DEGIRO is one of the most popular brokers in Europe and has thousands of ETFs to choose from. A few years ago it decided to offer 200 ETFs as part of a core selection, offering cheaper transaction fees when trading these. But how do you buy these ETFs and how do you benefit from the reduced pricing? We cover it all. We'll also look our top 5 ETFs in the core selection.
What is the DEGIRO core selection of ETFs?
DEGIRO has a "core selection" of over 200 ETFs for which they charge only a €1 transaction fee, instead of €3 for all their other ETFs. They call this €1 fee a "handling fee". ETFs in the core selection include those provided by the largest fund providers like BlackRock and Vanguard.
How to buy an ETF in DEGIRO's core selection
We'll walk you through buying VWCE, one of the most popular ETFs in DEGIRO's core selection. But first, you should know two things about investing in ETFs from the core selection:
- buy on the right exchange
- respect the fair use policy
Buy on the right exchange
ETFs are traded on stock exchanges. Famous ones are the New York Stock Exchange (NYSE) or Nasdaq, or Xetra and Euronext Amsterdam in Europe.
The most important thing when buying an ETF in the DEGIRO core selection is to buy it on the right exchange. If you don't, you'll pay €3 for that ETF instead of €1, even if the ETF is in the core selection. For instance, the iShares MSCI World Accumulating ETF (also known as IWDA) costs €1 only if you buy it on Euronext Amsterdam. If you buy it on the London Stock Exchange, DEGIRO will charge you €3.
You may find content online saying that ETFs in the core selection are free. But these sources are likely outdated. ETFs in the core selection are no longer free since DEGIRO changed their fee structure in April 2023. Instead, you now pay a €1 handling fee.
You can see the transaction cost for buying IWDA on DEGIRO on the different exchanges below:
To find out which exchange you need to buy an ETF on, you can use our tool below. Just type any ETF, and it'll show you the cheapest exchange to buy it on.
Alternatively, you can also see the list of ETFs in the core selection and their exchanges on DEGIRO's website.
Note that DEGIRO also charges a connectivity cost. This is a yearly fee that you pay per exchange you trade on. You can learn all the details about DEGIRO's pricing in our piece on the costs of investing through DEGIRO.
Respect the fair use policy
When buying an ETF from the core selection, you also need to respect certain conditions, or risk paying the full price of €3. The conditions are explained in DEGIRO's fair use policy. In short, every month, the first transaction of the ETF on the right stock exchange will cost €1 instead of €3. Subsequent transactions that same month will also cost €1 provided:
- the transaction is in the same direction (that is buy/sell) as the first transaction
- the value of the transaction is at least €1,000
Make sure you keep these important rules in mind when buying your ETFs on DEGIRO!
Example of buying VWCE on DEGIRO
The VWCE ETF (IE00BK5BQT80) is one of the most popular ETFs in the core selection. Let's walk you through buying shares of VWCE with DEGIRO.
If you don't have an account on DEGIRO, the first step is to open an account with them. If you're Belgian, bad news as degiro.be does not exist so you'll have to open an account with either degiro.nl (Dutch) or degiro.fr (French). This is slightly confusing for first-time investors.
The next step is to deposit cash on your DEGIRO account. This can take a couple of days to arrive, depending on your bank.
When the money arrives, you can buy the ETF. Search for VWCE by typing its ISIN code "IE00BK5BQT80" in the search bar. The second confusion is that you'll see several results. They all correspond to the same ETF, but on different exchanges. For instance, Vanguard trades on XETRA, Tradegate Exchange, Borsa Italiana... To pay €1 instead of €3, it's important with DEGIRO to buy VWCE on XETRA ("XET").
Now we can buy VWCE. Select the number of shares you wish to buy. Note that you can only buy whole units of shares. So you'll need to calculate how many shares you can buy, based on how much you want to invest and the amount you deposited on your DEGIRO account.
You also need to choose the type of order. The most common types are market orders and limit orders. A market order is an order to buy immediately at the best available current price. It prioritises execution speed over price, and it is typically filled quickly as long as there are enough sellers in the market. After all, remember that you're buying the ETF off of someone who wishes to sell his. Due to market fluctuations, the final execution price may be different from the price when the order was placed. A limit order, on the other hand, is an order to buy at a specific price or better. You can set a predetermined price at which you want to execute the transaction, offering you more control. Unlike market orders, limit orders are not guaranteed to be executed immediately or even at all, as they depend on the share price reaching the specified price.
Once you’re ready, click “Place order”. Congrats, you just bought your ETF on DEGIRO!
Top 5 ETFs in the core selection
With over 200 ETFs available in their core selection, it's difficult to know which ones to pick for your investment portfolio. We selected five you that we consider the best according to our criteria:
- Diversified across many sectors and countries. The basic idea behind diversification is to avoid having all your eggs in one basket. This way, 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.
