ETFs are a great way for most Belgians to build their wealth and improve for their financial future. But there are thousands of ETFs available in the market, and more are coming out every week. The problem is that not all ETFs are of the same quality. Some are poorly diversified, with others you'll pay a lot more taxes, or they're too expensive...
We carefully picked the best ETFs so you don't have to. We compare them and highlight their pros and cons. We also show ways of using ETFs to construct a well-balanced portfolio that is best-suited for your long-term success.
Why ETFs are a great investment
ETFs are the best way for Belgians to do index investing, an approach where you buy all the stocks in a market index, aiming to earn an average return that matches the overall market's performance. This strategy has proven to be more successful than active investing, where investors select individual stocks they believe are undervalued.
One reason for index investing's success is the difficulty and time-consuming nature of stock picking. Most stocks don't perform well, and only a small number excel, making it hard for investors to consistently pick winners. Moreover, professional investors with better information are often on the other side of stock transactions, putting individual investors at a disadvantage.
Index investing with ETFs offers several benefits compared to other ways of investing, including:
- Low costs: Index funds are cheap to run, as they simply track an index and don't require expensive analysts or specialists.
- Diversification: Index investing aims to diversify across many countries and sectors, reducing risk and increasing the likelihood of including top-performing stocks.
- Connection to the real economy: Most index funds invest in stocks or bonds, which are backed by real companies with tangible assets.
- Accessibility: Index investing requires little capital to start, making it accessible to a wide range of investors.
- Tax efficiency: In Belgium, stock market investments are tax-efficient compared to other types of investments.
- Proven track record: Long-term index investing has delivered consistent returns historically, such as the MSCI World index's average yearly return of 10.8% since 1979.
Due to these advantages, ETFs are the best way for most to build their wealth.
How to pick the best ETFs
There are a few criteria to consider selecting the best ETFs. Here’s a recap of the most important ones.
In order to reduce the tax burden, it’s important that Belgian investors choose accumulating ETFs. As these funds directly reinvest their dividends, you won’t have to pay the 30% dividend tax.
Domiciled in Ireland or Luxembourg
Both countries have special tax treaties with many countries around the world. This makes it fiscally advantageous to invest in ETFs domiciled in Ireland or Luxembourg. You can recognise these by their ISIN code that starts with "IE" (Ireland) or "LU" (Luxembourg).
Traded in €
We only selected funds that are trading in Euro as we don’t want to pay unnecessary currency exchange fees.
Follows an index
The style of investing based on index funds, also called passive investing, is a superior strategy for most people. There’s no need to spend time analysing individual stocks, you can just follow an index of companies.
Diversified across many sectors and countries
Diversification is important when investing because it helps to reduce the overall risk. The basic idea behind diversification is to avoid having all your eggs in one basket, so that the impact of a single negative event is reduced. For example, if you only holds stocks from one sector and that sector experiences a downturn, the entire investment portfolio will be negatively impacted. However, if you had invested in ETF that diversifies across different industries, the impact of the downturn on the portfolio would be less severe.
Most ETFs are already low-cost compared to active funds. But when we have the choice between several ETFs tracking the same index, we prefer a cheaper one (all other things being equal).
The best ETFs
Based on these criteria, we selected the 9 best ETFs for Belgians:
1. Vanguard FTSE All-World (VWCE)
VWCE continues to be a popular ETF for the Belgian index investing community. The fund, launched by Vanguard in 2019 to track the performance of the FTSE All-World Index, currently holds more than €11 billion under management.
It's composed of approximately 3,300 stocks. And because it's so diversified, investors can find in VWCE a great way to follow the market and hold a significant portion of the world's stocks. Equities such as Apple, Microsoft, Amazon, etc… are represented in the fund. The index has returned an average of about 8.6% per year since 2005:
One downside with investing everything through VWCE is that you will only invest in stocks. Stocks are a risky asset, meaning that your investment will fluctuate a lot. It’s important to understand your own unique approach to risk, how it affects you and find the right balance that suits you. So it’s often beneficial to reduce the riskiness of your portfolio by including bonds, if it will prevent you from selling at the worst possible time and incur a much bigger loss.
