💡Take Away Anyone investing globally automatically invests in countries and companies with currencies other than the euro. Currency pairs like EUR/USD can fluctuate, representing both a currency risk and an opportunity.
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💡Take Away The Tracking Difference refers to the difference in performance between an ETF and its benchmark index over a given period. It is influenced by factors such as transaction costs from rebalancing, taxes, or cash holdings.
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💡Take Away To replicate an index, there are 3 different methods: Physical replication buys the index in the same weighting. Such replication is called fully replicating ETFs. With sampling, the ETF provider only buys a selection of the securities.
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💡Take Away The stocks contained in ETFs pay dividends, which you, as an investor, benefit from. Distributing ETFs pay out the dividends to your account. Accumulating ETFs reinvest the dividends, meaning they buy more shares.
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💡Take Away When selecting ETFs, the Total Expense Ratio (TER) is an important decision-making criterion. You can find it in the factsheet. The TER summarizes all management costs charged by your ETF provider.
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💡Take Away The fund size describes how much invested money is in an ETF. ETF providers may remove ETFs from the market if they perform poorly. This risk is higher for new and small ETFs.
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💡Take Away Particularly important criteria for selecting an ETF include its costs, fund size A threshold of €50 million is considered sufficient. Over €100 million is considered stable. Over €150 million is a safe benchmark for larger funds.
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A portfolio refers to the collection of investments, which can be structured with various weightings and asset classes. Here, we’ll look at well-known ETF portfolios with examples. 70/30 Portfolio The 70/30 portfolio is a classic among portfolios with global ETFs.
2025-03-07
💡Take Away The method used to weight countries and companies in an index can lead to differences in performance. Most (global) indices are weighted by market capitalization, meaning they are based on the value of publicly traded companies.
2025-03-07