Best ETFs for Irish Investors
Our top pick for the best overall ETF for Irish investors is the Amundi Prime All Country World UCITS ETF. It invests in over 3,400 companies across 47 developed and emerging markets. It’s a physical, accumulating ETF domiciled in Ireland with a TER of 0.07%. Its ISIN is IE0003XJA0J9.
Reading time: 13 min
Written by:
Dan Malone
Our Top Picks | Best For | |
|---|---|---|
Best All-World ETF
EU Regulated Provider
UCITS Compliant
Why we picked this ETF
The Amundi Prime All Country World UCITS ETF (Acc) strikes the optimal balance between cost, coverage and structure. It has the lowest TER (0.07%) of any Irish-domiciled All-World ETF that offers exposure to both developed and emerging markets using a full replication strategy. It’s an accumulating, unhedged share class with a positive annualised tracking difference since inception.
Best North America ETF
EU Regulated Provider
UCITS Compliant
Why we picked this ETF
The State Street SPDR S&P 500 UCITS ETF (Acc) offers the joint-lowest TER of any S&P 500 ETF available to Irish investors at 0.03%. It’s an Irish-domiciled fund with an accumulating, unhedged share class that uses a full replication strategy. It has a positive annualised tracking difference since inception.
Best Europe ETF
EU Regulated Provider
UCITS Compliant
Why we picked this ETF
The Amundi Prime Europe UCITS ETF DR (C) (Acc) offers the lowest TER of any Developed Europe ETF available to Irish investors at 0.05%. It’s a Luxembourg-domiciled fund with an accumulating, unhedged share class that uses a full replication strategy. It has a positive annualised tracking difference since inception.
Best Emerging Markets ETF
EU Regulated Provider
UCITS Compliant
Why we picked this ETF
The Amundi Prime Emerging Markets UCITS ETF DR (C) (Acc) offers the lowest TER of any Emerging Markets ETF with a physical structure at 0.10%. It’s a Luxembourg-domiciled fund with an accumulating, unhedged share class that uses a full replication strategy. It has a negative annualised tracking difference since inception.
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Choosing An ETF: 10 Most Important Things To Consider
Choosing the right exchange-traded fund (ETF) is incredibly important. You don’t want to be in a position where you’re forced to sell and reinvest into a new ETF because you made a mistake. Here are 10 things to consider before investing:
1. Understanding ETFs
How can you expect to pick the most suitable ETF if you don’t know what they are to begin with? We’ve got you covered. Our complete guide on Exchange-Traded Funds tells you everything you need to know.
2. Holdings
Don’t invest in ETFs without knowing what the fund invests in.
There are over 3,000 different ETFs available to Irish investors. Not every fund invests in the same thing – they may invest in stocks, bonds, commodities, and even cryptocurrencies. There are two important reasons to know what investments an ETF holds.
Volatility measures how much an investment’s price rises and falls over time. Highly volatile investments experience larger and more frequent price swings than less volatile ones.
When you invest in an ETF, you’re investing in the basket of assets that the fund owns. The share price reflects the value of those investments. If the fund holds volatile assets like small-cap or emerging market stocks, its share price is more likely to be volatile.
Diversification is where you spread your investments across different assets to reduce risk. In layman’s terms, it’s not putting all of your eggs in one basket. ETFs are considered diversified investments because they can own many different stocks, bonds and other assets.
However, the quality of diversification depends on the companies themselves and the industries in which they operate.
| ARK Innovation UCITS ETF | SPDR MSCI ACWI IMI UCITS ETF | |
|---|---|---|
| Number of Holdings | ~40 | ~5,000 |
The ARK Innovation UCITS ETF and the SPDR MSCI ACWI IMI UCITS ETF are both funds which invest in stocks. Both of these offer a certain level of diversification to investors because they own stock in more than one company. However, the quality of diversification between these two is radically different.
The ARK ETF invests solely in companies that are engaged in disruptive innovation. Many of these companies are in the early stages of their lifecycle and may have little in the way of earnings. The fund managers are essentially trying to pick the companies who they believe will be the big winners of the future, and currently invest in over 40 such companies. This is a high risk, high reward strategy.
The SPDR MSCI ACWI IMI UCITS ETF on the other hand invests in nearly 5,000 companies across 45 developed and emerging markets. This represents 99% of the total value of the global stock market, making the quality of diversification far superior.
3. Weights
Don’t invest without knowing the weighting of investments within the ETF.
The investments that an ETF holds will not always be held in equal proportions to one another. Investment weightings are important as they determine which assets you’re most exposed to. The higher the weighting, the greater the impact a single asset’s performance will have on the ETF’s total returns.
