A step-by-step guide about how you can buy US ETFs from Europe in 2022

Updated February 8, 2022

In this article, you can find out the options of buying US ETFs that can be available for Europe, including US ETFs such as Vanguard and BlackRock ETFs. Recently many of you asked me “when is the best time to invest”?

Nadie puede contar los mercados y decirle cuál es el mejor periodo para hacer su inversión, y siempre es mejor estar diversificado. Al mismo tiempo, estas estimaciones parecen atractivas para cualquier inversor a largo plazo.

According to Warren Buffett, you should invest “when there is blood on the streets”. 

Si desea más información sobre cómo abrir sus cuentas e invertir en fondos estadounidenses, incluido Vanguard, desde Europa, puede ponerse en contacto conmigo a través de este formulario, la función WhatsApp que aparece más abajo, o simplemente enviándome un correo electrónico (advice@adamfayed.com). 

Quienes prefieran el contenido en vídeo también pueden ver el vídeo resumido aquí:

What are ETFs

ETFs or “exchange-traded funds” first appeared in the markets in 1993. Exchange-traded funds are similar to stocks and are usually traded on stock exchanges.

Normalmente se compone de activos como bonos, acciones, valores y materias primas que existen para negociar más cerca del valor liquidativo (con pocas posibilidades de desviación). Cada ETF se compone individualmente de más activos. Por ejemplo, el ETF que sigue al índice S&P 500 se compone de 500 acciones. Algunos de los índices bursátiles post-ETF más populares son el NASDAQ 100 y el S&P 500.

Asset Management Companies such as Vanguard or BlackRock issue ETFs and each of the individual asset management company is able to issue more ETFs. Exchange-traded funds generally track an Index which is Stock Index or Bond Index. It is estimated that between 1993 – 2015, 2 trillion US dollars were invested in ETFs in the United States of America. 

The most attractive features that make ETFs into an worthy investment option are their lower costs, tax efficiency, a big number of choices, features similar to the ones related to stocks, etc.

Different types of ETFs

Low Costs: When you compare ETFs to other mutual funds, they have lower costs. The annual overall costs can be 0.1%, but the annual management fees of mutual funds can be around 1-2%. 

Tax Efficiency: : Los ETF tienen una atractiva eficiencia fiscal, en comparación con otras opciones de inversión populares. Pero hay una excepción en el caso de los ETF de la empresa Vanguard, ya que en ellos no se puede disfrutar de las ventajas fiscales.

Many Choices: : Puede encontrar una amplia gama de opciones para elegir ETF de diversos sectores.

Trading of ETFs: : En comparación con los fondos de inversión que sólo pueden negociarse al final del día, los ETF pueden negociarse en cualquier momento cuando el mercado está abierto.

Buying an ETFs online:

The most asked questions that people usually ask themselves when they want to buy online or invest in an ETF are:

• ¿Cuáles son los factores clave más importantes que debo tener en cuenta al comprar un ETF por Internet?
• ¿Cómo puedo invertir en un ETF por Internet?
• ¿Qué hay que hacer para negociar un ETF en línea?

Los principales pasos para comprar un ETF por Internet son:

• Get accurate and reliable information about the country, region, or sector in which you are going to invest. If you predict growth in the country’s market, you can purchase an ETF which follows an index of that country’s stocks. In the other way, you can buy a sector-specific ETF that follows the sector stock index for the respective country if you are forecasting growth for the sector rather than the country-wide market. For example: if you predicted the US market is going to rise, you can go ahead and buy an ETF that follows an index made up of US stocks such as the S&P 500. If you expect growth in a sector such as technology, then you can buy an ETF that tracks an index containing US technology-related stocks such as the “NASDAQ 100”.
• Check ETFs based on their size and expense ratio, and try choosing a larger ETF with a lower expense ratio. Large ETFs tend to be more liquid than smaller ones. The size of ETFs is classified based on their “Assets Under Management”, which is known as “AUM”. The higher the value of the ETF, the more the liquidity of the ETF will increase. The ETF expense ratio indicates the ETF’s average annual fee. It is highly recommended to choose an ETF with an expense ratio below 0.1%.
• Elija la ubicación, la bolsa y la divisa del ETF preferido con el que piensa operar. La fiscalidad de los ETF varía según la ubicación. 90% de los ETF tienen su sede en EE.UU. y la UE (70% en EE.UU. y 20% en la UE). La bolsa de valores es distinta del lugar de residencia.

