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ETF comes from the term “Exchange Traded Fund.” They can also be defined as “trackers” and faithfully follow the value and the evolution of a stock market index.
Thus, when you invest money in a CAC 40 ETF, for example, you do not actually own shares in it. These are very useful for diversifying your portfolio and are quoted continuously. This means that you can buy them all day long!
If you don’t know how to invest in ETFs, we tell you everything in this article!
How to buy ETFs quickly?
- ✅ Step 1: open an account on eToro. Start by opening an account on the eToro platform. On the home page, click the “Register” button and complete the information form. As part of eToro’s KYC procedure, you must provide certain supporting documents.
- 💳 Step 2: Deposit funds. Once your data has been reviewed, you can make your first deposit. To do this, specify your payment method, the currency used, and your deposit amount. Click on confirm to validate. The minimum deposit is $50 by credit card.
- 🔎 Step 3: Search for the ETF of your choice. Click on the “Research” tab, then “ETF,” to select one of your choices.
- 🛒 Step 4: Buy the ETF. Enter the amount you wish to invest in the ETF and click ‘Buy’ to finalize the transaction.
Warning:
Your capital is at risk. Other fees apply. For more information, see etoro.com/trading.
The best platforms to buy ETFs (2023)
If you do not know where to start buying ETFs, it is on the side of the platforms that you should look at first. These offer you all the features you need to start trading or investing.
However, each of them has its advantages and disadvantages. And if you want to put the odds on your side, a small comparison is essential!
1. eToro, the best platform to buy ETFs
eToro remains, in our opinion and every respect, the leader to start trading and even for professionals. It’s a very ergonomic platform, and its many features will not fail you.
As for ETFs, the latter offers you a selection of 265 assets, mainly made up of iShares, SPDR, and Vanguard funds.
If these names are a bit fuzzy for you, remember that eToro offers a very diverse selection of its ETFs. The iShares Core range offers very low management fees that will make your portfolios happy.
Let’s not forget one of the biggest advantages of the platform. This will not take any additional commission or spread for trading and buying shares. The only condition being that you do not use leverage. A big plus that makes the difference compared to the competition. Note that the minimum deposit is $50, or approximately 46 EUR (the conversion into dollars will be done automatically when depositing).
Benefits
- A huge selection of ETFs
- A secure and market-leading platform
- Fees are among the most advantageous on the market
- An ergonomic platform that will suit all users
Disadvantages
- Little information about ETFs
2. XTB, a platform for investing in ETFs (beginner’s special)
XTB comes in second place in this ranking without demerits. It displays slightly fewer options than its competitor eToro with a selection of 220 ETFs. Where XTB really stands out is for all the features it offers beginners.
To help you take your first steps, XTB offers a demo account that allows you to trade ETFs without committing real money. A real advantage that you will not find on most other platforms.
The latter also relies on the amount of informational content available to teach you the basics of trading and investing directly in streaming.
Benefits
- Relevant training
- A very valuable demo account
- Low commission fees on your trades
Disadvantages
- Fewer ETFs are offered compared to the competition
3. AvaTrade, an interesting and reliable online broker to buy ETFs
AvaTrade is an Irish online broker that has proven itself as a trusted trading platform. Unlike XTB, the latter offers the possibility of investing in a PEA account.
At first, if ETF trading is of particular interest to you, you may find it difficult to find your account among the 60 choices offered. A very low offer compared to XTB and eToro.
If you manage to find your happiness, however, you will benefit from exemplary customer service and good features! Avatrade remains very accessible for beginners. All you need is a deposit of 100 dollars to start your activities on the platform.
Benefits
- Safe platform
- Possibility of PEA
- Exemplary customer service
- Minimum deposit of 100 dollars
Disadvantages
- 60 ETFs offered
- User experience that can be improved
4. Libertex, an experienced platform for your ETF investments
Libertex is a broker based in Cyprus. The platform has about 2 million users worldwide in more than 100 countries! The big strength of this platform is that it has been on the market for over 20 years.
A mastodon, therefore, which guarantees you an efficient service and a quality of use that is no longer to be proven. It offers you a selection of 10 ETFs, which is a big disadvantage when compared to our previous candidates.
Like its counterpart Avatrade, the minimum deposit is 100 dollars, which makes it an easy platform to access. Customer service will still be of lower quality than at XTB.
Regarding fees, Libertex does not charge a spread, but a commission will be taken on open positions. The commission is made in percentage and varies according to the popularity of the assets.