For example, the UBS Core S&P 500 UCITS ETF tracks the S&P 500 index. This is a market-capitalisation weighted index, so the most valuable companies will have the highest weightings. The top 10 companies account for between 35% and 40% of the index’s value. Every €100 invested in the UBS Core S&P 500 UCITS ETF would result in between €35 and €40 worth of exposure to those 10 companies.
If the ETF is tracking an equal-weighted index, it will own its assets in equal proportions. That means the performance of each index constituent will have the same impact on the performance of the ETF, irrespective of how large or small the company is. For actively-managed ETFs, the weighting of each asset is determined by the investment managers based on their conviction and research.
4. Structure
Don't invest in an ETF without confirming the structure of the ETF.
The two main ETF structures are:
Physical ETFs: The fund makes direct investments to provide returns
Synthetic ETFs: The fund uses financial contracts to provide returns
The vast majority of ETFs which invest in stocks and bonds are physical ETFs, although the popularity of synthetic ETFs is growing. To learn more about synthetic ETFs, check out our complete guide.
Leveraged ETFs use borrowed money and financial contracts to multiply the daily returns of the investments which the fund provides exposure to. You should check whether an ETF is leveraged before investing.
Leverage refers to the use of borrowed money in an investment. The most common example of this would be a mortgage used to purchase a home. Leverage amplifies any gains you make on an investment, but it also amplifies your losses.
If you’re planning on investing in a leveraged ETF it's really important that you understand how they work and the risks involved. The main thing is to not stumble into a leveraged ETF by mistake. You can see the effects of leverage on investment returns for yourself by checking out our leverage calculator.
5. Total Expense Ratio
Don't invest in ETFs without checking the total expense ratio (TER) of the fund.
The total expense ratio (TER), often referred to as the management expense ratio (MER) or ongoing fund charge (OFC), is the fee paid by investors to cover the costs of managing and operating an ETF. These costs include:
- Investment management
- Fund accounting
- Auditing
- Custody
- Legal
- Licensing
The TER doesn’t include swap fees, taxes or rebalancing costs, like broker fees and bid-ask spreads.
Key Insight: You’ll never receive a bill for the TER – it all happens automatically within the fund and is reflected in the share price.
The TER reduces the net asset value (NAV) of the fund. All else being equal, the higher the TER, the lower your return will be. You should select the ETF that provides you with the exposure you’re looking for at the lowest cost.
Take a fund that has a TER of 0.03% per annum. If we invest €1,000, it will cost us €0.30 each year to own the ETF. This would be considered a highly competitive TER. You can calculate the impact of total expense ratios on investment returns over the long-term using our fees calculator.
Key Insight: TER is only one factor that affects ETF performance. Other costs and additional fund income from securities lending or swap spreads also impact returns. The difference between the ETF’s return and the index return is called the tracking difference.
6. Distribution Status
Don’t invest in an ETF without knowing whether the ETF pays a dividend.
The fund owns the underlying investments, which may include company stocks. That means the fund will be entitled to receive a dividend if the underlying companies pay one. What the ETF does with that dividend will depend on its distribution status. There are two types of ETFs for dividend purposes:
- 1
Accumulating ETFs: There are no dividends paid out. Income received by the fund will be automatically reinvested for your benefit
- 2
Distributing ETFs: These do pay a dividend. Your share of fund income will be paid into your brokerage account
Key Insight: For Irish investors, accumulating ETFs can be attractive because reinvested dividends are not taxable. Because the dividend is never paid out to the investor, it can’t be treated as income. Comparatively, with distributing ETFs, dividends received by the investor are taxable at a rate of 38%. Learn more about how ETFs are taxed in Ireland by reading our complete guide.
7. Liquidity
Don’t invest without understanding ETF liquidity.
Liquidity refers to how easy it is to sell an investment without having to accept a lower price. The more buyers and sellers there are, the more likely it is that a fair market price will be received.
For normal company stocks, we can look at average trading volumes to get an idea of liquidity. Higher trading volumes equal greater liquidity. However, low ETF trading volumes on a stock exchange don't always mean low liquidity.
ETF liquidity depends on how liquid the fund’s investments are. If they’re highly liquid, the supply of ETF shares can easily be adjusted to meet investor demand. This is made possible by large financial institutions called Authorised Participants (APs) who work with the ETF issuer to create or redeem shares.
For example, an S&P 500 ETF should have little to no liquidity issues irrespective of trading volumes. ETFs which own more niche investments with lower liquidity might run into some problems.