You can also trade ETFs on a wider range of stock exchanges. Although it is recommended to choose stock exchanges with low commission rates. Commission rates actually can be different depending on the broker you choose. To avoid conversion fees, you must choose an ETF and a broker with the same currency, since the stock exchange results in a different currency.

• Finding a good broker plays a key role in ETF trading. Considering important aspects such as broker commissions, easy access, trading platform and user friendliness, you can find the right broker according to your requirements. It is also very important that you choose a reliable and reputable broker while you are looking to avoid risks.
• Buy the ETF you want to trade. Find the ETFs you want to buy on the online trading platform. You can buy ETFs through an online trading platform where you can choose from a variety of order types.
• Always keep an eye on the details of your ETF, regularly and impartially. Now that you’ve bought an ETF, it’s important to keep an eye on the details from time to time. It is best if you cultivate a strategy for choosing to keep ETFs for a longer or shorter period and manage them properly to prevent losses and achieve a targeted profit.

Estos consejos son la base del trading con ETFs y pueden ser necesarios para usted. Si cuenta con el plan adecuado y sigue estas técnicas a conciencia, podrá obtener beneficios de los ETF que haya adquirido.

Do it yourself providers (DIY)

Invertir por cuenta propia no suele funcionar estadísticamente hablando . Pero para un número de personas que están interesadas en los proveedores de bricolaje, aquí están algunos de los mejores en el mercado de los corredores en línea para invertir en ETFs en 2023:

• ‘Charles Schwab’ – is considered the best online platform for investing in ETFs. It was and always has been the best lawyer for those who want to invest individually. It is also popular for its discounts and is considered to be one of the most affordable platforms on the market. Brokerage fees on all ETFs are equal to zero, and individual stock trades are also free. 

Pros:

1. Con el ETF Portfolio Builder puede crear una cartera mejor y más diversificada.
2. Puede encontrar los mejores fondos para una cartera utilizando los filtros de ETF.
3. There are no extra or hidden charges for using Schwab platforms and mobile applications.

Contras:

1. La presencia de un exceso de plataformas dificulta la búsqueda de herramientas.
2. Obliging an investor to hire the Schwab financial advisor.

• ‘Fidelity Investments’ – best for online research and tools. The company offers good ideas for investments aimed at generating income. The research center provides ETF comparisons and ETP comparisons to help the investor get better and improved results. Their Screener gives you the opportunity to search based on their standards, that includes fundamentals, exposure, rankings, performance, unpredictability, and more.

Pros:

1. El proceso de investigación y análisis de ETFs es comparativamente fácil con la ayuda de su ETF Research Center.
2. Dispone de una aplicación móvil muy cuidada, fácil de navegar y utilizar.

Contras:

1. Se recomienda utilizar más de una plataforma para tener acceso a todas las ofertas de la empresa.
2. Las sucursales de la empresa no están disponibles 24 horas al día, 7 días a la semana.

• ‘TD Ameritrade’ – for beginners, it is best to invest in ETFs. US clients have a number of benefits as they charge no fees for trading ETFs, stocks, options, etc. This is the best choice if you want to control your investments online or using your mobile device.

Pros:

1. Puedes hacer transacciones por voz usando Amazon Alexa.
2. Puedes acceder a todas sus plataformas de negociación y a sus dos aplicaciones móviles.
3. Access to useful articles, instructional videos and live streams from 360 US affiliates.

Contras:

1. If not able to hold an ETF for 30 days, you will be charged 13.90 dollars.

• ‘Vanguard Group’ Como mayor proveedor de fondos de inversión del mundo, es una buena opción para operar con ETF, apta para cualquier tipo de inversor. El grupo es también el segundo mayor proveedor de ETF del mundo. Este es el nivel básico y no es el preferido por los operadores activos o las personas que desean utilizar funciones de gráficos avanzadas. Sin embargo, es una gran opción para aquellos que están interesados en invertir en ETFs de bajo coste y quieren un EA para hacer el análisis. 

Pros:

1. No commission on trading approximately 1,800 ETFs from over 100 vendors.
2. Nivel de análisis avanzado.
3. Lower management costs compared to others.
4. The services of a personal consultant are available at an affordable price.

Contras:

1. Account maintenance fee applies to Vanguard assets of less than $10,000.
2. No apto para inversores activos y profesionales de los gráficos.