Another downside with VWCE is that it does not apply sustainability criteria when selecting the companies that it invests in. Due to its globally diversified nature, tracking the performance of close to 3,700 companies of all types around the world, you can't consider VWCE to be sustainable in terms of environmental, social, and corporate governance criteria (ESG). For instance, an investment in VWCE means an investment in companies that manufacture and sell controversial weapons. The lack of ethical concerns in the selection of companies within VWCE can be a drag on investors wishing to follow responsible investment ethics.
If you want to invest with sustainability at the forefront, we put together a resource that looks at the best sustainable ETFs for Belgians.
1.32% transaction tax
The Belgian state levies a tax for every transaction you make on a stock exchange, whether it's to buy or sell. This tax is called the Belgian transaction tax. Most ETFs have a 0.12% transaction tax rate. But VWCE has a 1.32% rate because the fund is registered in Belgium. Note that strangely enough, not all brokers use this rate for VWCE and some continue to use the 0.12% tax rate.
We cover these downsides of VWCE and others in more detail.
2. iShares Core MSCI World (IWDA)
Second in our list is iShares Core MSCI World, which is offered by iShares (a brand of BlackRock). It tracks the MSCI World index, an index that consists of about 1,500 stocks from 23 countries that economists qualify as "developed": United States, Germany, Japan, United Kingdom, Australia…
Investing in IWDA means investing in a wide segment of the global economy. Many investors choose to simply invest in this one ETF as their entire portfolio. It has returned a staggering 10.9% annually since 1978:
Invests only in stocks
Choosing the makeup of your portfolio isn’t the easiest task as an investor. As we’ve seen through VWCE, being 100% exposed to stocks is a risk and may not help you sleep at night when drops in the stock market occur.
Does not invest in emerging markets
In contrast with VWCE, IWDA does not invest in emerging countries, like China or Brazil. That's why many Belgian investors opt for further diversification and combine their IWDA ETF with another fund such as EMIM, which focuses on stocks from emerging markets and that we discuss below. If you combine it with IWDA, you would be investing in 4,789 companies. Scroll down to number 4 in the list for additional details!
Only invests in large companies
The MSCI World index tracks only the largest companies. These companies are called "large-cap", from "market capitalisation". But just like it's beneficial as an investor to diversify across countries, it's also a good idea to spread your bets across different company sizes. For instance, VWCE also includes mid-cap companies. The sole inclusion of large-cap companies is a limitation of IWDA.
3. Growth portfolio
The Growth portfolio is a bit special because it's not a single ETF but a portfolio of funds. It's available through Curvo is and is a popular combination for Belgian investors who wish invest in the global economy for the long term. It's composed of two funds, both offered by Vanguard:
- A fund tracking the FTSE Developed All Cap Choice index (ISIN: IE00B5456744)
- A fund tracking the FTSE Emerging All Cap Choice index (ISIN: IE00BKV0W243)
Through the Growth portfolio, you invest in over 7,500 companies. It's managed by NNEK, a Dutch investment firm licensed by the Dutch regulator (AFM). The portfolio has returned approximately 8.5% annually since 2005:
Sustainable investing is challenging because everyone has different ethical beliefs and values. The funds in the Growth portfolio focus on one guiding principle: they don't support companies that are considered destructive to the planet. This means the following sectors are excluded:
- non-renewable energy (nuclear power, fossil fuels)
- vice products (adult entertainment, alcohol, gambling, tobacco)
- weapons (civilian firearms, military weapons)
- controversial companies, which are companies that do not meet the labour, human rights, environmental and anti-corruption standards defined by the United Nations Global Compact
Automated savings plans
You can invest in the Growth portfolio in an automated way by setting up a monthly savings plan. Every month, the amount of your choice will be debited from your bank account and automatically invested for you in the portfolio.
No Belgian transaction tax (TOB)
There’s a tax on the transaction every time you buy or sell a security, called the transaction tax ("beurstaks" or "taxe boursière" or TOB). The rules concerning the tax rate are complicated, also for ETFs. Even brokers are confused because they use different tax rates for the same ETF.
