All about Vanguard in Europe: Platform, Index Funds, & More (2024)

In the United States, Vanguard is widely known for enabling customers to open an account to invest in stocks, bonds, options, ETFs, and mutual funds (meaning Index Funds, whose sole function is to track an index).

In Europe, only residents of the UK (United Kingdom) can open an account with Vanguard.As such, if you are a resident of any other European region, you aren’t so fortunate. However, you can still invest in Vanguard ETFs through different investment platforms.

Do you want to discover the best alternatives to a Vanguard Account or find out about Index Funds in Europe? Keep on reading. Here’s what we’ll cover:

1. • What is Vanguard?
   • Is Vanguard available in Europe?
   • ETFs and Index Funds: what’s the difference?
   • Why are US-domiciled funds not available in Europe?
   • Vanguard Platform Alternatives in Europe
   • Vanguard ETFs/Index Funds Alternatives in Europe
   • The bottom line

Founded in 1975, Vanguard is the 2^nd largest investment company (after BlackRock) with $5.6+ trillion in assets under management and 30+ million clients trusting their services!

John Bogle, the deceased founder of Vanguard, made history in 1976 by creating the first index fund available for retail investors (people like you and us). The original name was “First Index Investment Trust”, though nowadays, its official name is “Vanguard 500 Index Fund Investor Shares”. Its central premise is that buying and holding the broad stock market would provide better results than trying to beat it by picking active managers. Since then, investment costs have dramatically decreased for all market participants.

In addition to Mutual Funds and ETFs, Vanguard also offers brokerage, financial planning, trust services (more positioned for the individual US investor), and Vanguard business accounts. The brokerage segment was introduced in 1983 to add diversification by combining stocks and bonds to the mutual funds’ segment. The Vanguard brokerage was not designed for short-term traders but was orientated more towards long-term investors (buy-and-hold strategies).

Vanguard is only available for US and UK retail investors. Unless you are a professional investor, you will not open a personal account in any other European country. Vanguard is present worldwide but not for retail accounts, nor are there any announcements indicating when Vanguard will be coming to any other countries apart from the US and UK.

However, not allowing you to invest through their platform is not synonymous with “you can’t invest in Vanguard financial products”. As a European, you are perfectly eligible to invest in the wide range of Vanguard ETFs available on the market. Yep, you may buy an ETF tracking the S&P 500, DAX, or any other of the leading indices! You have a range of45+ Vanguard ETFs to choose from. Keep in mind that all these ETFs are EU-domiciled. (See the explanation below – it’s important!)

So, since you can invest in Vanguard products but not in their platform, we must consider other platforms, and that’s exactly what we have for you!

In the US, everyone talks about mutual funds (or Index Funds as they are known in the rest of the world). In Europe, everyone talks about ETFs. What’s the difference?

The only difference between Index Funds and ETFs is that ETFs can be bought or sold at any time during the day (like a stock), whereas Index Funds are only priced at the end of the day (like an active mutual fund).

In practice, investing through ETFs and/or Index Funds should present very similar returns since the underlying assets are the same (as long as you are tracking the same benchmark).

Since you can only buy Index Funds directly from the provider, they are often not as common across borders. At the moment, in Europe,Vanguard only offers Index Funds to UK residents.

Unlike Index Funds, ETFs are common in Europe because they are easily available in multiple stock exchanges without much distribution costs to the fund provider.

At the end of the day, using an ETF or Index Fund structure should not matter since the output should be the same, (though there may be slight differences due to tracking errorandTER).

You have probably heard of SPY, VOO, IVV, etc. These are tickers of the largest passive funds available in the US and not in Ireland. Why? This is related to the Packaged Retail Investment and Insurance Products (PRIIPs), which defines a set of EU regulations to protect consumers.

At the beginning of 2018, alongside the MiFID II regulation, PRIIPs scrutiny demanded that all ETFs commercialized in Europe should fulfil the regulatory framework of the European Commission, which was implemented to create a harmonized regime in the EU-domiciled ETF market.

Have you ever noticed that the Key Investor Information Documents (KIIDs) have two pages and present the Objectives and Investment Policy, Risk and Reward Profile, Charges, and Past Performance in a very similar layout? This doesn’t happen by chance, EU rules are being applied.

So far, US-domiciled ETFs have not complied with these regulatory changes on time since their clients are still prominently US-based, so it’s not a priority for them to change their procedures at their own cost.

However, PRIIPs legislation leaves room for different interpretations since some financial institutions in the Netherlands allow their clients to invest in financial instruments based in the US, which brings even more ambiguity to the table! Even so, we strongly suggest you avoid this method since you may be subject to high foreign exchange costs, you would be under a different regulatory body (thus presenting potential legal issues), and you may be charged higher taxes if you do not sign a W-8BEN.

Our pre-selected alternatives allow you to implement the same long-term philosophy with similarly low costs as those you would find in Vanguard. What’s more, the online brokers we identify below even provide additional features: user-friendly mobile and desktop versions, watchlists, financial data, news, and many more! You may not need this sort of platform as a long-term investor, but at least you have the tools in case you call for it in the future.

Here are our top picks:

eToro is the world’s leadingsocial trading platform with over 30 million clients in more than 140 countries. This platform allows retail account holders to mimic the trades and trading strategies of the most successful clients automatically and in real-time.

Still, it does not solely focus on social trading! It is also a multi-asset platform offering many different financial instruments to trade, such as CFDs, ETFs, stocks, commodities, Forex, and cryptocurrencies.eToro provides 0% commission on stock and ETF trading(not all ETFs are commission-free). The spreads on CFDs may vary according to each financial product, so bear this in mind before placing an order.

