Index funds vs ETFs: the differences for Belgian investors

Index funds and ETFs both track the same markets. Both offer low-cost, diversified investing. Both can help you build wealth over time.

But try to set up monthly investing with each, and you'll quickly see the differences. With ETFs, you'll need a broker account, deal with fractional shares, and pay transaction fees. With index funds, you can often automate everything and invest any amount.

For Belgian investors, these practical differences, plus the tax implications, make the choice clearer than you might think.

What is an index fund?

An index fund is a type of mutual fund that tracks a market index instead of trying to outperform it. Think of indexes like the BEL 20, which tracks Belgian stocks, or the S&P 500, which tracks 500 large US companies. An index fund collects money from many investors to buy all or some of the investments in the index. This means the fund’s performance reflects the index’s performance. For example, an index fund tracking the S&P 500 will invest in those 500 companies.

Index funds use a strategy called passive investing, as they follow an index without attempting to outperform it. This makes them low-cost and diversified. There’s no expensive fund manager picking stocks. The fund holds the index’s components and updates when the index changes. This approach makes index funds a “buy and hold” choice for long-term investors looking for steady growth without much effort. They are usually priced once per day at the end-of-day net asset value, not continuously during trading hours. So, when you invest in an index fund, you receive that day’s closing price for the fund’s units. This daily pricing works well for most long-term investors who don’t mind short-term market movements.

Many index funds are available to Belgian investors through banks or investment platforms. For example, global index funds from providers like Vanguard or BlackRock can be accessed via certain banks or the app we built Curvo. Investing in an index fund is simple. You just pick an amount, like €100 a month. Then, the platform or fund manager invests it all into the fund. You can also buy fractional units.

In short, an index fund is a simple, low-cost way to invest in a broad market. You put money in and receive a piece of every stock or bond in the index, helping your money grow with the market over time thanks to the power of compounding.

What is an ETF?

An ETF, or exchange-traded fund, is like an index fund. Both track a market index or a group of investments. The main difference is in how you buy and sell them. An ETF trades on a stock exchange, just like an individual stock. This means you buy or sell it from another investor on the exchange, not directly from a fund provider or bank. You need a broker account to access the stock market.

Most ETFs are passively managed "trackers." They simply follow an index, such as the S&P 500 or MSCI World. For instance, a “BEL20 tracker” ETF holds the BEL 20 stocks.

ETF prices change throughout the trading day based on supply and demand, like stock prices. You can buy or sell an ETF at any time during market hours. The price may vary slightly from morning to afternoon. In contrast, an index fund has one price per day.

ETFs are popular because they offer the diversification of a fund and the flexibility of a stock. You can buy as little as one share, with no set minimum investment. There are ETFs for nearly every market or strategy. In Belgium, ETFs have become very popular among do-it-yourself investors thanks to books like De Hangmatbelegger. They help build passive portfolios since they are widely available on broker platforms and often have low annual fees.

"De Hangmatbelegger", which has become a best-seller in Flanders and the Netherlands, has been written by Tim Nijsmans and Yoran Brondsema. Yoran is also the co-founder of Curvo! You can read an interview with Yoran about the book.

In summary, an ETF is like an index fund that you trade on the stock market. It offers a range of index-tracking investments, similar to an index fund, but with more trading options. There are also differences in fees and taxes, which we will discuss later. It's like the cousin of the index fund, with a similar goal but a different way of trading.

The differences between an index fund and an ETF

Feature	Index funds	ETFs
How to buy	Via bank, fund manager, or platform like Curvo	Through a broker on the stock exchange
Minimum investment	Flexible: fractional units	Usually full shares only; fractional shares rare
Pricing	Once per day (end-of-day NAV)	Real-time pricing throughout trading hours
Ease of use	Very beginner-friendly and often automated	Requires more setup and knowledge of trading
Transaction costs	No broker needed; may have entry or exit fees	Broker fees on every trade
TOB (transaction tax)	Usually no TOB on entry; 1.32% on exit (or 0% via Curvo)	0.12% or 1.32% TOB on each buy/sell
Dividend tax (30%)	Only applies to distributing funds	Only applies to distributing ETFs
Reynders tax	30% on bond income from accumulating funds (if >10% bonds)	Same: applies to bond accumulating ETFs
Liquidity	Buy/sell once daily at NAV	Buy/sell anytime during trading hours
Rebalancing	Often automatic (for instance with Curvo)	Manual: you rebalance yourself
Monthly investing	Excellent: automated and fully invested	More complex: may leave cash uninvested
Psychological impact	Less temptation: no live pricing	Real-time prices can tempt over-trading
Ideal for	Hands-off, long-term investors wanting simplicity	DIY investors who want more control

How to buy: accessibility of index funds vs ETFs

One major difference between index funds and ETFs is how you access and buy them. This affects how easy each option is for beginners.

