LU0274209237 | LU1242369327 | Large & Mid Caps |
| 4 | Lyxor MSCI Europe UCITS ETF | 0.05% | 0.25% | ✓ | ✘ | Physical | 0.8 | 01/2006 | France | MSCI Europe Net Total Return Index | FR0010261198 | ✘ | Large & Mid Caps |
| 1 | iShares Core EURO STOXX 50 UCITS ETF | 0.44% | 0.10% | ✓ | ✓ | Physical | 6.8 | 04/2000 | Ireland | EURO STOXX 50 Net Total Return Index | IE00B53L3W79 | IE0008471009 | Only Large Caps |
| 2 | Xtrackers EURO STOXX 50 UCITS ETF | 0.45% | 0.09% | ✓ | ✓ | Physical | 5.3 | 01/2007 | Luxembourg | EURO STOXX 50 Net Total Return Index | LU0380865021 | LU0274211217 | Only Large Caps |
| 5 | Invesco STOXX Europe 600 | 0.00% | 0.19% | ✓ | ✘ | Synthetic | 0.2 | 04/2009 | Ireland | STOXX Europe 600 Net Total Return Index | IE00B60SWW18 | ✘ | With Small Caps |
Best European Equity ETFS
Lyxor Core STOXX Europe 600 UCITS ETF & Vanguard FTSE Developed Europe UCITS ETF
- Lyxor Core STOXX Europe 600 UCITS ETF (Accumulating) – captures the broadest universe of stocks and has one of the highest Tracking Differences for this asset class. It also has the lowest TER. For distributing investors,
- Vanguard FTSE Developed Europe UCITS ETF (Distributing) tracks a similar universe with equivalent historical performance.
Best AlternativeS
IShares ETFs
Both ETFs from iShares are some of the largest in their category. The iShares Core MSCI Europe UCITS ETF has the best Tracking Difference for this asset class, but lacks small-caps exposure.
Socially Responsible ETFs (Coming Soon)
NON-UCITS ETFs
Asset Class Criteria
- Aligned with Market Practice – Unhedged Currency.
- US Regulation Driven – Physical replication and distributing dividends. There are no accumulating ETFs.
NON-UCITS ETF SELECTION
| Exposure | Index | ETF | Ticker |
|---|---|---|---|
| Global | FTSE Global All Cap | Vanguard Total World Stock ETF | VT |
| Global | MSCI ACWI IMI | SPDR MSCI ACWI IMI ETF | ACIM |
| Global | MSCI ACWI | iShares MSCI ACWI ETF(ACWI) | ACWI |
| Global ex-US | FTSE Global All Cap ex-US | Vanguard Total International Stock ETF | VXUS |
| Global ex-US | MSCI ACWI IMI ex-US | iShares Core MSCI Total International Stock ETF | IXUS |
| Global ex-US | MSCI ACWI ex-US | iShares MSCI ACWI ex U.S. ETF | ACWX |
| Developed Markets ex-US | FTSE Developed Markets All Cap | Vanguard Developed Markets ETF | VEA |
| Developed Markets ex-US | FTSE Developed ex US | Schwab International Equity ETF | SCHF |
| Developed Markets ex-North America | MSCI EAFE | iShares Core MSCI EAFE ETF | IEFA |
| Emerging Markets | FTSE Emerging Markets All Cap | Vanguard Emerging Markets ETF | VWO |
| Emerging Markets | MSCI Emerging Markets IMI | iShares Core (MSCI IMI) Emerging Markets ETF | IEMG |
| Emerging Markets | MSCI Emerging Markets | iShares Emerging Markets ETF | EEM |
FROM OUR TEAM
This website was created to provide you with all necessary resources to invest without incurring any additional costs.
Servers, data, and software are some of our costs, just to name a few. Most importantly, our time is the main resource to create great content. If you find that our guides helped you on the path to financial success, you may give us a hand by buying a coffee.
By buying us a coffee you support our website and our investment research. Here are other ways to help.
FROM OUR TEAM
This website was created to provide you with all necessary resources to invest without incurring any additional costs.
Servers, data, and software are some of our costs, just to name a few. Most importantly, our time is the main resource to create great content. If you find that our guides helped you on the path to financial success, you may give us a hand by buying a coffee.
By buying us a coffee you support our website and our investment research. Here are other ways to help.
Next Steps
Not sure which Index to choose? This ETF selection results from our deep dives into different asset classes.
Start by having a look at the sections of our definitive guide to Equity Index Investing.
