EU investing

EU investing shows how you can apply the Bogleheads investment philosophy if you live in the European Union (EU). In addition to the topics described in the Bogleheads® investing start-up kit for non-US investors and Index funds and ETFs outside of the US you must be aware of a few things described below.

A person's domicile is often the determining factor for many legal aspects, including investing and taxation. Investment funds also have a domicile, and here this too determines the applicable legislation, including taxation.

Introduction

European MiFID II and PRIIPs regulations make it difficult or even impossible for residents of the EU community to purchase funds domiciled outside of the EU. See below for more.

There are few low-cost index mutual funds available in the EU, but there are a lot of index exchange-traded funds (ETFs) available. You can find all the ETFs available in the EU at etfinfo.com^{[note 1]}. These ETFs are usually domiciled in Ireland or Luxembourg. You should consult with your tax advisor before investing in ETFs. You must carefully read the Key Investor Information Document (KIID) and the prospectus of each ETF you choose. Look for important tax-related information such as registration and reporting in these documents.^{[note 2]}

The same ETF can have different share classes, and can be listed on several different stock exchanges in different currencies. Look for the ISIN code as unique identifier together with the name. Funds with different trading currency will have a different ticker if traded on the same exchange. If the fund is trading on different exchanges then it may or may not have the same ticker.

Some of the country pages in the Non-US domiciles wiki category contain sample portfolios or suggestions for (ETF) funds. While these can be taken to draft a first portfolio it is good to post a question on the forum as every country is different and the recommendation might change over time.

Non-EU domiciled funds

A European investor purchasing non-EU domiciled funds needs to validate the practical aspects of such a fund.

For example, US domiciled funds distribute their income periodically, and you must pay withholding tax to the US government. Depending on your country of residence, there may be other tax-related problems with US domiciled funds, for example US estate tax on holdings above just $60,000. In short, US tax policy can make US domiciled funds unattractive to EU investors.

EU domiciled ETF providers

Fig.1.Brussels Euronext Exchange

The following are the major companies that provide EU domiciled ETFs. This list is not exhaustive.

EU domiciled providers
Provider	Website
Amundi ETF	link
BlackRock iShares	link
Deutsche Bank db X-trackers	link
HSBC ETFs	link
Lyxor ETF	link
SPDR ETFs Europe	link
Vanguard	link

EU domiciled ETF exchanges

The following stock exchanges are the primary ones for trading EU domiciled ETFs. This list is not exhaustive.

European stock exchanges
Exchange	Website
London (LSE, London Stock Exchange)	link
Xetra (Deutsche Börse, Frankfurt)	link
Euronext (Amsterdam, Brussels, Lisbon, Paris)	link
Milan Stock Exchange (Borsa Italiana)	link
SIX Swiss	link
Chi-X	link

EU legislation : UCITS, MiFID II and PRIIPs

While every EU country has its own legislation there are a number of EU guidelines that most EU countries implement:

UCITS
MiFID II
PRIIPs

UCITS (Undertakings for Collective Investment in Transferable Securities Directive) is an EU directive that allows mutual funds and ETFs to operate freely throughout the EU on authorisation from a single member state.

Since 2018, the European MiFID II (Markets in Financial Instruments Directive) and PRIIPs (Packaged Retail and Insurance-based Investment Products) have become effective. The goal of this legislation is to protect the individual investor. The UK left the EU in January 2020, but created its own 'UK PRIIPs' regime that is fully aligned with the EU PRIIPs, so PRIIPs restrictions continue to apply in the UK.^[1]

PRIIPs requires a retail investment product such as an ETF to provide a Key Information Document in a clear and relatively tightly specified format. US domiciled funds and ETFs do not currently produce such documents, and because the EU is not a primary market for them, few if any have indicated that they will do so. Products lacking these documents cannot be offered to EU investors.

As a result, it is now difficult or even impossible for residents of the EU community to purchase US domiciled funds. Shares purchased before the regulation came into effect can be kept and sold, but EU residents can generally no longer buy new shares of these funds or ETFs.

Index funds and ETFs outside of the US

Index funds and ETFs were first created in the US and are now widely available outside of the US.