Buying index funds

Index funds are a type of mutual fund. You typically buy them directly from a fund provider or through a financial institution. In Belgium, this often means going through your bank or an asset management platform. For example, you might use your bank’s investment portal or an app like Curvo that offers index fund portfolios. You decide how much to invest (e.g. €500 or smaller monthly contributions). The platform allocates that amount into the fund.

A key advantage is simplicity and fractional investing. You can invest any amount, even if it doesn’t match a whole unit of the fund. If a fund’s price is €150 and you invest €100, you’ll receive ~0.667 of a unit. Index funds allow fractional units, so your entire €100 is invested. This makes it easy to invest fixed amounts regularly without leftover cash.

Many traditional index funds allow you to set up automatic monthly contributions. This helps you develop a “pay yourself first” saving habit.

Buying ETFs

ETFs must be purchased through a brokerage account on the stock exchange. You can’t buy an ETF directly from a bank branch like a mutual fund. You need a broker to place a trade. In Belgium, brokers like Bolero, Keytrade, and DEGIRO give access to European stock exchanges where ETFs are listed. You’ll have to order a number of ETF shares (e.g. buy 10 shares of an ETF).

Unlike index funds, ETFs usually trade in whole shares. If one share costs €57, your minimum investment is €57 for one share. Some brokers offer fractional ETF shares, but this isn’t common in Belgium. If you want to invest €100 in an ETF trading at €57, you can buy 1 share for €57 and have €43 left uninvested unless your broker supports fractional shares. Also, each buy or sell incurs a broker transaction fee (typically a few euros). You can set up automatic monthly investments in an ETF. Some brokers have periodic investment plans. However, these may be done as separate trades, which could lead to extra costs.

Index funds can feel more accessible for beginners who want hands-off investing. You can start with small, flexible amounts and automate contributions easily. ETFs require the extra step of a brokerage and understanding how to place market or limit orders, which is more involved. However, opening a broker account in Belgium is doable online, and many new investors start with ETFs. Index funds are convenient because they allow automatic investing and fully allocate your money. However, ETFs give you more control since you choose when and how many shares to buy or sell.

At Curvo, we think investing should be easy, especially for beginners. That’s why we create our portfolios with index funds. These let you start with any amount and automate your contributions effortlessly. You won’t have to worry about setting up a broker account, placing trades, or leaving cash uninvested due to full share pricing. Every euro you invest goes to work automatically.

Costs

Let's look at the differences in costs between index funds and ETFs:

Cost	Index funds	ETFs
Annual fees (TER)	0.10% to 0.30% (Vanguard, iShares); much lower than active funds (1.00% to 3.00%)	As low as 0.10% for broad ETFs; also much cheaper than active funds
Trading and transaction fees	Often no entry/exit fee via apps like Curvo	Broker fee per trade (buy/sell), for instance €1 to €5 per transaction
Bid-ask spread	None: priced once daily at NAV	Yes: small spread between buy/sell price; minimal for broad ETFs
Management fees	Varies: Curvo charges a clear annual fee (includes management and rebalancing)	Brokers may charge custody or platform fees
Automation and fractional investing	Full amount invested automatically which is ideal for monthly contributions	Often must buy full shares unless your broker supports fractions

ETFs may have slightly lower ongoing fees than index funds. Many index funds have similar total expense ratios (TERs), so costs are often close. However, ETFs can incur trading fees every time you invest. In contrast, index funds, especially automated ones, can reduce transaction costs if they don’t charge an entry fee.

For Belgians investing small amounts regularly, it’s crucial to avoid high per-trade fees. A €1 or €5 fee on a €100 investment can eat up 1-5% of your returns. If you want to invest every month and avoid trading costs, pick a platform with index funds that have no transaction fees. This choice can save you money.

On the other hand, if you have a larger lump sum and a low-cost broker, buying an ETF with a very low TER is a good option. The good news is that both index funds and ETFs are affordable investment options. Just keep an eye on any additional fees associated with them.

With no transaction fees per deposit (or sale), no TOB, and automated monthly investing, Curvo keeps your costs predictable and your experience beginner-friendly. Everything is managed behind the scenes, so you can focus on your long-term goals, not broker fees or picking ETFs.

Taxes

Belgian investors face a few key taxes when investing in ETFs or index funds:

Tax	Index funds	ETFs
TOB (transaction tax)	Usually no TOB on each investment; may pay 1.32% when selling an accumulating fund (the funds in the Curvo portfolios are exempt)	Pay between 0.12% and 1.32% on every buy/sell
Dividend withholding tax	30% on any cash dividends Accumulating funds avoid this as no cash is paid out	Same with 30% on dividends Accumulating ETFs help avoid this tax
Reynders tax	30% tax on gains from the bond portion of accumulating funds (if fund holds more than 10% in bonds)	Same applies to bond-heavy accumulating ETFs

Good news: There’s no tax on capital gains for pure stock index funds or ETFs, as long as they don't include bonds. However, this will change in 2026 due to new government measures regarding Belgium's 10% capital gains tax.