Key Insight: Daily trading volumes alone are not as useful for gauging ETF liquidity as they are for gauging company stock liquidity.
8. Asset Currency
Don’t invest in an ETF without knowing if it’s hedged or unhedged.
Many ETFs hold assets priced in foreign currencies. If you’re investing in euros, changes in exchange rates will affect your returns. For example, if an S&P 500 ETF grows by 10%, but the U.S. dollar falls 8% against the euro, your return on investment will only be 1.2%.
You can see this for yourself by using our foreign currency calculator.
A euro-hedged ETF uses forward currency contracts to eliminate the impact of exchange rate movements. This means your returns reflect the performance of the underlying assets. Most ETFs are unhedged, meaning your returns depend on the performance of the investments and foreign currencies.
9. Investment Apps
Choose the right investment app for you.
Different online brokers will charge different fees for investing in ETFs. Some trading platforms will charge no commission when buying and selling ETFs, while others will. Fees have a very real impact on your investment returns over the long-term, no matter how small it may seem.
You should be doing everything in your power to minimise the fees you’re paying. To help you do that, check out our comparison tool for investing platforms.
10. Personal Circumstances
Don’t invest in ETFs which are misaligned with your own personal circumstances and investment goals.
Every financial decision you make must be made in the context of you as an individual. The investing journey does not start with an investment; it starts with an analysis of oneself:
- Where are you at in your life?
- What are your short, medium and long-term financial goals?
- What’s your current and likely future financial situation?
- What’s your attitude towards and tolerance for risk?
All of these factors have to be considered before you invest. Once you have answers to those questions, the path becomes a lot clearer. To learn more about developing the mindset of an investor, check out our dedicated guide.
ETF Factsheet
You can find all of the important information on any given ETF by looking at its factsheet. On an ETF factsheet we can see:
- Fund name
- Investment manager
- Holdings
- International Securities Identification Number (ISIN)
- Total Expense Ratio (TER)
- Use of Income
- Distribution Frequency
- Structure
- Replication
- Currency & Hedging
- Securities Lending
If the fund were leveraged that information would also appear here.
Frequently Asked Questions
There is no single best ETF. It depends on your investment goals, risk tolerance and time horizon. Long-term investors who value simplicity would be best picking a single all-world ETF, like the Amundi Prime All Country World UCITS ETF or equivalent.
Generally, no. Due to PRIIPs regulations, most US-domiciled ETFs can’t be purchased by retail investors in Ireland because they don’t provide a Key Information Document (KID). Irish investors typically buy equivalent UCITS ETFs domiciled in Ireland or Luxembourg.
UCITS stands for Undertakings for Collective Investment in Transferable Securities. UCITS ETFs follow European regulations designed to improve investor protections, diversification and transparency.
Accumulating is best unless you need the income from a distributing ETF. You’ll pay less tax and your portion of the fund’s income will be automatically reinvested, making your life easier.
Physical ETFs own the underlying investments directly. Synthetic ETFs use financial contracts, known as swaps, to replicate an index's performance. Most equity ETFs available to Irish investors are physical.
Tracking difference is the difference between an ETF's return and the return of its benchmark index after fees, costs and any additional income have been taken into account.
Tracking error measures how consistently an ETF follows its benchmark. A lower tracking error means the ETF more closely matches the index over time.
Not necessarily. While lower fees generally improve long-term returns, you should also consider factors such as tracking difference, fund size, liquidity and how the ETF replicates the index.
ETF gains and income are liable to tax at a rate of 38% in Ireland. You can learn more about ETF tax by reading our full guide.
UCITS ETFs are regulated investment funds and are safe to purchase. The value of an ETF can rise or fall depending on the performance of its investments, so investors can still lose money.
Many investment apps allow you to start investing with as little as €1, depending on whether they support fractional share investing. If they don’t, you’ll need to have at least the price of one share.
A diversified ETF is extremely unlikely to lose all its value because it invests in many assets. However, niche, leveraged or cryptocurrency ETFs carry significantly higher risk than broad market ETFs.
Implied liquidity is the number of ETF shares that can potentially be created or redeemed based on the liquidity of the underlying investments. It means an ETF can often handle much larger trades than its average daily volume (ADV) suggests.
An ETF factsheet summarises the fund's key information, including its holdings, objective, benchmark, TER, distribution policy, currency, replication method, performance and risks.
Compare ETFs Side by Side
Ready to choose an ETF? Compare the most popular ETFs available to Irish investors by index, fees, dividends, and more to find the right investment for your portfolio.