Depending on the domicile of the fund it is subject to local legislation leading to local differences. Notable characteristics that are explained in the main article on index funds and ETFs outside of the US, are:

Differences between accumulating (or capitalizing) and distributing ETF share classes
Differences between base currency of the fund, trading currency of the fund, and currency of the underlying assets. The same ETF can have different share classes, and can be listed on several different stock exchanges in different currencies. Look for the ISIN code as unique identifier together with the name.
Securities lending
Index tracking strategies: replication or synthetic
Net total return and gross total return index
Cost and expenses related to UCITS index funds and ETFs
Investors that hold funds that hold securities are taxed at multiple levels: level of the asset, level of the fund, level of the investor. Depending on the situation of the individual investor, one can optimize the taxation.

Sample portfolios

There are many Boglehead inspired portfolios that can be created. Here below are some EU investor fund examples that are suitable for both accumulating and for distributing portfolios. Where available, funds from both iShares and Vanguard are shown. Multiple choices are provided for the bond funds both in the accumulating and the distributing lists.

Two main approaches to investing for non-US retail investors are considered:

Simple portfolios
Complex portfolios

Simple portfolios

The simplest portfolios are based on using index funds (mutual funds - where these are easily available or the corresponding ETFs) to build a low-cost portfolio with a small number of funds that are easy to re-balance and follow the spirit and principles of the Bogleheads® approach.

Complex portfolios

Investors may wish to move beyond simple three, four or five-component portfolios and either include additional components; slice and dice existing components; or purchase individual stocks and bonds.

Lists of ETF funds

The investor will need to assess their risk appetite and other criteria and decide which particular global bond fund ETF suits their purposes. The more cautious investor might choose to invest in one of the government ETFs or alternatively invest in an aggregate version.

The Xtrackers global bond ETF (DBZB) is domiciled in Luxembourg and the investor should review the tax arrangements in their home country in this regard.

Please also review the country specific pages.

These examples should be checked for best fit in the investor's particular tax domicile as noted above and also to align with the investor's optimal costs.

Selection of suggested funds for accumulating portfolios
Name ISIN, base currency and tracking indices	Description and comments	TER	Exchanges	Trading currency	Ticker
Global government bonds
Xtrackers Global Government Bond UCITS ETF 5C Acc LU0908508731 Euro Tracking FTSE World Government Bond Developed Market Index	World developed Govt bond unhedged	0.2%	Xetra	EUR	XG7S
			London	GBP	XG7S
			London	USD	XGGB
			Swiss	EUR	XG7S
			Italian	EUR	XG7S
iShares Global Govt Bond UCITS USD ETF Acc IE00BYZ28V50 USD Tracking an index composed of local currency bonds issued by governments of developed countries	World developed Govt bond unhedged	0.2%	London	USD	IGLA
	World developed Govt bond unhedged	0.2%	Swiss	USD	IGLA
Xtrackers II Global Govt Bd ETF EUR Hedged Acc LU0378818131 Euro Tracking FTSE World Government Bond Index – Developed Markets	World developed Govt bond hedged (€)^{[note 3]}	0.25%	Xetra	EUR	DBZB
iShares Global Govt Bond UCITS ETF $ Hedged Acc IE00BK7Y2P34 USD Tracking FTSE G7 Government Bond Index	World developed Govt bond hedged ($)^{[note 3]}	0.25%	Euronext	USD	SGLU
Global aggregate bonds
iShares Global Aggregate Bd ETF USD Hedged Acc IE00BZ043R46 USD Tracking the Bloomberg Barclays Global Aggregate Bond Index	Global aggregate hedged (US$)	0.10%	London	USD	AGGU
iShares Global Aggregate Bd ETF EUR Hedged Acc IE00BDBRDM35 Euro Tracking the Bloomberg Barclays Global Aggregate Bond Index	Global aggregate hedged (€)^{[note 3]}	0.10%	London	EUR	AGGH
			Swiss	EUR	AGGH
			Xetra	EUR	EUNA
Vanguard Global Aggregate Bd ETF USD Hedged Acc IE00BG47KJ78 USD (This fund was launched on 18 June 2019. Performance data will be available after one year.) Tracking the Bloomberg Barclays Global Aggregate Float Adjusted and Scaled Index Hedged in USD	Global aggregate hedged (US$)	0.10%	London	USD	VAGU
Vanguard Global Aggregate Bd ETF EUR Hedged Acc IE00BG47KH54 Euro (This fund was launched on 18 June 2019. Performance data will be available after one year.) Tracking the Bloomberg Barclays Global Aggregate Float Adjusted and Scaled Index Hedged in Euro	Global aggregate hedged (€)^{[note 3]}	0.10%	Xetra	EUR	VAGF
Stocks
iShares Core MSCI World ETF USD Acc IE00B4L5Y983 USD Tracking the MSCI World Index	Global, developed markets Large+Mid cap	0.20%	London	USD	IWDA
			Xetra	EUR	EUNL
			Milan	EUR	SWDA
			Euronext	EUR	IWDA
			London	GBP	SWDA
			Swiss	USD	SWDA
SPDR MSCI World UCITS ETF USD Acc IE00BFY0GT14 Tracking the MSCI World index	Global, developed markets Large+Mid cap	0.12%	Deutsche Boerse	EUR	SPPW
			Borsa Italiano	EUR	SWRD
			Euronext	EUR	SWRD
			London	GBP	SWLD
			London	USD	SWRD
Vanguard FTSE All-World UCITS ETF USD Acc IE00BK5BQT80 Tracking the FTSE All-World Index	Global, developed and emerging markets Large+Mid cap	0.22%	Deutsche Boerse	EUR	VWCE
			London	GBP	VWRP
			London	USD	VWRA
iShares MSCI ACWI UCITS ETF USD Acc IE00B6R52259 Tracking the MSCI ACWI Index	Global, developed and emerging markets Large cap	0.20%	Mexico	MXN	ISAC
			Deutsche Boerse	EUR	IUSQ
			London	GBP	SSAC
			London	USD	ISAC
			Swiss	USD	SSAC
			Tel Aviv	ILS	iSFF505
Emerging markets
iShares Core MSCI EM IMI ETF USD Acc IE00BKM4GZ66 Tracking the MSCI Emerging Markets Investable Market Index	Emerging mkts IMI : Large+mid+small	0.18%	London	USD	EIMI
			Swiss	USD	EIMI
			Xetra	EUR	IS3N
			Milan	EUR	EIMI
			Euronext	EUR	EMIM
			London	GBP	EMIM
Optional (world small cap)
iShares MSCI World Small Cap ETF USD Acc IE00BF4RFH31 USD Tracking the MSCI World Small Cap Index	MSCI World developed markets Small Cap	0.35%	London	USD	WSML
			Xetra	EUR	IUSN
			London	GBP	WLDS