Visually, the website and mobile app are nearly identical. They are attractively laid out, and incredibly simplified. The account opening process is pretty easy and fast. You only need a couple of minutes to sign up and follow the identification procedure. Moreover, if you are not yet comfortable with investing or its comprehensive dashboard, eToro provides you with a practice account.

eToro is considered safe since top-tier financial authorities like the Financial Conduct Authority (FCA) regulate it, and it has shown resilience during the Covid-19 market turmoil.

On the downside, it only has one account base currency (USD) and charges a 5$ commission per withdrawal. Plus, cost-free trading only applies when you trade real stocks or ETFs. In other words, if you leverage your positions, you’re trading CFDs and not real stocks or ETFs – so, you will incur spreads and overnight fees.

If you are interested, please read ourreview of eToro.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Founded in 1978 and publicly listed in NASDAQ (ticker: IBKR), Interactive Brokers is a global online broker which surpassed major financial crises, showing resilience and a rigorous risk management process.

Interactive Brokers offers an advanced investment platform that includes a wide range of products (stocks, options, mutual funds, ETFs, futures, bonds, and currencies) from 150 markets, solid trade execution (IB SmartRouting), and a set of technical and fundamental tools to help you in your investment decisions.

Beginners and intermediate investors have educational tools to explore, but the learning curve will be steep. That´s why we mainly endorse it to more advanced traders. Besides, the customer service gives crystal clear answers to your doubts, so there is no need to go back and forth.

On the downside, Interactive Brokers’ fee structure is quite complex, the registration process is lengthy but fully online, and the broker doesn’t offer commission-free trading. However, when considering FX fees, narrower spreads, and the stock loan program, Interactive Brokers’ clients still get significant savings compared to most brokers.

Interactive Brokers also launched IBKR GlobalTrader, a modern mobile trading app to tradeStocks, Options and ETFs, ideal for beginner investors. Some of the features of IBKR GlobalTrader include automatic currency conversions, fractional shares, demo account, and more.

Want to know more about Interactive Brokers? Check our Interactive Brokers Review.

Founded in 2013, Degiro is a low-cost brokerage firm that has become very popular due to its low rates! With almost 2 million users, the innovative platform has become widely known for its “do-it-yourself” philosophy in the sense that you have everything at your disposal to start investing on your own. It offers a wide range of financial assets to trade, including stocks, ETFs, bonds, options, futures contracts, warrants, investment funds, and some leveraged products (not quite the same as CFDs. More info here).

For instance, you can trade some stocks and ETFs for free (a €1.00 flat handling fee – external costs – still applies). You also have a list of 200 ETFs where you may trade once a month completely free with no minimum amount required. The web trading platform is basic, but it is efficient and straightforward to use. In a matter of minutes, you get used to it. The same applies to its mobile app. On the downside, there is an absence of any significant fundamental research, a €2.50 connectivity fee applies and pricing alerts are missing.

Regarding security, Degiro is the Dutch branch of flatexDEGIRO Bank AG (a German regulated bank). In the unlikely event that the segregated assets cannot be returned to clients, Degiro falls under the German Investor Compensation Scheme, which compensates any losses from non-returned assets up to 90% (with a maximum of €20,000), so do bear this in mind if you are planning to invest much larger volumes. Furthermore, any money deposited on a DEGIRO Cash Account with flatexDEGIRO Bank AG will be guaranteed up to an amount of €100,000 under the German Deposit Guarantee Scheme.

Still any doubts? Go through our Degiro Review!

Before selecting an ETF, make sure you find out what thereplication method is. In other words, whether it is physical or synthetic. Physical ETFs trade the real underlying assets of the index, whereas synthetic ETFs don’t hold physical securities. Instead, they use financial derivatives in an attempt to achieve the same results.

Despite being cheaper, synthetic ETFs come with an additional hazard: counterpart risk. They rely on swap contracts to execute their investment strategy, which means if the counterpart that ensures the future cash flows generated by the index cannot meet those obligations, you may lose all your money. A way to balance this risk is by providing collateral but, honestly, stick to the physical ones—you’ll avoid one more headache!

Take a look at thefull list of ETFs based in Europe.

Whether you are looking for a viable Vanguard Platform alternative or a particular EU-domiciled ETF that offers the same exposure to a certain index that any US-based ETF would, we think you are well served with the alternatives we reference.

ETFs are reasonably straightforward. Choosing an investment platform can be a bit more challenging. In general, it is always crucial to be aware of the fees, to make sure that top-tier institutions regulate the platforms you are considering, to know the range of products you can trade (not all platforms allow you to trade EU stocks, for instance), and to determine how responsive the customer service is, among other factors.

The key aspect is to always know how aligned the platform/company’s interests are with your particular needs. Each investor has a set of requirements. Unfortunately, it is humanly impossible to help every one of you individually, but we are convinced that our solutions will fit more than 90% of our readers.

Take your time and choose wisely!

A reminder that the above should not be construed as investment advice and should be considered information only. Investors should do their own research and due diligence about the services and opportunities, to determine which are best suited for their risk, returns, and impact strategy.

We hope we have helped. Please leave your comments below.

Happy investments!

Does Vanguard work in Switzerland? Can Swiss investors use the Vanguard trading app? 🇨🇭

No, Vanguard is not available in Switzerland (assuming you are not a professional investor). However, you can still invest in Vanguard ETFs through different platforms.

Is Vanguard available in Belgium? 🇧🇪

No, the Vanguard trading app is also not available in Belgium. It is only available for US and UK clients.

Does Vanguard operate in Italy? 🇮🇹

No, Vanguard does not operate in Italy for retail (non-professional) investors. However, you can still invest in Vanguard ETFs from Italy through other platforms.