The 40 best iShares ETFs on Trade Republic for investors
Trade Republic now offers over 400 iShares ETFs and ETF savings plans. In this article, we take a look at the 40 best iShares ETFs for long-term investors.
But before we get started, we need to narrow down our options right from the outset. This is because there are also ETFs that aren’t designed for long-term saving. So, out of the 400 ETFs on Trade Republik, we’ll only consider those that invest in shares. All the others – those investing in bonds, the money market, commodities and property – are out.
Although each of these may well be a useful addition to one’s own portfolio, that is not what we wish to compare here. This brings us to 227 equity ETFs, and of these we will take a closer look at the top 40.
Criteria
Costs
The first thing I decided was that the costs must be less than 0.5 per cent per year. This means that they simply aren’t too expensive and don’t eat into the entire return. That’s a strict limit, and I’ve allowed for exceptions here because, in my opinion, that’s simply too much for an ETF.
Assets under management
Let’s move on to assets under management. For me, that has to be at least 250 million euros, or 100 million euros. That’s the absolute lower limit. So if an ETF manages less than 100 million euros, it’s very likely not worth it for the provider.
And once the value reaches around 250 million, that’s when it really starts to pay off. And then the provider won’t discontinue the ETF either, which would, of course, be disastrous for a long-term investment, as you’d then have to reallocate everything again and end up with a lot of unnecessary work.
Exotic ETFs
There are ETFs that specialise in specific sectors, such as hydrogen, for example, which is a good example of an industry that is currently experiencing a resurgence. However, I have omitted these specialised ETFs – whether they focus on healthcare, digitalisation or hydrogen – as these may simply be trends where one invests not for the long term but for the medium term, and where one also needs to take an active approach. If you’re interested in the ETFs I’m mentioning here, you can also use the tracking difference as an additional criterion. I’ve explained what that is in this A closer look at the video.
Winners and losers among ETFs
In what follows, I will be presenting an ETF that didn’t make the cut. And then the counter-example that did.
The iShares Dow Jones Global Sustainability Screen ETF it’s out. At 277 million euros, it’s large enough, but with costs of 0.6 per cent, it’s too expensive for long-term investment. There are cheaper options available, even if you want to invest sustainably. It doesn’t necessarily have to cost a lot of money. And this is demonstrated by the next ETF, which, incidentally, is structured very similarly, including in terms of the countries it comprises.
This is the iShares MSCI World SRI ETF, and SRI is the sustainability label here. This ETF has assets under management of more than a billion, so it is more than large enough, and yet charges just 0.2 per cent per year – only a third of the previous ETF’s fee. It only includes companies that, compared with their sector peers, have high ratings in the areas of environmental protection, social responsibility and corporate governance. For anyone who considers sustainability to be an important issue, this ETF is a good and affordable option.
Let’s move on to the second ETF that didn’t make the cut: the iShares Automation & Robotics ETF. At 44 million euros, this is significantly too small, which means it falls well below the 100 million euro threshold we have set as a criterion. It is therefore not viable for the provider and consequently carries an increased risk of being closed down in the future.
With fees of 0.4 per cent, it’s not too bad. But it’s still a good example of a sector bet that can go wrong. In other words, if this sector doesn’t prove profitable in the long term, then you’ll end up losing out in the long run, and you can actually gain much easier access to sectors that do hold promise.
One of these is the iShares Nasdaq 100 ETF. This fund includes the top 100 US tech stocks and, at five billion euros, is extremely large. With management fees of just 0.33 per cent, it is also considerably cheaper than the ETF mentioned above and is not at risk of being closed down. It’s really, really worth it for the provider. Personally, this isn’t my ETF of choice, as I now only invest in two ETFs for the long term; you can find out more in this video Nevertheless, this ETF could be a good addition to your portfolio.
However, it is important to bear in mind that these figures have performed extremely well in recent years and that this cannot go on indefinitely. We may well see some sharp corrections in the near future.
After looking at this good ETF, let’s take a look at another one that isn’t quite as good: the iShares Dividend DAX ETF. From the very limited selection of 30 DAX constituents, he has simply picked out the ‘15 best’ – or rather, the 15 with the highest dividend yield – and charges an incredibly high fee of 0.31 per cent per annum for this. He manages 460 million euros, which is truly remarkable given that he does almost nothing. To be honest, you’ve got a choice here – and it’s not even that complicated to do it yourself. All you need to do is check the dividend yield and buy the better of the two.