Navigating Belgian taxes can be a hassle, but not with Curvo. We:

Use TOB-exempt funds, so you save on transaction tax
Offer accumulating index funds to reduce dividend taxes
Automatically manage everything behind the scenes: no broker needed

Trading: how can you access your money?

Let's take a look at the differences between index funds and ETFs is liquidity, how quickly or often you can trade in and out of the investment:

Liquidity	Index funds	ETFs
When you can sell	Once per day (at end-of-day price)	Anytime during the trading day (real-time prices)
Price certainty	You won’t know the exact price until end of day	You see the price live and sell immediately
Who it suits	Long-term, hands-off investors	Traders or those who want more control
Is it a big deal?	Not really: timing the market isn’t necessary for long-term growth	More flexibility, but not critical for passive investors

ETFs offer quick buying and selling, which is great for flexibility. However, this isn't a major benefit for long-term, automatic investors. Both index funds and ETFs are liquid, meaning you can exit when needed. But with ETFs, you can trade during the day. Index funds require you to wait until the end of the day. This is a noteworthy difference, but it’s not a key factor for most beginners.

With Curvo, there’s no need to track market hours or worry about timing your exit. Since we focus on long-term, passive investing with index funds, you get:

The liquidity you need to access your money
Without the stress of real-time trading
And without distractions that hurt your long-term performance.

Simplicity and convenience

When comparing index funds and ETFs, especially for beginners, simplicity is a big factor. This includes how easy each is to understand, use, and stick with over time.

Factor	Index funds	ETFs
Setup	Simple: no broker needed; just set and forget	Requires broker account and learning how to trade
Fractional investing	✅ Yes, your full contribution is always invested	❌ Rare: leftover cash often uninvested
Automation	✅ Easy to automate monthly investing	❌ Manual unless broker offers automation
Portfolio rebalancing	Often automatic (especially with Curvo)	Manual, you manage splits and rebalancing
Psychological impact	Less temptation to check constantly as prices update daily only	Real-time prices can encourage over-trading
Ease of diversification	Pre-built, diversified portfolios available	You choose and manage your own ETF mix

To sum up, if you want simplicity and a hands-off approach, index funds are the best choice. Using an automated platform makes this even easier. If you prefer to manage your portfolio actively and don't mind some extra work, ETFs could be a good fit. Both options are simple, but factors like fractions, automatic investing, and fund choice make index funds easier to use.

Index funds or ETFs: which is better for Belgians?

Both are great tools for passive, long-term investing. The choice often depends on personal preference and practical factors.

If you want to manage your own investments, ETFs are a great choice. They have low costs, and some research can help you succeed. You can select a few broad ETFs, like a world stock ETF and a bond ETF. Then, open a broker account and start investing. Many Belgian DIY investors prefer ETFs for their wide selection and lower fees. Just remember to think about Belgian taxes. Use accumulating ETFs for tax efficiency, and consider the TOB on trades. For those taking this path, we suggest a passive strategy. Buy and hold for the long term, and avoid frequent trading for the best results.
If you value ease, guidance and automation, an index fund approach might suit you better. We think investing should be easy. Just set aside some money and let it grow with minimal effort. By using index funds in our portfolios, you gain the benefits of passive investing. You’ll enjoy good market returns at a low cost, without the hassles of ETF trading. Curvo’s portfolios use index funds, allow fractional investing and have no TOB on each contribution. This is perfect for monthly investing. You won’t need to choose from thousands of ETFs or manage rebalancing, we handle it for you. If you’re a beginner or like a hands-off approach, investing with Curvo (index funds) can be easy. You get a low-cost, globally diversified portfolio that works for you. It helps you stay on track and invest regularly.

Based on our experience with Belgian investors, starting and staying consistent is key. Whether you choose an index fund or an ETF, ensure it matches your style. If managing trades and brokers isn’t for you, don’t hesitate to take the easier route. If you enjoy tinkering and optimising, ETFs can be rewarding.

At Curvo, we believe the best investment is the one you can keep.

Both index funds and ETFs are good choices if you use them right. ETFs may suit you better if you like to manage things yourself and want to save costs. On the other hand, index funds are great for their simplicity and ease.

In the end, both paths lead to the same goal: growing your wealth by following the market. The good news is you don’t have to choose just one for life. Some investors begin with one or two ETFs. Later, they might switch to a managed index fund for convenience or vice versa.

Conclusion

Both index funds and ETFs can help you build long-term wealth, but they serve different types of investors. Your choice comes down to how hands-on you want to be with your investments.

ETFs work well if you're comfortable with brokerage accounts and want maximum control over your portfolio. Index funds shine when you value automation and simplicity over everything else. As a Belgian investor, also consider the tax implications and transaction costs that come with each option. The most important step is starting your investing journey. Once you begin, you can always adjust your approach as you learn what works best for your situation and goals.