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 Ireland, you are not allowed to open a personal 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 Ireland? Keep on reading. Here’s what we’ll cover:
What is Vanguard, and why does it hold an extraordinary reputation in the US?
Founded in 1975, Vanguard is the 2nd 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, and trust services (more positioned for the individual US investor). 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).
Is Vanguard available in Ireland? What are their expansion plans?
Vanguard is only available for US and UK retail investors. Unless you are a professional investor, you will not be able to open a personal account in Ireland. 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 Irish, 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 main indices! You have a range of 45+ 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!
ETFs and Index Funds: what’s the difference?
In the US, everyone talks about mutual funds (or Index Funds as they are known in the rest of the world). In Ireland, 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.
Why are US-domiciled funds not available in Ireland?
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.
Vanguard Platform Alternatives in Ireland
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:
Commission-free stock and ETF trading. You can also copy other traders/investors. Slick, modern, and easy for anyone to use. It is trusted by over 20 million clients worldwide.
Disclaimer: 67% of retail CFD accounts lose money.
Low-cost broker where you can buy stocks and ETFs with 0% commissions.
Disclaimer: Investing involves risk of loss.
A recent broker that offers commission-free stocks, ETFs and cryptos trading in Ireland. Very transparent and regulated by top-tier AFM. New users will receive one free share worth up to €200.
commission-free stock and ETF trading with +10,000 global stocks and ETFs. It charges 0.15% on foreign exchange fees and presents fractional shares.
Disclaimer: 76% of retail CFD accounts lose money. You will never lose more than the amount invested in each position.
These trading platforms are quite recent. Despite this, we have noticed that all of them could withstand the massive spike in volatility that occurred due to Covid-19, especially in March and April of 2020. We hadn’t seen that type of market instability since 2007–08, during the Global Financial Crisis, so this gives us good comfort to know that none of these apps suddenly crashed – as happened with Robinhood, a free US-based online broker.
Vanguard Alternatives in Ireland
eToro at a glance
eToro is the world’s leading social trading platform with over 20 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 our review of eToro.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% 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.
Vanguard Alternatives in Ireland
Degiro at a glance
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 €0.50 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 EUR 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 EUR 100,000 under the German Deposit Guarantee Scheme.
Still any doubts? Go through our Degiro Review!
Vanguard Alternatives in Ireland
# BUX Zero
BUX Zero at a glance
BUX Zero is an online broker launched in 2019 that has positioned itself as an affordable way for Europeans to increase their savings. It brings a simple and elegant way to start investing.
It allows users to trade US and EU stocks (Dutch, German, Belgian, French, and Austrian) and 30+ ETFs. New users will also benefit from one free share worth up to €200 (terms available on page 31 of the Bux Zero Client Agreement). You also have access to fractional investing, making it easy to invest in companies with big share prices (Amazon, Tesla, Alphabet,…) starting for as little as €10.
In addition, crypto trading is also available for free! Investors can trade Bitcoin, Ethereum, Litecoin, among other cryptocurrencies.
BUX Zero is very transparent in its pricing structure: it charges no commission for Zero, Market and Limit Orders for US stocks, but it will cost you 1€ per Market or Limit Order in EU stocks and ETFs (Zero Orders are free). Besides, it also earns money through an FX markup (currency conversion fee) of 0.25%.
On the downside, the only place to trade is its mobile app (no desktop or web trading platform available), the products available are limited and it has no demo account.
BUX Zero is regulated by the Dutch Authority for Financial Markets (Autoriteit Financiële Markten – AFM). If you want to learn more, check our Bux Zero Review.
Along with BUX zero, BUX’s flagship platform, you can still use BUX X to invest in CFDs and BUX Crypto if you only want to buy cryptocurrencies. Note that both of these services are expected to be combined with BUX Zero for consolidation processes as the company progresses to create a single destination for investors.
Investing involves risks. You can lose your deposit.
Vanguard Alternatives in Ireland
# Trading 212
Trading 212 at a glance
Trading 212 is one of the most famous European brokers, being the most downloaded trading app in the UK since 2016 and even reaching the #1 spot in Germany in 2017. Their philosophy is to “disrupt the stock brokerage industry by offering the first zero-commission stock trading service in the UK and the EU, unlocking the stock market for millions of people”.
Trading 212 allows users to trade in various assets, including stocks, ETFs, and CFDs on stocks, indices, forex, and commodities. It has a freemium model (“Invest” account) offering the basic services with 0% commissions on stock and ETF trading but with a 0.15% currency conversion fee and a CFDs area (“CFD” account) where you will incur spread costs.
Trading 212’s trading platform is a proprietary one, specially developed for investors who want to have clean, simple, and yet innovative software to trade with. It can be accessed from a computer and/or smartphone.
Since the Brexit negotiations deadline (31st December 2020), as an Irish citizen, you will continue to be under the regulation and supervision of the Financial Conduct Authority (FCA) as Trading 212 remains a UK-based company. This also means that you will still be covered by the Financial Services Compensation Scheme (FSCS) for up to 85 000£. However, additional compensation by the EU will no longer apply.
Do you still have questions you need to find the answers to? Check out our full Trading 212 Review.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% 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.
Vanguard ETFs/Index Funds Alternatives in Ireland
As stated above, you will find 45+ EU-domiciled Vanguard ETFs, so you still have plenty of choices. However, other ETF providers offer ETFs in other asset classes and, in some instances, these are even cheaper than Vanguard.
- IShares: As a subsidiary of Blackrock, iShares is the largest provider of ETFs in the world. You can find any asset class under this umbrella structure. In Ireland, you will find 340+ ETFs from this provider alone.
- Lyxor: As a subsidiary of Société Générale, Lyxor is present in the ETF industry since 2001, being one of the pioneers in this segment. It has 200+ ETFs domiciled in Europe.
- xTrackers: It is a family of ETFs available to European investors managed by DWS, a subsidiary of Deutsche Bank. Their offering covers all asset classes with 200+ ETFs in the market.
- Amundi: It offers a wide range of simple and transparent tracking options. In Ireland, you will find over 120 ETFs from this provider.
Before selecting an ETF, make sure you find out what the replication 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 the full list of ETFs based in Europe.