Instead, you could opt for another ETF that has a global focus, rather than one limited to Germany. It’s a bit more expensive, but it offers broader exposure and still falls below our threshold of 0.5 per cent in annual costs. With 100 companies, the iShares STOXX Global Select Dividend 100. And this fund has selected the companies with the highest dividend yields from Europe, America and Asia and simply included them in its index.
The top 100 companies are included in this list. Germany accounts for just under six per cent, whilst the US is not particularly heavily weighted, at 23 per cent. I consider a purely German approach to be grossly negligent. That is why I see this as a genuine alternative, even though Germany is significantly less well represented here. Simply investing in German companies is short-sighted. Here, you currently get a dividend yield of 5 per cent – which is very high.
Let’s move on to the iShares Global Clean Energy ETF. This is definitely one of iShares’ larger ETFs. It manages more than a billion euros in assets, which is a huge amount. However, if we look at the composition of this ETF, we see that it comprises just 30 constituent stocks and has performed very poorly. This ETF never really recovered from the financial crisis of 2008–2009, and investors are still grappling with a 70 per cent loss to this day, even though they have been invested for more than 13 years.
The next ETF is one of the most popular. We’re talking about the iShares Core Euro STOXX50 ETF. Four billion euros are managed here, which is significantly larger than the last one we discussed. And that’s with costs of just 0.1 per cent. That actually sounds a bit like an ETF, where you’d say, ‘Right, you really ought to invest in that.’ Both criteria – volume and cost – are more than met. In fact, however, there are only 50 titles included here. You should bear this in mind if you’re considering investing here.
Another ETF structured along the same lines is the iShares STOXX Europe 600. And as the name suggests, this ETF comprises a total of 600 holdings. That’s 12 times as many companies as in the ETF mentioned earlier. Unsurprisingly, the assets under management are significantly higher at 5.7 billion euros. The management fee is 0.2 per cent, which is acceptable, but more expensive than the previous one.
Currency hedging
And now we come to another type of ETF – of which there are a great many, but which I have also excluded. These are currency-hedged ETFs. For example, there is the ETF from iShares S&P 500 EUR Hedged UCITS ETF, which is hedged against the euro.
In my personal opinion, there’s really no need for that, because the currency risks are very small when it comes to long-term investments, at least when you look at the world’s major currencies. And the euro, our domestic currency, is also one of the world’s major currencies.
Rather, one needs to consider which regions one actually favours, where one is investing, and how the shares of companies operating in those regions are performing. But currency is really one of those things you don’t need to worry about very much. That’s quite a bold and sweeping statement, which I don’t usually make, but numerous studies back me up on this. Stiftung Warentest has also highlighted this in this article To put it in a nutshell. It states quite clearly:
Currency is a very minor risk, so there’s no need to worry about it.
These are additional costs that you don’t need in the long run when investing. And so we’re leaving them out, including in the selection of the top 40 ETFs I’ve listed here. I’ve highlighted a few ETFs here that I think are very good, as well as alternatives to poor-quality ETFs, which I’ve deliberately left out. And here’s another overview of all the ETFs that I personally consider to be good options for long-term investment.
My top 40 ETFs on Trade Republic:
iShares Core S&P 500
iShares Core MSCI EM
iShares Core FTSE 100
iShares Core MSCI Europe
iShares STOXX Europe 600
iShares Edge MSCI World minimum volatility
iShares Core MSCI USA SRI
iShares Nasdaq 100
iShares MSCI Europe SRI
iShares Core MSCI Pacific Ex-Japan
iShares Euro STOXX
iShares MDAX
iShares STOXX Global Select Dividend 100
iShares Edge World Quality Factor
iShares MSCI World Small Cap
iShares MSCI China A
iShares Edge MSCI Europe Value Factor
iShares TecDAX
iShares MSCI Japan
iShares MSCI ACWI
iShares MSCI North America
iShares Edge MSCI USA Value Factor
iShares MSCI EMU ESG
iShares MSCI USA ESG
iShares Core FTSE 100
iShares S&P Small Cap 600
iShares MSCI EM SRI (/ESG)
iShares MSCI Canada
iShares Edge MSCI EM minimum volatility
iShares MSCI USA Small Cap
iShares MSCI Korea
iShares Euro STOXX Small
iShares Europe ESG
iShares MSCI Australia
iShares Nikkei 225
iShares MSCI EMU Mid Cap
iShares MSCI Japan ESG
As always, this isn’t investment advice. I can’t recommend that you invest in these ETFs. This is just my personal opinion. You’ll have to decide for yourself whether this is right for you or not. I hope you’ve enjoyed this look at the top ETFs on Trade Republic.
