Skip to content
All library documents

Finding European ETF Substitutes by Benchmark and Managing Currency Exposure

Article Quant Q&A · Author: OlivierLarue
Read the original

Summary

The document asks how to adapt a globally diversified portfolio of US-listed funds for an investor in Europe who would prefer euro-denominated products. The portfolio spans international and emerging-market bonds, commodities, gold, global and US equities, and real estate. The response recommends identifying each fund’s primary benchmark and searching ETF databases or fund research platforms for European products tracking the same index. It cautions that an exact substitute may not exist, especially when a fund follows a proprietary index.

A second response notes that buying a fund quoted in euros does not by itself remove the underlying currency exposure. If the investor wants a different currency profile, currency futures or forwards can be added as an overlay. The exchange focuses on how to search for comparable products and alter currency exposure; it does not name replacement funds, assess their fees or liquidity, or analyze tax, domicile, trading-access, tracking-error, and hedging considerations relevant to a French investor.

Key ideas

  • Identify an ETF’s benchmark before searching for a European-listed substitute.
  • ETF research platforms can help find funds that track the same or a comparable index.
  • Funds tracking proprietary indices may have no close replacement.
  • A currency overlay using forwards or futures can adjust currency exposure independently of the ETF holdings.

Tags

Multi-assetPortfolio constructionFixed incomeEquitiesCommoditiesRisk management
Full text
# Where can I find the European equivalents ETFs from a USD superdiversified 10 ETFs portfolio


# Where can I find the European equivalents ETFs from a USD superdiversified 10 ETFs portfolio












I have been using this superdiversified 10 ETFs portfolio. To lower the risk it's composed from stocks and bonds across the globe and includes some commodities. Being in USD currency and the Euro being on the rise I wanted to find equivalents ETFs (tracking the same indexes) in Euros. Where could I find the equivalents ETFs I could buy in Europe (ideally from France) ?

```
+--------+--------------------------------------------------+-------------+
| ticker | Exchange-traded Fund                             | Percent (%) |
+--------+--------------------------------------------------+-------------+
| BWX    | SPDR Bloomberg Barclays Intl Treasury Bond       |  13         |
| EMLC   | VanEck Vectors JP Morgan Emer Mkts Loc Curr Bond |  10         |
| BND    | Vanguard Total Bond Market                       |   9         |
+--------+--------------------------------------------------+-------------+
| IAU    | iShares Gold Trust                               |  11         |
| DBC    | PowerShares DB Commodity Tracking                |   5         |
+--------+--------------------------------------------------+-------------+
| VEU    | Vanguard FTSE All-World ex-U.S.                  |  17         |
| VWO    | Vanguard FTSE Emerging Markets Index             |  14         |
| VNQI   | Vanguard Global ex-U.S. Real Estate              |   4         |
| VNQ    | Vanguard REIT                                    |   6         |
| VTI    | Vanguard Total Stock Market                      |  11         |
+--------+--------------------------------------------------+-------------+
| Composite Portfolio                                       | 100         |
+-----------------------------------------------------------+-------------+
```

## Answer by vanguard2k (score 1)

https://quant.stackexchange.com/a/35811

You can find the tracked indices on bloomberg. Just open the corresponding ticker and type comp or get the field FUND_BENCHMARK_PRIM if you dont know it already.

There are several pages such as etfdb.com or morningstar for example where you can search ETFs by benchmark. Just pick your benchmark and choose an ETF from the list that is suitable for your needs.

You will need to make small concessions though I guess. For some of these will not have a widely accepted benchmark and there wont be other suitable products.

The DBC is such a case. Since it "tracks" a proprietary index, there will not be a like for like replacement. (probably you can buy this one in France anyway, but you see my point)

## Answer by nbbo2 (score 1)

https://quant.stackexchange.com/a/35820

As you said, this portfolio is well diversified across the world, so I would not worry about currency risk unduly. However, if you are not happy with the currency exposure it gives you, you could change it by using a "currency overlay", that is add currency futures or forwards to bring the exposure to whatever you wish.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.