• ‘E*TRADE’ – No fees for trading stocks and ETFs in the US. The company offers effective tools and resources. Features such as the All-Star ETF List, ETF Screener, and pre-built ETF Portfolios (this is a tool that helps you choose the best ETF based on your preferences, such as investment timeframes and risk tolerance) help you select your own investments. 

Pros:

1. Available 24/5 for some active ETFs.
2. Responda rápidamente a las noticias del mercado fuera del horario laboral.
3. Las herramientas pueden utilizarse a través de la plataforma web.
4. Disponibilidad de listas de vigilancia para aplicaciones móviles.
5. Interactive chat and phone support available throughout the week.

Contras:

1. Los tipos de margen son ligeramente más caros.
2. Al igual que con Fidelity Investments, se recomienda utilizar varias plataformas para acceder a todas las ofertas que ofrecen y a las herramientas que se pretendan utilizar.

• ‘Ally Invest’ – this is another good US based broker where you can make good profits by investing in ETFs. The broker provides you with very good research tools and resources that can help you when trading ETFs. Its web platform is user friendly and very efficient. It also comes with the same benefits as the other online brokers we talked about above.

Pros:

1. Sin comisiones y sin cuenta mínima.
2. Herramientas de investigación extremadamente útiles.
3. Plataforma web bien diseñada y eficaz.

Contras:

1. Usted paga $9,95 al realizar la transacción de los fondos de inversión.
2. No hay sucursales para el corredor en línea.

In case you are interested in using Robo advisors (like Betterment) to make the investment for yourself, below you can find a table that will be useful for you. Always try to keep the tips in mind and look for the best online broker to make a profit by investing in ETFs. 

ETFs. 

Nombre del agente	Charles Schwab	Inversiones Fidelity	E*TRADE	TD Ameritrade	Vanguard	Ally Invest
Cuenta mínima	$0	$0	$0	$0	3000$	$0
Tasas	$0	$0	$0	$0	$7 per stock	$0
Promoción	Up to $500	n/a	Up to $2500	n/a	n/a	$50 – $3500
Número de ETF sin comisiones	todos	todos	todos	todos	Around 1800	todos
Comisiones de transacción de fondos de inversión	$49.95 per trade	$19.95 per trade	$0	$0	$20 for account balance less than $10,000.	$9,95 por operación
Clasificación	4.5/5	4.5/5	4.3/5	4.5/5	4/5	4.5/5

Elegir entre ETF de EE.UU. o de la UE:

Since you have read the details about ETFs and online brokers to buy ETFs, below you can find some other details about “US ETF” and “EU ETF”. As already mentioned, the US accounts place about 70% of the ETF market, while the EU accounts have 20%. The main difference between US ETFs and EU ETFs is based on the country or region where the ETF was issued. An ETF can track the same index but have a different address. The main and most important factors to consider when choosing between US and EU ETFs are taxation, liquidity, and regulation.

• ‘Taxation’ – The taxation of an ETF is affected by the location of the ETF and the tax residency of the respective investor. When trading ETFs, taxes such as withholding tax, income tax, and capital gains tax may arise. In that case, try to always keep these aspects in mind when trading. More information you can get from your accountant or tax advisor.
• ‘Liquidez’ – By the end of 2018, the EU ETF market was valued at $800 billion, while the US ETF market was around $3,700 billion. It was previously mentioned that ETFs with higher liquidity are preferable for transactions over a short period of time compared to ETFs with lower liquidity. EU ETFs have lower liquidity than US ETFs, making them higher spread costs. 
• ‘Regulation’ – In January 2018, a regulation came into effect that officially prohibits European investors from buying U.S.-registered ETFs. This is due to the lack of a document with key information. They can trade EU-registered ETFs that comply with the rules of the new PRIIPS (Packaged Retail Investments and Insurance Products) regulation.

How can I buy US ETFs in Europe:

Puede que ahora le interese saber si existe la posibilidad de comprar ETF estadounidenses en Europa. Intentaremos darte una respuesta completa y todos los detalles que disiparán tus dudas al respecto.

Under the PRIIPS regulation, you cannot trade US-registered ETFs while in Europe because US-registered ETFs do not contain “KID”. The key information document contains the details of the investment such as risk, cost, etc. This key information document gives the investor complete information about the investment. The largest ETF issuers have announced that they are unwilling to provide key information documents. Instead, they invited EU clients to invest in similar EU domiciled ETFs, which is effectively allowed under the PRIIPS Regulation.