- Low-cost. 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).
- 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).
To illustrate the diversification of an ETF, we provide you with the number of companies in each ETF as well as all the countries it invests in. The cost of an ETF is measured through the "total expense ratio", or TER. It's the yearly cost that the fund provider charges for managing the fund, and it's a percentage on your total investment.
iShares Core MSCI World
The iShares Core MSCI World ETF, offered by iShares (a brand of BlackRock), 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…
It's also commonly known under its ticker IWDA. Investing through this ETF means you're investing in a wide segment of the global economy. Because it's so diversified, many investors choose to simply invest in this one ETF as their entire portfolio. This is also not surprising given that the MSCI World index has delivered a staggering 10.9% average yearly return since 1978:
Vanguard FTSE All-World
Most commonly known under its ticker VWCE, the Vanguard FTSE All-World ETF continues to be a popular ETF for European investors. We believe its inclusion in the DEGIRO core selection is the main reason for its popularity! 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. Stocks such as Apple, Microsoft, Amazon, etc… are represented in the fund. The FTSE All-World index has returned an average of about 8.6% per year since 2005:
Vanguard S&P 500
A trending ETF amongst DEGIRO investors is the Vanguard S&P 500 ETF. 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.
It's important to note that the ETF is distributing, meaning it pays out dividends to you in cash, usually every quarter. If you're saving for your future, we do prefer accumulating funds over distributing funds. In some countries, distributing funds are also fiscally less optimal than accumulating funds.
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. It outperformed both the MSCI World index and the FTSE All-World index that we saw earlier, which is a testament to the exceptional economic performance of the United States the last few decades. Naturally, the question is if that trend will persist the next decades!
Shares also has a good ETF that tracks the Nasdaq-100 index. This index 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.
Note that 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.
Having said that, 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:
Xtrackers II Global Government Bond
All ETFs in our selection up until now are stock ETFs, meaning that they only invest in stocks. But we had to also include a bond ETF in our selection, because we think that bonds are an important component of a well-balanced portfolio of ETFs. Whereas stocks are very exciting (and scary when they sharply drop), bonds are 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. Also, because of their lower volatility, bonds are much better suited than stocks if your investment horizon is shorter. Our piece on building a portfolio of ETFs can help you come with the mix of stocks and bonds that's right for you and your goals.
Beyond their role of stabilising a portfolio, bonds are also great diversifiers. Generally, it turns out that 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.
DBZB is one of the most popular bond ETFs as part of the core selection on DEGIRO. 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. The index invests in government bonds, which are basically loans to the government. Governments issue bonds to borrow money from investors, that they then spend on public services. In return, the investor earns an interest on the loan.
This ETF is composed of government bonds from “developed” nations. What this essentially means is that you have diversification through exposure to the following countries: United States, Japan, France, Italy, Germany, Spain, United Kingdom, Canada, Netherlands and Curvo's homeland Belgium 🇧🇪.
Also, DBZB is hedged to the euro. Because it invests in government bonds that are not denominated in euro, for instance American Treasury bonds, your return is impacted if the currency rate between the euro and the dollar changes. Currency hedging is a financial technique that neutralises this impact of foreign currency fluctuations on your returns. If the euro weakens against the dollar, the hedging strategy would offset the loss that would have occurred due to that currency movement. Therefore, the return of the ETF becomes dependent only on the performance of the underlying bonds, not the performance of the foreign currency.
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.
The best ETFs not in the core selection
Although the core selection features many popular ETFs, there are plenty of others which didn't make the cut on DEGIRO, including:
- iShares MSCI ACWI (SSAC)
- SPDR Bloomberg Euro Government Bond (GOVA)
We recommend you take a closer look at our guide of the best ETFs to invest, which doesn't just focus on DEGIRO.
The drawbacks of the DEGIRO core selection
The DEGIRO core selection is great for investors, because it allows you to buy ETFs cheaply. However, there are drawbacks.
You can easily buy on the wrong exchange
There's no visual indication in the DEGIRO app about which exchanges allow you to buy an ETF under the core selection conditions. We searched for IWDA in the screenshot below. There's no way to tell which of the two we should buy to get the cheaper price. The unclarity likely works to DEGIRO's revenue numbers as investors easily make mistakes.
The fair use policy is complicated
The fair use policy can be difficult to understand and implement as a first-time investor.
DEGIRO's app has a confusing interface
In general, there are also some other considerations when trading on DEGIRO. First of all, the interface of their app is intimidating to use if you're new to investing. As you can tell from the screenshots above, there's a lot going on within each screen. DEGIRO offers many types of securities: turbos, warrants, stocks, ETFs… And when you place an order, you also have to choose between a market order, a limit order, a stop-loss order, amongst others. All this technical terminology means that you need to know what you're doing.