But contrary to all the ETFs listed here, there’s no transaction tax to be paid when investing through the Curvo app!
Most brokers force you to buy units of stocks, with the consequence that you always have cash on the side not working for you. But you can buy fractions of the Growth portfolio. This means that all your money is invested for you.
The downside of Curvo is the price. Using Curvo is likely more expensive than buying ETFs through a broker. The price starts from 0.6% “all-in” per year for the service, as a percentage of your total investments. But, it’s easier than having to open a brokerage account and managing your own portfolio of ETFs!
Read more below about how Curvo helps you prepare for your financial future by making good investing really easy.
4. iShares Core MSCI Emerging Markets IMI (EMIM)
EMIM (ISIN: IE00BKM4GZ66) is offered by iShares and tracks the MSCI Emerging Markets IMI, which is an alternative for the FTSE Emerging Markets index. The index consists of roughly 3,000 companies from 23 countries that economists qualify as "emerging": China, Taiwan, India, South Korea, Brazil… What’s also interesting is that you get significant diversification as you get small to large companies in one single fund.
A €10,000 investment in the EMIM in 1994 would have resulted in almost €37,904 in 2022. That's a 4.8% average annual return:
As we showed above, IWDA is one of the best ETF options for Belgian investors. Combining it with EMIM is a popular combination. The diversification benefit of adding EMIM means you’re including smaller companies from emerging markets which is often overlooked by the bigger funds like VWCE.
With this combination of IWDA and EMIM, both funds provided by iShares, is equivalent to VWCE when weighted in the right proportions. IWDA (ISIN: IE00B4L5Y983), which tracks MSCI World and covers the developed markets. This extra diversification means you’re investing in 4,789 companies in one go spread across the world.
Maintaining the right split between IWDA and EMIM
You’re essentially buying two different funds. If you wish to respect a market capitalisation weighting, the recommended split becomes 89% in IWDA and 11% in EMIM. The right allocation is something you have to manage yourself. It can become more cumbersome because the ratio changes over time.
Higher broker fees when investing in two funds
As you’re purchasing two funds, it also becomes more costly. After all, you have to make an additional transaction with each round of investments and pay the broker fees. This is why the simplicity of a single ETF is attractive for investors.
5. iShares Core S&P 500 (CSPX)
A popular ETF amongst Belgian investors is the iShares Core S&P 500 (Acc) ETF (ISIN: IE00B5BMR087). It's one of the better S&P 500 ETFs, and is offered by iShares, one of the largest fund providers in the world. S&P 500 stands for the Standard & Poor’s 500 index and as the name suggests, it seeks to track the performance of an index composed of the 500 largest American companies (even though it holds 503 companies at the moment). Through the S&P 500, you get exposure to a large section of the US economy as it covers 80% of the total American market capitalisation.
As you can tell from the graph below, the S&P 500 has returned an average 10.4% per year since 1992. That’s quite a significant return on your investment if you began your investment journey in the early 90's:
One of the cheapest ETFs
The American stock market is one the largest stock markets in the world, with high volumes, high liquidity and low transation costs. This is why ETFs that track the S&P 500 are usually among the cheapest, and this fund is no different.
Invests only in the US
The 500 companies in the S&P 500 represent about 40% of the global stock market. This is significant, but it also means that you're leaving many companies aside if only investing in the S&P 500. There are great stocks to be held from other regions of the world, like Europe, Asia or South America.
Also, the US stock market has performed exceptionally well over the last 20 years. But that's not guarantee that it will over the next 20 years. Betting on a single country, no matter how dominant its market is at the moment, increases the likelihood of a bad outcome when investing for the long term.
Invests only in the largest companies
The S&P 500 invests in only the largest companies. But good investment returns can be achieved in mid-size and smaller companies too.
If you wish to learn more, we dig deeper into the advantages and disadvantages of investing solely in the S&P 500.