An alternative is to invest in UCITS (collective investment commitments in transferable securities) ETFs. These ETFs are regulated by the European Union and have a UCITS KID. You can invest in your favorite ETFs as long as they are UCITS ETFs from issuers like Vanguard and BlackRock. These two issuers are mentioned among many other issuers as they are highly liquid due to their assets under management worldwide, where Vanguard is valued at $5.30 trillion and BlackRock is valued at $5.98 trillion. Because they have higher assets under management, they have high liquidity as well as lower fees.

Se trata de los ETF S&P 500 UCITS de Vanguard y BlackRock:

For Vanguard the S&P 500 UCITS ETF is as follows: Vanguard S&P 500 UCITS ETF (USD) Distributing (VSUD)

For BlackRock, the S&P 500 UCITS ETF is as follows: iShares Core S&P 500 UCITS ETF(CSPX)

Comparison of US-domiciled funds and UCITS funds:

There are three main aspects that are considered while comparing the UCITS funds to US Domiciled funds are:

• Gastos anuales
• Comisiones
• Liquidez

‘Annual Expenses’ – these are comparatively lower than that of UCITS ETFs.

1. The annual expenses of ‘Vanguard (US Domiciled) VOO’ are ‘0.04%’.
2. The annual expenses of ‘Vanguard UCITS VSUD’ are ‘0.07%’. 
3. The annual expenses of ‘iShares UCITS CSPX’ are ‘0.07%’.

Here we can see that the annual expenses of trading US Domiciled ETFs are lower than UCITS ETFs. 

‘Commissions’ – These include fees for buying an ETF for the first time. When you trade to maintain a good and well-balanced portfolio by using communication brokers and buying up to $100,000 ETFs that follow the S&P 500 Index. These charges will be as follows:

1. The commission charges for ‘Vanguard (US Domiciled) VOO’ are ‘2 USD’.
2. The commission charges for ‘Vanguard UCITS VSUD’ are ’50 USD’.
3. The commission charges for ‘iShares UCITS CSPX’ are ’50 USD’.

Interactive broker fees will be around “$0.005 – $0.0075” for each share depending on their routing. Whereas for trading on the London Stock Exchange it is “$0.05”. Here we can notice that fees for US-listed ETFs are comparatively lower compared to UCITS ETFs.

‘Liquidity’ – We already know that the liquidity of an ETF depends on the assets under the management of the respective ETF. A growth in the number of assets results a high amount of liquidity and a lower spread cost. Thus, with higher liquidity, the purchase price and the sale price of an ETF can be similar to each other.

1. The worth of the Assets owned by ‘Vanguard (US Domiciled) VOO’ is ‘$448.6B’.
2. The worth of the Assets owned by ‘Vanguard UCITS VUSD’ is ‘$22.4B’.
3. The worth of the Assets owned by ‘iShares UCITS CSPX’ is ‘$32.9B’

Los ETF con sede en EE.UU. tienen un alto porcentaje de liquidez, superior al de los ETF OICVM, ya que los activos gestionados por los ETF con sede en EE.UU. son relativamente más elevados.

As result, we can summarize, that UCITS ETFs are far less profitable than US-listed ETFs. This is in line with the results we have seen compared to US-listed ETFs with the UCITS ETF. While there are more benefits to trading US-listed ETFs, people looking to invest will be out of luck as the Key White Paper is not available for US-listed ETFs, and PRIIPS regulation does not allow trading of ETFs without a Key White Paper.

However, there is an advantage to trading UCITS ETFs: US inheritance tax does not apply to this type of trading. US real estate tax applies when the amount of ETFs registered in the US exceeds $60,000 and the tax will be around 40% unless your country has a tax treaty with the United States of America.

Si usted es un cliente profesional, operar con ETF registrados en EE.UU. es muy difícil. Los requisitos para ser cliente profesional son una cartera enorme, medio millón de efectivo, formación profesional de nivel experto y una experiencia significativa en negociación.

Una vez estudiada toda la información facilitada, podrá elegir el ETF en el que esté dispuesto a invertir. Siguiendo los consejos y métodos anteriores, podrá obtener beneficios satisfactorios operando con ETF. Esperamos que este artículo le haya resultado útil.

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