ETFs

ETFs are an excellent way to invest, according to this famous SPIVA study.

About 92% of investors who try to do better than an index like the S&P 500, which groups together the 500 best American companies, fail to outperform this index. Only about 8% manage to do better.

Investing in the stock market requires many human qualities, and most people don’t want to spend hours on this activity.

The stock market also tests our mental capabilities, often putting them to the test. It’s necessary to constantly check several vital financial indicators, such as:

• Inflation
• Politics
• Interest rates
• Market calendar
• Central banks
• Market timing
• Recessions
• News and media
• Etc.

For the average person, following all these aspects can be very demanding, so much so that many who wish to invest feel helpless and end up giving up. This isn’t a game; it’s hard-earned money at stake.

That’s why it’s not wise to rely on luck in this field. Once again, knowledge is power…

This is where ETFs come in!

When you buy a share of an ETF, you acquire a basket of stocks. Take the S&P 500 for example: by buying a share of this ETF, you’re actually investing in a portion of the 500 best American companies.

As you’ll understand, it’s an incredible way to diversify and position yourself among those who, without beating the S&P 500, don’t underperform it. It also provides peace of mind, as you don’t have to research which companies to invest in, which can be mentally demanding. Thus, you can invest passively…

There are several thousand ETFs, indexed to different themes or sectors…

The Best ETFs for Investing

• iShares Core S&P 500 UCITS ETF (Acc) - IE00B5BMR087
• iShares Core MSCI World UCITS ETF USD (Acc) - IE00B4L5Y983
• iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc) - IE00BKM4GZ66

These ETFs are among the largest in terms of assets under management, meaning the total value of assets managed by these funds.

You’ll notice they all carry the iShares name, indicating they come from the same issuer: BlackRock, the world’s largest financial asset manager, providing additional security.

The first ETF replicates the American S&P 500 index. The second tracks the top 1482 companies from developed countries, and you can check its technical sheet here. Each ETF has a detailed technical sheet, including the ETF’s positions. Finally, the last ETF tracks emerging markets and includes small and mid-cap companies, covering what the MSCI WORLD ETF doesn’t cover.

With just 2 or 3 ETFs, you can achieve great diversification while maintaining good performance.

The Best ETFs for PEA

Here are the best ETFs for investing through a PEA (Plan d’Epargne en Actions), normally reserved for French/European stocks, but which also allows investment in certain ETFs issued by European companies.

These ETFs are called synthetic ETFs (holders don’t directly own the assets of the index they replicate), but their performance is similar.

• iShares MSCI World Swap PEA UCITS ETF EUR (Acc) - IE0002XZSHO1
• Amundi MSCI World UCITS ETF EUR (C) - LU1681043599
• BNP Paribas Easy S&P 500 UCITS ETF EUR - FR0011550185

Bonus

ETFs can also track other values besides stock baskets, such as precious metals or bitcoin.

• iShares Physical Gold ETC - IE00B4ND3602:
  This ETF allows you to invest in gold.
• Amundi Index MSCI World SRI PAB UCITS ETF DR (C) - LU1861134382:
  An ETF for investing in companies that comply with the Paris climate agreement.
• iShares Nasdaq 100 UCITS ETF (Acc) - IE00B53SZB19 Amundi Nasdaq-100 II UCITS ETF Acc - LU1829221024: These two ETFs allow you to invest in the American Nasdaq 100 index, covering the top 100 technology companies, including giants like Google, Microsoft, Apple, or Amazon. Be careful, as they focus on a particular sector, they can experience strong variations both up and down.

In Conclusion

ETFs are excellent financial assets, offering the possibility to invest passively, with good returns, lower risk, and reduced fees.

On the downside, investing in ETFs isn’t very exciting and requires time. It’s advisable to automate your investments as much as possible by scheduling regular transfers to investment platforms.

Finally, the MSCI WORLD recorded an annualized total performance of 14.20% between the end of 2011 and December 2021.