Vanguard Funds for European Investors

What are the Vanguard ETF Equivalents for European and UK Investors?

As a European or UK Investor you would have to slightly adjust the way to construct a typical two/three or four fund Portfolio using UCITS ETFs. Here is what you need to know:

  • 100% Vanguard – While Vanguard is relatively small in Europe you can still build a 100% Vanguard Index Fund Portfolio
  • Stick to ETFs – Investing through Vanguard ETFs is easier than Mutual Index Funds, particularly in continental Europe  
  • Research Brokers – You will need to find a European broker that gives access to Vanguard Funds. Keep an eye on transaction fees, custody fees, membership fees, service and currency exchange fees

While there are other things to consider when choosing an ETF, European investor may also opt for a 100% Vanguard Portfolio. And there is lots of reasons to back them including excellent reputation and unique ownership structure with low conflicts of interest.

Here are some questions, that European investors frequently ask.

What is the European equivalent of VT ETF (Vanguard Total World Stock Index Fund)?

Vanguard Total World Stock Index Fund is an ETF that gives you access to all  markets: 

  • Developed and Emerging
  • Large, Mid and Small Caps

It tracks the FTSE Global ALL CAP Index.

The closest European and UK UCITS Equivalent to VT ETF is 
Vanguard FTSE ALL-World ETF with accumulating Class in GBP and EUR. Distributing classes are available in GBP, EUR and CHF.
 

Note that Vanguard FTSE All World tracks the FTSE All World Index (it does exclude Small Caps) but performance is closely correlated.

If you are looking for other options (e.g. including Small Caps), I have done an extensive analysis about World ETFs that give you all the convenience in Investing through a single Index Fund.

What is the European equivalent of VTI ETF (Vanguard Total Stock Market Index Fund)?

The Vanguard Total Stock Market Index Fund is an ETF that gives you access to the entire US Market – Large, Mid and Small Caps. This includes about 3,500 companies.

It is a popular choice and gives you a larger coverage than just the S&P 500 that only tracks 500 Large Caps.

The closest European and UK UCITS Equivalent to VTI ETF is Vanguard S&P 500 UCITS ETF with accumulating Class in GBP and EUR. Distributing classes are available in GBP, EUR and CHF.
 

Note that this Vanguard ETF tracks the S&P 500 (it does exclude Small and Mid Caps). However, since both indices are weighted by market size the performance is very similar.

As a European or UK Investor you don’t necessarily need to control the allocation to US Large Caps Stocks. 

A more efficient way may be to split your portfolio into Developed and Emerging Markets ETFs. You can learn more about how the ETF World is divided through my analysis of ETF Benchmarks from two leading providers – MSCI and FTSE.

Given the lack of direct VTI equivalent, research points to the fact that European Investors are often underweight US small caps.

What is the European equivalent of VXUS ETF (Vanguard Total International Stock Index Fund ETF)?

Vanguard Total International Stock Index Fund is an ETF used by American Investors that want to control exposure to all International markets ex-US. 

There is no European and UK Vanguard UCITS ETF Equivalent to VXUS ETF given that European and UK Portfolios are not US Centric.
 

As a European or UK Investor you don’t necessarily need to control the allocation to ex-US. 

Similar to the above, a more efficient way may be to split your portfolio into Developed and Emerging Markets ETFs. You can also add your local country benchmark e.g. FTSE 100 / CAC 40 or DAX 30 to overweight exposure to your local Equity Market.

This approach is not without potential traps and biases. You may follow a Banker portfolio as described here if you want to control for your local market. 

If you need to exclude Europe from Developed countries, Amundi has a synthetic Developed Markets ETF excluding Europe.

What is the European equivalent of Vanguard Total Bond Market Index Fund ETF (BND ETF)?

The Vanguard Stock Bond Index Fund is an ETF that gives you access to the US Bond Market

It is a one stop solution to give you exposure to the entire Bond Market including Government Bonds, highly rated corporate Bonds and Mortgage Bonds. 

The BND ETF Tracks the Bloomberg Barclays US Aggregate Index

The closest European and UK UCITS Equivalent to BND ETF is Vanguard Global Aggregate Bond UCITS ETF (VAG ETF series including VAGE, VAGF, VAGS and VAGP) with accumulating Class in GBP and EUR. Distributing classes are also available in GBP and EUR.
 

Note that the VAG ETFs track the Bloomberg Barclays Global Aggregate Bond Index .

As European or UK Investor you want access to High Quality Bonds available in your currency. 

That’s why tracking a Global Aggregate Benchmark hedged to your currency is the best practice when building your portfolio. Alternatively, you can also invest in your local Government/High Quality corporates but this provides lower diversification while not necessarily higher returns.

If you want to learn more about the different Bond ETF Types (including the Vanguard ETFs listed above) and how to make it fit into your portfolio have a look at my analysis related to International Bond ETFs

What are the European equivalents of Vanguard Lifestrategy Funds?

Should you want to choose the efficient and simple way without splitting your portfolio into multiple ETFs, Vanguard Lifestrategy Funds are a great choice. It combines exposure to all global equity markets and bonds.

These products are structured as funds-of-fund.  

In a nutshell, it is a one ETF solution to gives you exposure to both Equities and Bonds. 

The LifeStrategy Funds differ by the asset allocation or the proportion of Equity and Bond ETFs and risk profile. 

The European and UK Equivalents are Vanguard LifeStrategy UCITS ETFs.  Equity proportion varies from 20% to 80% and the ETFs are either accumulating or distributing. Note that in the UK these are structured as mutual Index Funds and have some biases, while the European ETFs maintain market allocations. 
 

If you want to learn more about the Lifestrategy range, I have included a dedicated section on them.

What are the Best Non-Vanguard ETFs for European Investors?

Other ETF Providers can also offer very competitive investment solutions for Europeans.

There are key things to remember when choosing an Equity ETF including selecting only Established Asset Managers, Funds with Track Record and reduced risk of closure.

Here is a list of the very best European Equity and Bond ETFs along with the selection criteria.

How do I construct an ETF Portfolio?

Choosing a 100% Vanguard Portfolio could be a great and cost-efficient way of Investing. 

But, remember that you have your individual circumstances that should dictate the way you invest. Some factors include:

  • Fund size and age
  • Currencies
  • Costs and Fees
  • Taxes

Click on the image above to understand how to construct a portfolio to reach Financial Independence. 

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Simon
Simon
7 months ago

What about DGRO, NOBL, SCHD or SPHD?