Cheapest UCITS ETFs by TER in Europe

The fee is the only thing about an index fund that you control. The index return is what it is, and whatever the fund takes it takes again every year you hold the position. The gap between 0.05% and 0.50% a year looks trivial on paper, yet after thirty years it eats more than a tenth of the final value.

Why this article lists no US tickers

English-language rankings of the cheapest ETFs are topped by SPLG (0.02%), VOO and IVV (0.03%), QQQ, BND and GLDM. All of them are domiciled in the United States, and a retail investor cannot buy them through a European broker.

The obstacle is the PRIIPs regulation, in force since 1 January 2018, which requires the seller to hand a retail investor a key information document (KID) before the trade. US issuers do not produce one, so brokers operating in Europe block the purchase.

The European counterparts cost a little more than the US originals — part of the difference pays for the stricter UCITS rules.

The lowest annual cost in each asset class. Source: issuer key information documents and factsheets.

S&P 500 ETFs

The cheapest European funds tracking the S&P 500 cost 0.03% a year. Both are share classes of the same State Street fund. We went through them in more detail in the article on how to buy and invest in the S&P 500 index.

The Invesco factsheet gives an ongoing charge of 0.05% and a separate 0.07% for the swap. The total cost is the sum of both.

Nasdaq 100 ETFs

The US QQQ and QQQM cannot be bought in Europe. Two European funds tie for cheapest on the Nasdaq 100 at 0.13% a year — one from UBS, one from Amundi.

0.30% is more than double 0.13%. Both of the cheapest funds are young, though — the UBS one has been running only since March 2025. The largest is the iShares fund at $28.25 billion in assets, and the longest track record belongs to Invesco EQQQ, which has been going since 2002.

European equity ETFs

This is where most people pick the wrong index rather than the wrong fund. “European shares” means three different things, and the difference between them is bigger than the difference in fees.

STOXX Europe 600 covers 600 companies from seventeen countries including Britain and Switzerland, so it holds Nestlé, Roche, AstraZeneca and Shell. MSCI Europe is almost the same thing, with 396 large and mid-cap companies from sixteen countries. EURO STOXX 50 is something else — fifty companies from the single currency area, without Britain and without Switzerland. As a bet on the eurozone it makes sense, as “European shares” it does not.

With the Invesco fund on the EURO STOXX 50, the advertised 0.05% is only the ongoing part. Add the 0.35% swap and the fund works out at 0.40% a year.

Bond ETFs

The US BND and AGG are closed to European investors. The substitute is a global aggregate fund hedged to the euro, because without the hedge the bond portfolio picks up the currency risk that bonds are bought to avoid in the first place.

Vanguard cut the fee on its global aggregate fund from 0.10% to 0.08% on 1 July 2025. Hedged share classes cost roughly 0.05 percentage points a year more than unhedged ones.

Commodities and gold

In Europe you cannot buy gold as an ETF. UCITS rules require a fund to be spread across several assets and a single commodity fails that test, so gold is held through an ETC, an exchange-traded commodity.

With a fund the assets are ring-fenced from the manager. With an ETC you hold a claim on the issuer, albeit one secured by stored metal.

Xetra-Gold has traded in Frankfurt since December 2007 as a bearer bond.

Thematic clean energy ETFs

While a broad equity index starts at 0.03% a year, clean energy starts at 0.35%, roughly ten times higher.

The US ICLN, cited in the rankings as a cheap option, is once again a fund you cannot buy. Its European namesake from iShares costs 0.65%, almost twice as much.

What the fee costs over thirty years

A lower fee shows up mainly through compounding. Whatever the fund takes in the first year never earns anything again, and that shortfall multiplies with every year that follows.

The worked example takes a one-off investment of €4,000 held for thirty years at a gross annual return of 7%, and compares three fee rates.

Model example. 7% gross return a year, a thirty-year horizon, three levels of annual fee.

At 0.03% a year the investment grows to €30,200. At 0.12% it reaches €29,400, eight hundred euros less. At 0.50% you are left with €26,500 — €3,700, or about 12%, below the cheapest option.

Over a five-year horizon the difference between the rates is negligible. It opens up in the last third of the thirty-year period.

What to look at besides the fee

Fund size. A small fund is harder to trade, and the issuer may close or merge it. The difference between a fund holding a hundred million euros and one holding ten billion matters more to an ordinary investor than a hundredth of a percent in fees.

Tracking difference. The fee tells you what the fund charges. Tracking difference tells you how far it actually fell behind, and with a well-run fund the two numbers sit close together.

Accumulating or distributing class. The accumulating class reinvests dividends itself, while the distributing one pays them into your account. The pairs in the tables above are often the same fund in two classes with the same fee.

Availability at your broker. Check whether your platform offers the fund before you settle on it, because the range on offer differs from broker to broker.