Benefits
- No spread fees
- An experienced and reliable platform
Disadvantages
- Customer service to improve
- Only 10 ETFs offered
- Commission on open positions
5. Alvexo a good platform for trading ETFs
Alvexo is a platform created in 2014 and which has proven itself over time. It offers you no less than 450 assets to trade with thousands of traders operating with Alvexo around the world. In total, the trading platform registers for 650,000 registrations!
But what about ETFs? Well the platform specializes mainly in CFDs. CFDs differ slightly from ETFs in that they are not actual stocks that you own.
They just follow market trends. It will therefore be necessary to take this important element into account before making your choice. Despite everything, Alvexo remains a trusted trading platform on which you will have no problems.
Benefits
- Regulated by CySEC
- On the market since 2014
- Many traders are registered
Disadvantages
- Ask for a large deposit at the start
- No MT5 trading platform
- Specialized in CFDs and not ETFs
What is an ETF? Definition
An ETF or “Exchange Traded Fund” is a financial instrument that faithfully replicates the price variations of an index, whether during its declines or rises.
We also talk about trackers. ETFs have the particularity of being able to be purchased at any time of the day. A big plus for traders! And their benefits don’t stop there. Whether in terms of taxation, the proposed diversification, and the minimum funds to be provided.
From the legal side, ETFs are considered index mutual funds. They differ from other UCITS because their management is called passive.
An ETF is often a long-term investment and does not require much arbitrage on the trader’s part. Thus, there are less fees applied. An ETF must replicate as closely as possible the index on which they are affiliated.
The closer an ETF is to the real value of an index, the better the latter will perform. Note, however, that some leveraged ETFs exist. They then amplify the variations of the affiliated index with a high ratio.
In short, an ETF is easy to access, allows you to diversify your portfolio smartly, and is flexible and relatively safe.
What are the different types of ETFs?
As you will have understood, ETFs offer many advantages and greatly diversify the portfolio of the late. And that’s also because there are a whole bunch of different ETFs out there. We give you the list just below!
Sector ETFs
Sector ETFs are very useful if a trader wants to invest in a particular sector. Thus, it is linked to an index that contains companies that operate in the same field. So that no misunderstanding is made, sector ETFs are based on a precise classification that allows for completely transparent investment.
Today, there is a very large number of increasingly specialized sector ETFs. And the offer continues to expand more and more. An ideal way to diversify your portfolio!
Examples of sector ETFs
- SMH VAnEck Semiconductor UCITS ETF
- Lyxor Millennial ESG Filtered (DR) UCITS ETF
- Lyxor STOXX Europe 600 Travel and Leisure UCITS ETF
- BNP Paribas Easy ESG Eurozone Biodiversity Leaders PAB
Geographic ETFs
As their name suggests, geographic ETFs allow you to invest in a particular region of the world. Thus, an ETF could bring together a whole bunch of companies based if you think the economy will flourish there in the coming months or years.
Geographic ETFs are not the most popular among all the current offers, but they can be interesting in targeting a local economy.
Examples of geographic ETFs
- Lyxor PEA Nasdaq 100 (PUST) FR0011871110
- Amundi RUSSEL 2000 (RS2K) LU1681038672
- Amundi ETF PEA MSCI Europe (PCEU) FR0013412038
- Amundi ETF PEA S&P 500 Daily Hedged (P500H) FR0013412293
Stock index ETFs
Probably the first ETC you will think of when talking about it. This is the best-known type of ETF and replicates stock market indices such as the CAC 40, for example.
Stock index ETFs are great for investing in a cluster of big companies worldwide . The S&P 500 ETF includes America’s 500 largest companies and has proven itself over time.
Examples of stock index ETFs
- Lyxor CAC 40 (DR) ETF List
- iShares Nikkei 225 UCITS ETF
- BNB Paribas Easy S&P 500 UCITS ETF USD
Commodity ETFs
They are also called ETCs, and they replicate the price of raw materials such as coal, for example. The latter try to replicate as much as possible the changes in the price of gold or silver, for example. They are popular for their stability, especially with gold which is a safe haven or stone.
Examples of commodity ETFs
- ISIN: IE00BDFL4P12
- BNP Paribas Easy Energy & Metals Enhanced Roll
- Lyxor Commodities Thomson Reuters/CoreCommodity CRB
- Lyxor Bloomberg Equal-weight Commodity ex-Agriculture UCITS ETF
Bond Market ETFs
A bond ETF serves, among other things, to allow small investors to invest in large markets. Primary market bonds, that is, the market that features financial securities that are seeking funds for the first time.
