The best ETFs to invest in are not necessarily the funds with the highest recent returns or the largest inflows. ETF selection depends on the intended role of the investment, the market exposure provided, the costs involved, and the level of concentration within the wider portfolio.
This guide works through factors that may affect ETF selection, compares the main ETF types, and outlines 2 routes into ETF investing on Mintos: selecting ETFs or using the automated Mintos Core ETF portfolio.
For anyone still building their understanding, the guide to what an ETF is covers the fundamentals.
Questions to ask before choosing an ETF
→ What market, region, or sector does the ETF track?
→ Which ongoing costs should an investor expect?
→ Is income reinvested or paid out (accumulating vs distributing ETF)
→ Does the ETF add new exposure or duplicate existing holdings?
Disclaimer
This is a marketing communication and in no way should be viewed as investment research, investment advice, or recommendation to invest. The value of your investment can go up as well as down. Past performance of financial instruments does not guarantee future returns. Investing in financial instruments involves risk; before investing, consider your knowledge, experience, financial situation, and investment objectives.
In this guide to choosing ETFs
- 6 factors that may affect ETF selection
- ETF types and what sets them apart from each other
- Choosing an investment platform
- Starting with ETFs
- ETFs on Mintos
Factors that may affect ETF selection
A single search for “best ETF to invest in” can return a global equity fund, a technology ETF, and a gold product in the same list. They hold different assets, carry different risks, and serve different portfolio roles, so comparing them side by side without a framework is misleading. The 6 factors below give that framework.
Area | Information to review |
Exposure | Benchmark, regions, sectors, and holdings |
Index design | Weighting method and inclusion rules |
Costs | TER, trading fees, spreads, and currency charges |
Replication | Physical or synthetic |
Fund profile | Size, operating history, and liquidity |
Income | Accumulating or distributing |
Portfolio role | Diversification, concentration, and overlap |
Market exposure and index methodology
The starting point in any ETF comparison is what the fund actually holds. Two ETFs described as “global” can behave very differently depending on which index they track, how that index is built, and how heavily it leans on any one country or sector. Before comparing returns or costs, an investor benefits from checking:
- Countries and regions represented
A fund labeled “global,” for example, may exclude emerging markets entirely, or it might concentrate the majority of its weight in a single country.
- Number and size of holdings
To illustrate, a fund tracking a broad index spreads risk more widely than one tracking a narrow benchmark, but a large holding count does not guarantee even distribution.
- Sector allocation
Technology, as one example, may make up a much larger share of one global index than another, which changes how the fund performs when that sector rises or falls.
- Weighting method
In practice, a market-cap-weighted index gives larger companies more influence over performance, so a handful of mega-cap stocks can drive the entire fund. An equal-weighted index gives each holding a similar allocation, spreading influence more evenly.
- Currency exposure
A euro-based investor holding a fund dominated by US-dollar assets, for instance, is exposed to exchange rate movements on top of market movements.
Ongoing costs and trading expenses
The total expense ratio (TER) is the annual fee charged by the ETF provider, deducted from the fund’s assets. But it is not the only cost an investor pays. The full picture includes:
- Total expense ratio (TER): As mentioned, this is the headline annual fee, covering the provider’s management and operational costs.
- Buying and selling fees: Some platforms charge a commission on each trade, which adds up for investors who buy or sell frequently.
- Currency-conversion charges: An ETF priced in US dollars bought through a euro account may trigger a conversion fee on every transaction.
- Bid-ask spreads: The gap between the buying price and the selling price at any given moment. Less liquid ETFs can have wider spreads, meaning the investor pays more to enter and receives less when exiting.
- Account or custody fees: Some platforms charge ongoing fees for holding ETFs, separate from the TER.
- Applicable taxes: Tax treatment varies by country and fund structure, and can affect net returns in ways that are not visible in the TER.
The lowest overall cost does not always sit with the fund showing the smallest TER. A cheaper fund may track a different benchmark, give narrower exposure, or trade on a platform that charges higher transaction fees.
Physical vs synthetic replication
Replication describes how an ETF mirrors the performance of its index, and the two main methods work in fundamentally different ways.
- A physically replicating ETF buys the actual securities that make up the index. If the index contains 500 stocks, the fund holds those 500 stocks (or a representative sample of them). The investor’s money is backed by real, identifiable holdings.
- A synthetic ETF does not hold the underlying securities. Instead, it enters into an agreement with a financial institution (usually a bank) that promises to deliver the return of the index. The fund gets the performance it needs, but the holdings inside it may be completely different from the index it tracks.
