EU investing

🇪🇺 EU investing shows how you can apply the Bogleheads investment philosophy if you live in the European Union (EU). As well as the topics described in the Bogleheads® investing start-up kit for non-US investors and Index funds and ETFs outside of the US, there is some additional information below.

Your domicile is usually 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. 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.

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 currencies will have a different ticker if traded on the same exchange. If the fund trades 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 you can use these 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
If you plan on using non-EU domiciled funds, you need to be careful to understand the full implications.

For example, US domiciled funds distribute their income periodically, and you must pay withholding tax to the US government. US domiciled funds can also distribute capital gains to holders, something that does not happen with EU domiciled funds.

And 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


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

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

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.

In 2018 the European MiFID II (Markets in Financial Instruments Directive) and PRIIPs (Packaged Retail and Insurance-based Investment Products) took effect. 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.

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 EU and UK residents 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.

A fund's domicile can affect its returns. Some notable topics covered in 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 your situation you can perhaps optimize the taxation.

Sample portfolios
There are many Boglehead inspired portfolios that you can use. Below are some EU investor fund examples that are suitable for both accumulating and for distributing portfolios. Where available, the tables show funds from both iShares and Vanguard. And there are multiple choices for bond funds, both in the accumulating and the distributing lists.

Simple portfolios
The simplest portfolios use index funds (that is, mutual funds where these are easily available, otherwise 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
If you want to move beyond simple three, four or five-component portfolios you can include additional components, slice and dice existing components, or use individual stocks and bonds.

Lists of ETF funds
You need to assess your risk appetite, among other criteria, to decide which particular global bond fund ETF suits their purposes. If you are a cautious investor you 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, so you need to check your tax situation for this ETF.

Please also review the country specific pages.

Finally, please check before you invest that the information shown for these suggested ETFs is not out of date.