Because yes, primary market bonds are not listed on the stock exchange, and their price is traded differently. Bond market ETFs are more reserved for sophisticated traders.
Examples of Mandatory Market ETFs
- iShares Core MSCI World UCITS ETF USD (Acc)
- Vanguard FTSE All-World UCITS ETF Distributing
- Xtrackers MSCI Emerging Markets UCITS ETF 1C
- iShares Global Clean Energy UCITS ETF USD (Dist)
Why invest in ETF trackers?
If you’re wondering about the concrete benefit of an ETF, don’t panic! ETFs are a great place to start investing. We explain why via a few essential points to remember.
Time-saving
Investing in ETFs is a huge time saver. First, they are very easily accessible, and one can invest in popular platforms like eToro in no time.
You do not need a large capital to invest, which will be perfect for retail investors. To top it all off, the best performing ETFs are often very well known. All it takes is a few simple searches to grow your funds.
- An easy-to-use tool
ETFs are known to be very easy to buy and sell. Liquidity is a very important element to take into account and ETFs do admirably well in this area.
On top of that, you can buy and sell them at any time of the day without worrying about closing times. In short, a good way to learn about the world of investment while avoiding a lot of hassle.
Long-term investment
ETFs are not particularly volatile. These include a whole bunch of companies and make an average of their evolution on the markets. This considerably reduces the risk and offers a long-term investment.
With ETFs, you don’t have to stare at your screen trying to sell at the best time. Your money works for you and you can withdraw your profits whenever you want after several months or years.
A less expensive investment
Unlike traditional funds, ETFs do not incur any issue or redemption fees. In addition, the annual management fees of ETFs are much lower than other assets because the ETF spares the investor from any market analysis.
Even better, most ETFs are eligible for PEA, PEA-PME, and life insurance. Thus, you can position yourself on foreign indices while benefiting from tax advantages.
Diversification and maximization of investments
This is the main reason why experienced investors invest in ETFs. This is a great way to diversify your portfolio.
Why do it? Quite simply because diversification makes it possible to manage risk better and reduce losses over time. To last in the investment world, ETFs will be your best ally.
Where and how to buy ETFs?
Are you convinced? Very good, but you still need to know where to go to be able to start investing in ETFs. And for that, there are several solutions available to you. Here are the three best ways to buy an ETF.
On a trading platform
Probably the simplest and most flexible solution. Registration on a trading platform will only take you a few minutes and you can already start investing.
The eToro platform gives you access to almost 265 ETFs to invest in. If you do not want to bother with tedious procedures, trading platforms will surely be the most suitable solution for individuals.
By opening a PEA or CTO
The PEA represents a definite tax advantage. In return, you will only be able to invest in European equities. The securities account ( CTO ) is unrestricted.
You can invest in all types of financial securities. They will be useful for people who wish to optimize the taxation of their investments as much as possible!
With an ETF management company in ETF
This solution will suit people with a large capital to invest. Management companies provide the best advice to investors in their investment strategy. Management companies are specialized in their field and can make you earn more through optimal investments.
What are the risks associated with ETFs?
As with any investment, there is an element of risk. And to help you better prepare for it, we’ve compiled a list of the three biggest ETF risks. Take them into account when making your decision.
Risks of loss of capital
An ETF is directly linked to changes in the market index being tracked. If the latter falls, the funds you have invested will be impacted at the same level or even more strongly for those who have chosen to use leverage effects.
ETFs aren’t a magic bullet, and it’s still possible to lose money even when investing in the top 500 US companies
Attention tracking error
Some indices have many values , making them sometimes difficult to follow. It is then possible that there is a “tracking error,” that is to say, an error in following the evolution of an index on the markets. The evolution of the ETF can then deviate from its index, be vigilant concerning the tracker when reselling or buying.
Foreign currency ETFs
Some ETFs are quoted in foreign currency . You must consider their value according to the currency you use to avoid pitfalls. The differences can sometimes be significant and cause you to lose money when changing. Don’t be fooled!
Conclusion
In our opinion, ETFs are an excellent way to start investing in the stock market, even with small amounts. The resurgence of trading platforms makes ETFs accessible with just a few clicks in just a few minutes.
ETFs are known for their very low fees and attractive long-term investment. You can combine your ETFs with a PEA which will give you many tax advantages.
But beware, ETFs still represent a risk of capital loss like any investment. Make sure you know this before you start and only invest what you can lose.