A simple exampleAn ETF tracking the S&P 500 using physical replication would hold shares of Apple, Microsoft, Amazon, and the other companies in the index. A synthetic version tracking the same index might hold a basket of European government bonds inside the fund, with a bank contractually agreeing to swap the return of those bonds for the return of the S&P 500. The investor gets the same index performance, but through a very different mechanism. |
Physical replication tends to be more transparent, because the investor can see the actual holdings and verify that they match the index.
Synthetic replication can give access to markets that are harder or more expensive to invest in directly, but it introduces counterparty risk, which is the risk that the bank on the other side of the agreement fails to deliver what it promised. If that institution runs into financial difficulty, the ETF may not receive the full index return.
Neither method is inherently better. Each involves trade-offs that depend on the market being tracked and the investor’s comfort with the underlying structure.
Fund size, operating history, and liquidity
Fund size is measured by assets under management. Larger ETFs tend to have narrower bid-ask spreads, but size alone does not tell the whole story. Lower assets under management can increase the chance of a fund closure or merger, even if the ETF tracks a well-known index.
Operating history provides information on tracking difference, spreads, and distribution patterns. A recently launched ETF may follow a recognised benchmark but offer less historical evidence.
Liquidity affects how quickly and cheaply an investor can buy or sell. Both the ETF’s own trading volume and the liquidity of the securities inside it matter. Past performance does not guarantee future returns, regardless of fund size or operating history.
Accumulating vs distributing ETFs
The accumulating vs distributing ETF question is one of the most practical decisions an investor makes. When an ETF holds stocks that pay dividends or bonds that pay interest, that income has to go somewhere. The two structures handle it differently, and the choice affects how the investment grows, what cash the investor receives, and how the returns are taxed.
Type | What happens to income | In practice |
Accumulating ETF | Income is reinvested into the fund automatically | No cash payments; the value of each unit grows instead |
Distributing ETF | Income is paid out as cash | Cash arrives on a set schedule |
A distribution is not an additional return on top of the ETF’s value. The fund price adjusts after income is paid out, so the total value to the investor is the same at the moment of distribution, it is simply split between the fund price and the cash received.
Portfolio overlap and diversification
Holding more ETFs does not automatically mean more diversification.
A global equity ETF, an S&P 500 ETF, and a technology ETF may all hold many of the same large US companies. Adding each fund can increase exposure to existing holdings rather than introduce a new source of diversification.
What matters is not how many funds sit in the portfolio, but how different the holdings inside each one actually are. Reviewing the largest positions, sector weights, and regional allocations across all funds in the portfolio can reveal duplication that is not obvious from the fund names alone.
ETF types and their main characteristics
ETF type | Main exposure | Points to review |
Broad-market and global ETFs | Companies in multiple sectors or regions | Index coverage, country weights, overlap, and TER |
Dividend and income ETFs | Dividend-paying companies or bonds | Selection method, income schedule, concentration, and total return |
Gold and commodity | Gold, metals, or commodity baskets | Physical vs derivative backing, currency, cost, and volatility |
Thematic and sector ETFs | A specific industry or trend | Theme definition, concentration, overlap, and TER |
Government and corporate bond ETFs | Government or corporate debt | Credit quality, maturity, currency, and income policy |
Broad-market and global ETFs
Broad-market ETFs give exposure to hundreds or thousands of companies through a single fund. Common benchmarks include the MSCI World, FTSE All-World, STOXX Europe 600, and the S&P 500.
An S&P 500 ETF holds large US companies. An MSCI World ETF covers large and medium-sized companies in developed markets. Despite the name, MSCI World excludes emerging markets and may carries substantial US exposure.
Long-term investors often favor broad-market funds for their diversification and low ongoing costs. Broad exposure can reduce dependence on a single company or sector, but it does not prevent losses.
Dividend and income ETFs
Dividend ETFs select companies based on yield, dividend history, dividend history, growth, or a combination of these factors.
A high yield does not mean stronger returns. It may rise because a share price has fallen, and companies can reduce or suspend dividends. Past dividend payments are not a guarantee of future ones.
Bond ETFs can also deliver income, but government and corporate bond funds carry different levels of credit risk and interest-rate sensitivity.
Gold and commodity ETFs
Gold does not produce earnings, dividends, or interest. Returns depend on movements in the gold price and, for euro-based investors, currency movements.
In Europe, some gold products listed alongside ETFs are technically exchange-traded commodities rather than UCITS funds. Checking the legal structure before investing matters.
Gold does not move in lockstep with shares and bonds, but it can lose value quickly. Commodity prices can be volatile.