Selection of suggested funds for distributing portfolios
Name ISIN, base currency and tracking indices	Description and comments	TER	Exchanges	Trading currency	Ticker
Global aggregate bonds
iShares Core Global Aggregate Bond UCITS ETF Dist IE00B3F81409 USD Tracking an index composed of global investment grade bonds	Global aggregate unhedged	0.10%	London	GBP	AGGG
			Swiss	USD	AGGG
			Xetra	EUR	AGGG
Vanguard Global Aggregate Bd ETF EUR Hedged Dist IE00BG47KB92 USD Tracking the Bloomberg Barclays Global Aggregate Float Adjusted and Scaled Index Hedged (This fund was launched on 18 June 2019. Performance data will be available after one year.)	Global aggregate hedged (€)^{[note 3]}	0.10%	Xetra	EUR	VAGE
Global government bonds
iShares Global Govt Bond UCITS USD ETF Dist IE00B3F81K65 USD Tracking an index composed of local currency bonds issued by governments of developed countries	World developed Govt bond unhedged	0.2%	Deutsche Boerse	EUR	EUN3
			London	USD	IGLO
			London	GBP	SGLO
			Swiss	CHF	IGLO
iShares Global Govt Bond UCITS ETF GBP Hedged IE00BDFK3H31 USD Tracking the FTSE G7 Government Bond Index	World dev, govt hedged (£)^{[note 4]}	0.20%	London	GBP	IGLH
Stocks
Vanguard FTSE All-World UCITS ETF IE00B3RBWM25 USD Tracking the FTSE All-World Index	World dev+em large+mid	0.22%	London	USD	VWRD
			London	GBP	VWRL
			Euronext	EUR	VWRL
			Xetra	EUR	VWRL
			Swiss	CHF	VWRL
			Chi-X	CHF	VWRLz

Notes

↑ Enter keywords into the search field, such as "REIT", "emerging markets", or "MSCI ACWI", or use the advanced search function.
↑ For example, UK citizens should investigate whether the chosen ETF has "UK Reporting Status" or not, and French citizens should look for "Plan d'Épargne en Actions" (PEA) eligibility.
↑ ^3.0 ^3.1 ^3.2 ^3.3 ^3.4 Hedging to the Euro or US dollar is reasonable for investors whose future financial liabilities will be dominated by or pegged to that currency. Otherwise, choosing an unhedged bond ETF will probably be more appropriate.
↑ Hedging to Sterling is reasonable for UK investors. Otherwise, choosing an unhedged ETF may be more appropriate.