6. iShares Nasdaq 100 (CNDX)
Following our theme of US stocks, the ETF "iShares Nasdaq 100 UCITS ETF (Acc)" (ISIN: IE00B53SZB19) offered by iShares is another popular option for Belgian investors. It tracks the Nasdaq-100 index, which consists of 100 companies that are classified as technology companies. Industries such as hardware, software, telecommunications and biotechnology make up the index, and all major tech companies like Apple, Google, Microsoft and Tesla are in it.
Returns have been significant. A €10,000 investment in the Nasdaq-100 in 2007 would have resulted in almost €90,000 in 2022. That's a staggering 15.6% average annual return:
Concentrated in US tech stocks
Similar to the S&P 500, an investment in the Nasdaq-100 lacks diversification. It focuses so heavily on the American tech industry. In fact, the Nasdaq-100 makes up only 15% of the global stock market. Tech stocks have seen incredible returns the last 20 years. But the past does not guarantee future returns. And it's a real possibility that this scenario won't repeat itself over the next 30 years.
We cover the pros and cons of the Nasdaq-100 in more detail in investing in the Nasdaq-100 for Belgian investors.
7. iShares MSCI ACWI (SSAC)
The SSAC fund (ISIN: IE00B6R52259) is a diversified ETF to buy for Belgians. This fund, launched by iShares in 2019, tracks the performance of the MSCI All-Country World Index (ACWI). The index is composed of almost 3,000 large and mid-sized companies from 23 developed and 24 emerging markets countries worldwide. Because it's so diversified, investors can find in SSAC an easy way to invest in the global stock market.
The index has returned approximately 8.3% annually since 1987:
The same downsides of investing in VWCE holds, as investing in SSAC means your asset allocation is purely 100% stocks. It’s often better to reduce the riskiness of your portfolio by including bonds, if it will prevent you from selling at the worst possible time and incur a loss due to the volatility of stocks.
Similar to other ETFs listed above except for Growth, SSAC does not apply sustainability criteria when selecting the companies that it invests in.
8. Xtrackers II Global Government Bond (DBZB)
All the ETFs we've seen up until now invest only in stocks. DBZB (ISIN code LU0378818131) is one of the most popular bond ETFs for Belgian investors. This fund, launched by Xtrackers in 2008 to track the performance of the FTSE World Government Bond for developed markets, currently holds more than €2 billion under management.
Governments issue bonds to borrow money from investors that they then spend on public services. Essentially, a government bond is a loan to the government.
This ETF is composed of bonds from “developed” markets. What this essentially means is that you have diversification and exposure to the following countries: United States, Japan, France, Italy, Germany, Spain, United Kingdom, Canada, Netherlands and our homeland Belgium 🇧🇪. Also, the ETF is hedged to the euro. This essentially means that you remove the impact of fluctuating currency rates, as for instance the United States issues its bonds in US dollar.
Whereas stocks are very exciting (and scary when they sharply drop), bonds are very boring. They don't fluctuate as much. So one way bonds are used in your portfolio is to tame the volatility of stocks. As Ben Felix explained in his interview with us, bonds are designed not to seek return, but to decrease volatility and stabilise a portfolio. Portfolios with more bonds relative to stocks will be better suited for investors with a lower appetite for risk. This means that going for a 100% stocks strategy or not should come in line with how smooth you wish your returns to be, to offset the potential impact of a downturn over your investment journey.
Beyond their role of stabilising a portfolio, bonds are also great diversifiers. It turns out that oftentimes when stocks are dropping, bonds are rising, and vice versa. So the losses of one type of asset can be partially offset by the gains of the other. In finance speak, we say that there is little correlation between stocks and bonds.
Also note that bonds held by Belgian investors are subject to the Reynders tax, which is 30% charged on capital gains. Yet this doesn’t outweigh the argument for holding bonds in your portfolio to stabilise your investments.
Learn more about building a balanced portfolio of ETFs.
Bonds in the portfolios offered through the Curvo app
We looked at the Growth portfolio above. But Growth is only one of five portfolios managed by NNEK and available through the Curvo app, each adapted to a different investor profile. We believe that bonds play an important role in making sure that a portfolio fits you and your long-term goals. So depending on your answers to our questions when you sign up to Curvo, your portfolio will consist of the right mix of stocks and bonds for you.