Thematic and sector ETFs
Thematic ETFs focus on artificial intelligence, clean energy, digital infrastructure, and similar themes.
Two AI-focused ETFs can hold very different companies. One may focus on semiconductor manufacturers, while another includes software, cloud infrastructure, and data-centre companies.
What defines the theme, how concentrated the fund is, how much it overlaps with broad-market holdings, and what it costs are all worth checking.
A growing industry does not guarantee positive ETF returns. Concentration in one sector or theme could increase risk relative to broad-market ETFs.
Government and corporate bond ETFs
Bond ETFs hold debt issued by governments or companies.
The main variables are credit quality, maturity, currency, income policy, and TER. Bond values can fall when interest rates rise. Corporate bonds also carry the risk that an issuer fails to make payments.
A bond ETF is not a single risk profile. The range runs from short-dated government debt to high-yield corporate bonds, and each behaves differently.
Choosing an investment platform
The “best platform to invest in ETFs” depends on what the investor values most. Relevant features include:
- ETF range
- Buying and selling fees
- Currency-conversion costs
- Minimum investment
- Fractional investing
- Recurring investment tools
- Reporting
- Regulatory status
- Managed and self-directed options
Starting with ETF investing
Every ETF selection starts with a financial goal: long-term growth, income, exposure to a particular market, or diversification.
Individual ETF selection gives control over fund choice and allocation but requires research, monitoring, and rebalancing. A managed portfolio handles the allocation automatically, based on the investor’s risk level.
The comparison of individual ETFs and Mintos Core ETF outlines these routes.
When building a shortlist, comparing ETFs with similar objectives could be more useful than comparing unrelated funds. 2 global equity ETFs can be measured against each other on coverage, TER, replication, and income treatment. A global equity fund and a gold product serve different purposes and are not directly comparable.
Commission-free ETF investing on Mintos
Mintos (AS Mintos Marketplace) is an investment platform licensed by Latvijas Banka that provides access to ETFs popular with European investors.¹
Individual ETFs
Take full control and select your own ETFs from €1. With over 1,000 ETFs from recognized providers such as iShares, Vanguard, Amundi, and Xtrackers, you can build the ETF portfolio that fits your goals.²
✔️Popular ETFs from recognized providers²
✔️Automated regular investing with Investment plan (coming soon)
✔️Commission-free: €0 to buy or sell³
Core ETFs portfolio
An automated ETF portfolio matched to your risk level, from €50. The Core ETFs portfolio builds a globally diversified mix of stock and bond ETFs, automatically rebalanced and reinvested so you do not need to manage it yourself.
✔️Globally diversified portfolio of ETFs, equities, and bonds
✔️Automatically rebalanced and reinvested
✔️Commission-free: €0 to buy or sell³
As with any investment, the value of ETFs can go down as well as up, and you may receive back less than you invested.
¹ ETF providers shown for illustrative purposes only. This does not constitute a recommendation or investment advice.
² Based on frequently searched ETFs among European investors on justETF.com.
³ Each ETF carries its own annual fee (Total Expense Ratio) charged by the ETF provider, built into the ETF price.
Developed by the Mintos Content Team, making investment knowledge accessible for everyday investors across Europe.
Frequently asked questions
What does the term "best ETF" mean?
The term can refer to cost, diversification, size, liquidity, or historical performance. Each definition can produce a different result.
What are the best ETFs to invest in 2026?
Market leadership, valuations, interest rates, and demand can change during the year.
ETF structure and selection criteria provide a more stable basis for comparison than a ranking based on recent returns.
What is the difference between accumulating and distributing ETFs?
An accumulating ETF reinvests eligible income within the fund. A distributing ETF pays eligible income according to a published schedule.
The relevant structure depends on the investment objective, preferred income treatment, and applicable tax rules.
How many ETFs can provide diversification?
One broad ETF can already hold hundreds or thousands of securities.
Additional funds increase diversification only when they introduce different exposure. Several ETFs tracking similar markets can instead increase complexity and concentration.
What does which ETF to buy depend on?
Broad-market, bond, income, gold, and thematic ETFs serve different functions. The intended exposure determines which funds are directly comparable.
What does “best” ETF to buy mean in an ETF comparison?
A broader comparison considers the benchmark, structure, costs, liquidity, income treatment, and portfolio overlap.
What does "best platform to invest in ETFs" mean?
This depends on the required ETF range, fees, minimum investment, reporting, regulation, and preference for direct or managed investing.
Platform features and ETF suitability remain separate considerations.