References

↑ "Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit)". GOV.UK. https://www.gov.uk/government/publications/draft-packaged-retail-and-insurance-based-investment-products-amendment-eu-exit-regulations-2019/packaged-retail-and-insurance-based-investment-products-amendment-eu-exit-regulations-2019-explanatory-information. Retrieved February 1, 2020. Regulations 2019: explanatory information

External links

UCITS (Undertakings for Collective Investment in Transferable Securities Directives), from Wikipedia.
Key information documents for packaged retail and insurance-based investment products (PRIIPs), European Commission.
MiFID II, European Securities and Markets Association.
etfinfo.com
SPDR® ETFs Tax Reference Guide, 2013, by SPDR ETFs Europe, viewed June 19, 2015. This guide explains how distributing and accumulating (offshore) funds are taxed in Austria, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Switzerland. and in the UK in 2013. Reference: Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Portfolio, by forum member hafius500.

[1] Enter keywords into the search field, such as "REIT", "emerging markets", or "MSCI ACWI", or use the advanced search function.

[2] For example, UK citizens should investigate whether the chosen ETF has "UK Reporting Status" or not, and French citizens should look for "Plan d'Épargne en Actions" (PEA) eligibility.

[eurohedge-4] 3.0 ^3.1 ^3.2 ^3.3 ^3.4 Hedging to the Euro or US dollar is reasonable for investors whose future financial liabilities will be dominated by or pegged to that currency. Otherwise, choosing an unhedged bond ETF will probably be more appropriate.

[gbphedge-5] Hedging to Sterling is reasonable for UK investors. Otherwise, choosing an unhedged ETF may be more appropriate.

[3] "Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit)". GOV.UK. https://www.gov.uk/government/publications/draft-packaged-retail-and-insurance-based-investment-products-amendment-eu-exit-regulations-2019/packaged-retail-and-insurance-based-investment-products-amendment-eu-exit-regulations-2019-explanatory-information. Retrieved February 1, 2020. Regulations 2019: explanatory information

[note 1]

[note 2]

[1]

[note 3]

[note 4]

v t e Non-US domiciles - general
	Outline and FAQs	Outline of non-US domiciles • Non-US frequently asked questions
	United States excluded Entry pages	Getting started for non-US investors • Investing start-up kit for non-US investors • Investment philosophy for non-US investors • My portfolio: seeking advice
	United States excluded Portfolio construction	Bond basics for non-US investors • Building a non-US Boglehead portfolio • Complex non-US portfolios • Domicile • Index funds and ETFs outside of the US • Non-US Robo-advisors‎‎ • Real estate investment trusts for non-US investors • Simple non-US portfolios • Stock asset allocation for non-US investors
	United States excluded Portfolio management and taxation	Comparison of accumulating ETFs and distributing ETFs • Investing from outside of the US • Investment trusts • Non-US investors and ETF currencies • Non-US investor's guide to navigating US tax traps • Nonresident alien's ETF domicile decision table • Nonresident alien investors and Ireland domiciled ETFs • Nonresident alien taxation

v t e Non-US domiciles - European Union countries
	Belgium	Investing from Belgium
	European Union	Cash equivalents for EU investors • EU investing • EU non-habitual residence
	Germany	Investing from Germany
	Ireland	Investing from Ireland • Pensions in Ireland
	Italy	Investing from Italy
	Netherlands	Investing from the Netherlands
	Spain	Investing from Spain

v t e Non-US domiciles - non-European Union countries
	Australia	Investing from Australia
	Brazil	Investing from Brazil
	Canada	Canada (finiki)
	India	Investing from India
	Japan	Investing from Japan • Investing from Japan for US citizens and US permanent residents • TOPIX indices
	Singapore	Investing from Singapore
	Taiwan	List of Taiwan exchange traded funds • Taiwan bond indexes • Taiwan stock indexes • Taiwan treasury bill rates • Taiwan Bogleheads 2013 conference • Taiwan Bogleheads 2015 conference
	United Kingdom	FTSE UK indexes • UK Individual Savings Accounts • UK personal pensions • UK asset class returns • Investing from the UK • Vanguard US domiciled ETFs that are UK HMRC reporting funds
	United States US person abroad	Investing from Japan for US citizens and US permanent residents • Passive foreign investment company • Taxation as a US person living abroad • US tax pitfalls for a US person living abroad • Vanguard US domiciled ETFs that are UK HMRC reporting funds
	United States New US resident	US tax pitfalls for a non-US person moving to the US