Historical return of DBZB
The index has returned approximately 6.1% per year since 1985. This is lower than most other ETFs discussed here, but it's because government bonds are less risky than stocks.
9. SPDR Bloomberg Euro Government Bond (GOVA)
An alternative to DBZB is the SPDR Bloomberg Euro Government Bond ETF (ISIN: IE00BMYHQM42). Instead of investing in government bonds from all developed countries, it focuses just on countries that have the euro. This makes it a bit less diversified. But it removes the need for hedging the currency, since all bonds are in euro. This makes the ETF a bit cheaper.
Comparing the historical performance
“Past performance is no guarantee for future results' - I’m sure you have read this sentence in some disclaimer or other. However, this sentence is often misinterpreted and people conclude that the analysis of the past is not worthwhile. In the world of investing, the past is indeed no guarantee of what the future will look like. Nevertheless, we are convinced that it can give us interesting insights, which in turn are important when we make projections about the future, albeit with a dose of uncertainty.
To give you an idea of how these funds compare in terms of past performance, let’s put them together:
The Nasdaq-100 ETF has outperformed all the other ETFs, with the S&P 500 second. However, as mentioned above, companies in the United States, and in particular tech companies, have performed extremely well over the last 30 years. But will it continue for the next 30 years? We think it's a risky bet, and we prefer to diversify across many different markets and indsutries.
The role of bonds also becomes apparent in the graph. The yellow line for DBZB fluctuates significantly less than the others. This shows that bonds are a good option to stabilise your portfolio.
If you wish to dig deeper into why historical performance can help us understand our investments and build the right portfolio for long-term success, explore our article on understanding your portfolio of ETFs through Backtest.
Where to buy these ETFs
For many making their first steps into the world of investing, their bank is the one-stop shop for anything related to finance. Unfortunately, they are likely not your best partner when it comes to investing. They are simply a lot more expensive than the alternatives.
A better way is through a specialised service called a broker. Through a broker, you gain access to the financial markets where you can buy stocks, ETFs, bonds and even some more complex products like derivatives. However, brokers come with their challenges.
The challenges of investing through a broker
The allocation of your portfolio is in your hands
A single ETF does not necessarily make up a well-balanced portfolio. For instance, even though an ETF like VWCE is very diversified, not many investors are ready to emotionally withstand the high volatility of stocks. Also, if you invest for a shorter period of time, investing in just stocks is not the right strategy because you may not have enough time to recover from a downturn.
A balanced portfolio typically includes a mix of stocks, government bonds and corporate bonds to provide diversification and reduce risk. By investing in multiple asset classes, you achieve a balance between risk and return that aligns with their investment goals and risk tolerance. And when investing through a broker, you are responsible for finding the right mix for you.
You need to understand taxes
Taxes have an important impact on how you should invest. And unfortunately, taxes aren't simple in Belgium. But it's important you understand them if you are going to manage your portfolio of ETFs through a broker.
Starting to invest is one thing. But it requires self-confidence and discipline to stay the course!
Brokers want you to trade
Research shows that a buy-and-hold strategy, where you hold your investments over a long period of time, delivers a higher return for most people than actively trading. The reason is that trading incurs taxes and transaction costs, which cut into your return. Additionally, it leads to taking investment decisions based on emotions, as well as reacting to short-term market fluctuations rather than taking a long-term investment approach.
But the business model of brokers is centered on trading. They need you to trade in order to generate revenue. That's why a broker like eToro has an inactivity fee, where they charge you $10 per month if you don't trade. Be careful with such brokers!
Curvo: an easier way
We understand that investing in ETFs through a broker can be daunting, especially for someone who's just starting to invest. We built Curvo to take away all the complexities of passive investing in ETFs and index funds. No need to search through thousands of ETFs or scour wikis in order to understand how to select a fund.
Invest in a portfolio tailored to you
Based on a questionnaire, the right mix of funds is selected that correspond to your goals and appetite for risk. The portfolios are managed by NNEK, a Dutch investment firm supervised by the Dutch regulator (AFM).
