ETFs (Exchange-Traded Funds) combine the diversification of a mutual fund with the liquidity of a stock: they are bought and sold on the stock exchange in real time, have very low fees, and track stock market indices. In Spain, the popularity of ETFs has skyrocketed since 2020 thanks to platforms like Trade Republic and DEGIRO.
ETF or index fund?
The most common question from novice Spanish investors. Both invest in the same assets, but there are important differences:
| Aspect | ETF | Index fund |
|---|---|---|
| Where to buy | Stock exchange (broker) | Directly through the bank/asset manager |
| Transaction fee | €1–3 (or free, depending on the broker) | €0 (subscription/redemption) |
| Price | Real-time | Daily net asset value |
| Tax-advantaged transfer | No (each sale is taxable) | Yes (tax-free transfer) |
| Best for | Long-term investing with little rebalancing | Investors who want to transfer holdings tax-free |
In Spain, for long-term portfolios with periodic rebalancing, index funds are more tax-efficient than ETFs. ETFs are better if you don’t rebalance frequently or if you invest in tax-advantaged accounts.
The best ETFs for investing from Spain
Global equity ETFs
IWDA — iShares Core MSCI World (ACC)
- ISIN: IE00B4L5Y983
- TER (annual fee): 0.20%
- Benchmark: MSCI World — 1,500+ companies from 23 developed countries
- Domestication: Ireland (tax-efficient)
- Ideal for: the foundation of any equity portfolio
VWCE — Vanguard FTSE All-World (ACC)
- ISIN: IE00BK5BQT80
- TER: 0.22%
- Benchmark: FTSE All-World — over 4,000 companies, including emerging markets
- More diversified than IWDA (includes China, India, Brazil)
- Ideal for: a single portfolio seeking comprehensive global exposure
CSPX — iShares Core S&P 500 (ACC)
- ISIN: IE00B5BMR087
- TER: 0.07%
- Tracks: S&P 500 — the 500 largest U.S. companies
- The cheapest ETF on the market for exposure to the U.S. market
Money market ETFs (conservative component)
C3M — Amundi ETF Floating Rate EUR Corporate 1-3M (ACC)
- Tracks the €STR — currently ~2.00% APR
- TER: 0.10%
- Daily liquidity on the exchange
- Ideal for: emergency fund / conservative portfolio component
- See full article: Best European Money Market ETFs
XEON — Xtrackers II EUR Overnight Rate Swap (ACC)
- Synthetically tracks the €STR (swap)
- TER: 0.10%
- Alternative to C3M with more accurate synthetic replication
Dividend ETFs
VHYL — Vanguard FTSE All-World High Dividend Yield (DIST)
- ISIN: IE00B8GKDB10
- TER: 0.29%
- Distributes dividends (~3–3.5% annually) rather than reinvesting
- For: investors seeking regular cash flow (e.g., retirees)
- Tax note: dividends are taxed in the year they are received (less tax-efficient than reinvestment)
How to buy ETFs from Spain?
The best platforms for buying ETFs in Spain:
- Trade Republic: €1/trade, automatic plans starting at €1/month, 9,000+ ETFs. See Trade Republic
- DEGIRO: €0 for Core Selection ETFs, broader selection for active traders
- Interactive Brokers: larger selection, greater complexity. See IB review
- XTB: €0 up to €100,000/month, regulated in Spain by the CNMV
- Scalable Capital: unlimited savings plans, 2.50% cash
Taxation of ETFs in Spain
Accumulating ETFs (ACC) are the most tax-efficient in Spain:
- Taxed only upon sale — not annually
- Capital gains: 19% up to €6,000, 21% between €6,000–€50,000, 23% from €50,000 to €200,000, 27% and above
- They have no tax-deferred advantage: selling one ETF to buy another triggers a tax event. That’s why index funds are more efficient for those who want to rebalance frequently
The minimum viable ETF portfolio
For 99% of investors, a single ETF is sufficient:
- If you want only developed markets: IWDA (0.20%, 1,500+ companies)
- If you want the entire world, including emerging markets: VWCE (0.22%, 4,000+ companies)
Adding more ETFs only makes sense if you want to customize your geographic or factor exposure—not to “diversify further” (they’re already diversified).