3Mo·

Why domestic ETF providers are worth considering


In the increasingly globalized financial world, choosing the right ETF provider can be a challenging decision. While international providers often boast prestigious brands and impressive product portfolios, there are compelling reasons to consider domestic ETF providers. These considerations range from supporting the local economy to alignment with personal values and potential cost benefits.


A comment from me as to why $AMUN (-0,63 %) , $HSBA (-2,41 %) or $DWS (-1,17 %) should sometimes be the better choice.

Reading time: 3-5 minutes.


1. Supporting the local economy

The first and perhaps most obvious reason to choose a local ETF provider is to support the 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 aspect that is often overlooked is the value orientation of the investment strategy. Domestic ETF providers generally have a better feel for the cultural and economic characteristics of their country. They are more closely networked with local markets and companies and can offer products that are better tailored to the needs and values of domestic investors. This is often reflected in a greater consideration of sustainability criteria, social responsibility and governance principles that are important to local investors.


3. cost savings with comparable quality

Another compelling reason to choose domestic ETF providers is the potential cost benefits. International providers often have high marketing and distribution budgets, which is why domestic providers can often offer their products at a lower cost. Management fees and other costs are often lower as they do not have the same high overhead costs as international providers. In addition, the differences in quality are often minimal for products that are comparable in structure and investment objective. 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, while other investors may prefer ETFs based in Ireland or Luxembourg to take advantage of tax benefits. Brands such as BlackRock or Vanguard attract many investors as they offer large fund volumes and a broad product range.

However, it should be noted 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

By "domestic" here we mean Europe. It is not only about the ETF domicile in Germany, but also about the conflict between Ireland and Luxembourg regarding the ETF domicile, which can certainly have an impact.


Cheers!

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24 Commentaires

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I prefer $VWRL and $VWCE because it is more fun to have the ETF in Ireland than in Germany. What do I care about German ETF providers? Where does value creation take place here? Then I'd rather buy German products, that benefits the German economy more.
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Actually every point you mentioned is bad for investor in Germany. And everything comes down to cost.
What you consider "supporting local economy " I see it as high TER just because you spent a lot to get a licence in Germany and now you need to recoup that somehow.

What you save in marketing ( according to your pt 3) you spend that or more in regulation and paperwork for Germany.
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I would generally prefer NL domicile due to the pro rata solidarity surcharge tax savings. However, there are hardly any interesting ETFs with NL domicile. In my opinion, a top ETF is $TDIV.
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Where are the Vanguard people who are about to explain to me why cooperatives are cool, which, by the way, only apply in the USA?
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I also tried it once when I was starting out here, in the meantime I was a Nazi. But I admit, I didn't write it as objectively as you did, but rather provocatively. I am pro domestic economy! I have now switched from FTSE All-World to Amundi ACWI Dist ;-).
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I would choose amundi as an etf provider if they had a quarterly distributing world etf xD
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