Why "domestic" ETF providers are worth considering
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In the increasingly globalized financial world, choosing the right ETF provider can be a difficult decision. While international ETF providers often boast big names and an impressive range of products, there are compelling reasons why investors should also consider domestic ETF providers. These considerations range from support for the domestic economy to alignment with home values and potential cost benefits.
A comment from me on why $AMUN (+2.38%) , $HSBA (+1.51%) or $DWS (+1.83%) should sometimes be the first choice after all.
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1. Supporting the local economy
The first and perhaps most obvious reason to choose a domestic ETF provider is to support your local economy. By investing in ETFs managed by local providers, investors are not only supporting the growth and stability of domestic financial markets, but also local employment and innovation. Any domestic provider that can compete with international giants helps to strengthen the financial center and secure jobs. In addition, the administrative costs that investors pay flow directly back into the domestic economy instead of flowing abroad.
2 Value-oriented investment decisions
Another point that is often overlooked is the value orientation of the investment strategy. Domestic ETF providers generally have a better understanding of the cultural and economic characteristics of their country. They are often more closely networked with local markets and companies and can therefore offer products that are better tailored to the needs and values of local investors. This can also be reflected in a better consideration of sustainability criteria, social responsibility and governance principles, which are often important to local investors.
3. cost savings with comparable quality
Another convincing reason to choose domestic ETF providers lies in the potential cost advantages. As international providers often have high marketing and distribution budgets, domestic providers often have to offer their products at a lower cost. Management fees and other costs are also often lower, as they do not have the same high overhead costs as international providers. In addition, for products that are similar in structure and investment objective, the differences in quality are often minimal. Domestic ETFs therefore often offer excellent value for money.
Potential disadvantages and trade-offs
Of course, there are also reasons that could speak against a domestic ETF provider. One example is a higher tracking error or some investors also prefer ETFs domiciled in Ireland (alluding to Amundi and Luxembourg) due to tax advantages. However, large brand names such as BlackRock or Vanguard attract many investors because they offer brands, high fund volumes and broad product ranges.
The fact remains that the differences in quality between domestic and international providers are small, especially for financial products such as ETFs, which are often standardized and transparent.
Addendum: Of course, you shouldn't put yourself in a worse position just to choose a domestic product.
Addendum 2: Domestic means Europe and it is not about ETF domicile in Germany but about the conflict between Ireland and Luxembourg regarding ETF domicile, which can certainly have an impact.
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