Get a better return on your time
Don't waste energy figuring out the intricacies of good investing. Start your investment plan and spend your free time on the things that matter most to you.
Set up a savings plan
Put your savings on autopilot. Choose an amount and it will automatically be invested every single month. Saving is easy when it's automated!
All your money is invested
In contrast with the majority of brokers, your investments work with fractional shares. This means that all your money is put to work. There will never be cash sitting on your account doing nothing.
No entry or exit fees
There are no transaction fees, entry or withdrawal fees.
Investing sustainably is challenging because everyone has different beliefs and values. We focus on one guiding principle: none of the portfolios invests in companies that we consider destructive to the planet.
Learn more about how Curvo works.
We covered a few different ETFs for Belgian investors, and highlighted their pros and cons. We hope the list was helpful in making a choice! Whichever ETF you end up choosing, you’ve already made the right choice as they are a great investment that provide diversification at a fairly low cost.
However, it can be intimidating to get started investing through a broker. There are quite a few questions you need to answer before you can start:
- Which broker to choose?
- What is the right mix of stocks and bonds for you?
- Which mix of ETFs are best able to help you reach your goals?
- What are the tax implications for each ETF in your portfolio?
- … and more
If you’re feeling a little overwhelmed, don’t hesitate to explore Curvo’s app. After all, our goal is to take care of all the complexities of good investing for you!
What you should do now
- Figure out if you want to invest in ETFs yourself. If you’re confident with your choice of ETF from the list above, then go for it!
- Choose the broker that works best for you. You can use our comparison which will help you decide on the best option as a Belgian investor.
- Send money to your broker and hit that “Buy” button.
- Explore Curvo. See how it works, and download the app when you’re ready. When creating an account, you'll complete a short questionnaire to help us determine the best portfolio for you. You can then start investing from €50.
Questions you may have
What are the best ETFs for Belgians?
Some of our favourite ETFs include:
- Vanguard FTSE All-World (VWCE)
- iShares MSCI World (IWDA)
- iShares MSCI Emerging Markets IMI (EMIM)
- iShares MSCI ACWI (IUSQ)
- Xtrackers II Global Government Bond (DBZB)
Aside from these, investing through the Curvo app is the most accessible way to invest in index funds, if you don't want to manage your own portfolio of ETFs. The portfolios are highly diversified, well-balanced and suited for any type of investor who's wanting to grow their wealth on the long term.
Which ETF performs best?
Over the last 15 years, the iShares NASDAQ 100 ETF (CNDX) that tracks the Nasdaq-100 index has performed the best. Between 2007 and 2023, it has delivered an average yearly return of 15.7%!
Do note that past performance is no guarantee for the future. Large tech companies like Apple and Amazon, which the Nasdaq-100 mostly consists of, have outperformed the rest of the market these last 15 years. But it's not a given that they will continue to outperform over the next decades.
What is the best ETF for the long term?
We believe that diversification is the most important criteria when investing for the long term because it helps to reduce the overall risk of your investments. Investing in a single stock or asset class exposes you to the risks associated with that specific stock or asset class. If the company or industry experiences problems, your entire portfolio could suffer.
Our selection of best ETFs for the long term are:
- Vanguard FTSE All-World (VWCE) to invest in stocks worldwide
- iShares Core MSCI World (IWDA) to invest in stocks from developed markets
- iShares MSCI ACWI (SSAC) to invest in stocks worldwide
- Xtrackers II Global Government Bond (DBZB) to invest in government bonds worldwide
If you wish to invest for the long term but without using a broker, we suggest you take a look at the Growth portfolio.
What is the safest ETF?
It's important to note that no investment is entirely safe or risk-free, and all investments carry some level of risk. However, some ETFs are considered safer than others. Generally, more diversified ETFs are safer (see the previous question). Also, bond ETFs are considered safer than stock ETFs.
Which ETF should I invest in in 2024?
A diversified ETF like Vanguard FTSE All-World (VWCE) or iShares Core MSCI World (IWDA) is a good choice. It's globally diversified, accumulating, low-cost, and trades in Euro.