Four interesting ETFs for novice investors
The fifth episode of BeleggersBootcamp is all about ETFs. Naturally, analyst Niels Koerts has given a number of concrete ETF tips. As promised in the podcast, a summary of these trackers follows below.
We’ll start with one of the best known and a cornerstone for many ETF investors: the world tracker. In this case, the iShares world tracker. Editor and presenter Coen Grutters indicated in the odcast that he is mainly involved in this ETF.
1. iShare Core MSCI World ETF
The iShares Core MSCI World ETF follows the world index, according to Head of Investor Desk Erik Mauritz this is even the ETF to start with. The biggest advantage of this ETF is that it tracks more than 1,500 stocks. This means that you are well spread in one fell swoop, which is particularly important for small investors.
If you are well spread over several stocks in different sectors, your entire portfolio will not fall sharply if things don’t go well for a few. There are always other stocks that are better at that moment.
Further advantages are the relatively low expense ratio of 0.2% and the low tracking error, ie the extent to which the ETF deviates from the index it tracks. In addition, this tracker is traded a lot, so so-called spreads, the price differences between buyers and sellers, are quite low.
The only downside is that 70% of the companies in this ETF are American, so you run a dollar risk. Suppose the dollar suddenly drops enormously, then the profits that American companies make in dollars are suddenly worth less in euros.
2. iShares Stoxx Europe 600 UCITS ETF
To limit that dollar risk, an ETF full of European shares is now following. This basket contains the – you guessed it – 600 largest companies in Europe. Companies from the United Kingdom have a weighting of 25% and Dutch equities have a weighting of 6.5%. This puts the Netherlands in fifth place in terms of weighting in this ETF.
ASML and Shell are in the top ten largest positions. With a total of 600 shares, you are also well diversified with this ETF, although there are relatively few technology shares here compared to the world index. However, the costs remain limited at 0.2%, just like with the aforementioned world tracker.
3. Van Eck AEX UCITS ETF
If you would like to have even more shares from Dutch soil in your portfolio, you can consider Van Eck’s AEX tracker. As the name suggests, this ETF tracks the 25 stocks that make up the Dutch main index.
Because Van Eck is a Dutch provider and they are Dutch companies, dividend leakage is not a problem. If the stocks in your ETF pay dividends, that goes to you. But of course you pay dividend tax on that. In the Netherlands this is 15%, but abroad it can be more.
Agreements have been made with some countries. For example, as a Dutch person you only pay 15% dividend tax in the United States, while the dividend tax there is actually 30%. Of course, America would like foreigners to invest in the United States as well.
The problem is that agreements have not been made with all countries. Suppose you have to pay 30% dividend tax elsewhere, you can only reclaim 15% via your income tax. The remaining 15% is therefore dividend leakage.
4. SPDR S&P US Dividend Aristocrats UCITS ETF
An ETF for the true dividend enthusiast. The impossible foods stock ipo is found online. The shares are dividend aristocrats. This term is only reserved for companies that have increased their dividends for at least twenty years in a row. That means they’re not necessarily the sexiest stocks. It is often the less sustainable oil companies or arms stocks that neatly increase their dividends every year.
All about ETFs
Want to know more about ETFs? Then listen to the ETF special from BeleggersBootcamp. ETF expert Adriaan Kootstra is a guest in the podcast. Together with analyst Niels Koerts and editor Coen Grutters, he tells you everything you need to know about trackers. You can listen to the podcast on Spotify, Apple Podcasts, Google Podcasts or simply below.