Price isn't the only criteria when choosing a broker
We tend to focus just on price when comparing brokers and that's one of the reasons why DEGIRO has gained a lot of popularity. But safety, ease of use or convenience are also important criteria. For instance for Belgians, there are also considerations with DEGIRO when it comes to declaring your account or else having to declare and pay certain taxes.
You can learn about these in our in-depth comparisons:
How to pay less with DEGIRO
There are some guidelines you can follow to pay less when investing with DEGIRO:
- Only select ETFs in DEGIRO's core selection. Make sure you buy them on right exchange!
- If you are investing monthly, bundle the investments for several months in a single transaction. The relative cost of the broker fee goes down as the transaction amount is higher.
Why ETF investing through DEGIRO is challenging
When managing your own investments through a broker like DEGIRO, you have to figure out what to buy, when to buy, understand the tax implications of your decisions, rebalance your investments and make sure they stay in line with your goals and risk tolerance.
There are quite a few challenges:
- The allocation of your portfolio is in your hands: figure out how to build the right allocation that meets your long-term goals.
- You need to do your homework: figuring out how to start and understanding the intricacies of investing in ETFs takes an effort. Yet it's important, because in investing the details matter.
- It takes time: send money to your broker monthly and then make the purchases.
- Costly for monthly contributions: if you wish to invest on a monthly basis, you’ll have to pay a lot in broker fees. Also, as you buy units and can’t buy fractions, you’ll always be left with cash on your account.
- Learn how to rebalance your portfolio: if you have multiple funds in your portfolio, how will you rebalance? Quarterly or yearly? How do you decide?
- Keep track of your portfolio: you may have to set up a spreadsheet to stay on top of things!
- Understand taxes: this can be complicated and they also often change.
- Discipline: it requires self-confidence and discipline to stay the course.
- Brokers want you to trade: the majority of brokers make money on you trading so a “passive” approach isn’t in their best interest.
Curvo: an easier alternative to DEGIRO for ETF investing
Choosing an ETF is not the end of the story: it's a small part of building a portfolio that will give you success over the long term. Defining the right portfolio is probably the most important and most difficult task for every investor. The composition of your portfolio is dependent on goals, your appetite for risk, your age and your income. We understand this difficulty, along with the many other subtleties investors have to deal with in order to be successful over the long term.
As we've seen, investing in ETFs through a broker is not always straightforward. We understand that this can be daunting, especially for someone who's just starting to invest. Curvo was built to take away all the complexities of investing in index funds. No need to search through thousands of ETFs or scour wikis in order to understand how to select a fund. Through Curvo:
- Invest in a portfolio tailored to you: based on a questionnaire, the right mix of funds is selected for you that correspond to your goals and appetite for risk.
- Invest securely: your investments are managed by NNEK, a Dutch investment firm that is overseen by the Dutch regulator (AFM).
- Set up a savings plan: put your savings on autopilot. Choose an amount and it will automatically be invested every single month.
- All your money is invested: in contrast with the majority of brokers, your investments through NNEK support 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.
Learn more about how Curvo works.
How Curvo compares to investing through DEGIRO
You can follow the steps above and buy ETFs through DEGIRO. However, if:
- you're worried of making a mistake when investing
- you don't want to handle the taxes
- you don't want to spend time choosing a broker
- you don't want to spend time making the trades
- you don't want to figure out a rebalancing strategy and execute on it
- you want fractional shares
- you want peace of mind that your investments are taken care of
...then you're welcome to use Curvo! You can learn more on the differences with doing investments yourself through a broker.
We covered all the things you need to know about DEGIRO's core selection of ETFs and start investing in them. We hope our selection of top ETFs are helpful for your choice. Whichever ETF you end up choosing, you’ve already made the right choice of investing in an ETF in their core selection, as ETFs are a great investment that provide diversification at a fairly low cost. You simply need to double check you're following the rules in order to benefit from the lower costs: buying from the right exchange and adhering to their fair use policy.
Being responsible for your investment portfolio on DEGIRO can be daunting, especially for first-time investors. If you're looking for an easier option to invest the right way, then do take a closer look at what we offer at Curvo.
What you should do now
- Figure out which ETF you want to buy from DEGIRO's core selection.
- Double-check you're buying it on the right exchange and also that you're adhering to their fair use policy.
- If you're a bit overwhelmed with DEGIRO, explore Curvo as a real alternative.
Questions you may have
Which ETF to buy for the long term?
There are some important criteria for ETFs that are suitable for the long term:
- Diversification. A key to success is to have a lot of eggs in different baskets. Choose for ETFs that diversify across many countries and sectors.
- Low cost. Lower fees means you'll maximise your returns.
- Accumulating. No need to worry about dividends, the money is automatically re-invested for you. Compounding will work in your favour over the long run.
Look at our selection of best ETFs on the market for options.