Get our take on ETFmatic, one of Europe’s most renowned Robo-Advisors, in this article. ETFmatic is ideal for those seeking to invest in stocks and bonds for long-term growth while saving time and ensuring risk management with automated investment. With a user-friendly mobile app boasting over 13 million downloads, you can invest in low-cost ETFs effortlessly. However, tax implications may vary based on your location. Find out more about our in-depth analysis of ETFmatic in this review.
Introduction to ETFmatic
ETFmatic is a Robo-Advisor founded in 2014 that offers a more transparent, cost-effective, and efficient investment option compared to traditional wealth management services. With ETFmatic, users can take advantage of the stock market’s potential for growth with minimal effort and expense. The investment strategy relies on the idea that passive investing, more often than not, outperforms active management (as documented by the SPIVA reports). By eliminating intermediaries, ETFmatic has become the most popular Robo-Advisor app in Europe. Deposits are automatically invested for you, so you don’t have to worry about where to put your money.
Pros and Cons of ETFmatic
- User-friendly mobile app
- Clear fees and services
- Regulated by FCA, uses leading ETF issuers
- Yearly tax activity summary
- No account opening, inactivity or withdrawal fees
- Limited investment options for goal customization (viewed as an advantage for avoiding overwhelming choices)
- Free demo account available
- High minimum deposit requirement (1000 EUR/USD/GBP)
- Potential tax inefficiencies for ETF distributions in some areas
- Only invests in equities and bonds, no crypto, alternative investments or forex.
ETFmatic’s Investment Strategy
ETFmatic’s investment strategy is centered around investments in ETFs, which are low-cost, exchange-traded funds designed to mirror the market. There are standard asset allocations, but they can also be tailored to your investment goals.
The Robo-Advisor gives clients the option to specify target weightings for each asset class, but the actual ETFs selected are determined by ETFmatic. This is useful because it streamlines the investment process by reducing the number of options from thousands to a manageable amount. ETFmatic uses distributing ETFs for portfolio construction, which may not be tax-efficient in some jurisdictions due to the dividend tax rates paid in most European countries. However, ETFmatic claims that using distributing ETFs gives them greater control over reinvesting dividends. For example, if a portfolio is overweight in one ETF and underweight in another, dividends from both ETFs can be used to buy more of the underweight ETF, thus bringing the portfolio closer to the target weightings.
ETFmatic only uses leading ETF providers, including Vanguard, iShares (BlackRock ETFs), SPDR, and HSBC, adding an extra layer of security. Please note that the investment strategy within each profile may be subject to discretionary changes. From time to time, ETFmatic’s management team may adjust the allocation of invested capital between different asset classes to take advantage of market conditions. However, this goes against the idea of a Robo-Advisor, which is to set a risk profile and stick to it unless the client’s risk tolerance changes. It could be seen as a disguised form of active investing using asset allocation rather than a purely passive investment approach.
ETFmatic charges a yearly fee of 0.48% on the total value of your portfolio, which covers typical investment costs like custody and brokerage. This fee is divided into a monthly rate of 0.04% and automatically deducted from your ETFmatic account each month. ETFmatic provides monthly summaries of fees, and an annual consolidated summary of purchases, sales, and dividends for tax purposes. The ETFs in your portfolio have an average Total Expense Ratio (TER) of 0.12% per year, which is already included in each ETF.
ETFmatic Account Currencies
ETFmatic is available in 31 European countries and offers bespoke accounts in Pound (GBP), Euro (EUR), and Dollar (USD). If you’re from Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, or Sweden, you can use a low-cost currency exchange platform such as Wise or Revolut to convert your money.
ETFmatic Safety and Reliability
Before April 1, 2021, ETFmatic Ltd was authorized and regulated by the Financial Conduct Authority (FCA) and all clients were protected up to £85,000 by the Financial Services Compensation Scheme (FSCS), meaning clients’ cash and securities were protected in the unlikely event of the broker’s failure. However, since April 1, 2021, the protection scheme has changed as Aion Bank has acquired ETFmatic and clients are now subject to Belgian law (details can be found here). Despite this, ETFmatic, like most other robo-advisors, is still a relatively new company in the market, having been founded in 2014. Its track record during crises is limited.
ETFmatic Available Countries
ETFmatic is available to residents of 31 European countries, including Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. It offers accounts denominated in GBP, EUR, and USD. Unfortunately, ETFmatic is not currently accepting new clients from the United Kingdom. However, simulation accounts are available globally for free.
The bottom line
In conclusion, ETFmatic is a robo-advisor that offers a convenient and simple solution for managing portfolios in 31 European countries. The platform is easy to use, with a user-friendly interface that allows you to invest with confidence. Additionally, the low annual fee of 0.48% is a great benefit, especially considering that it already includes typical investment costs such as custody and brokerage fees.
Overall, ETFmatic is a great choice for those who are looking for a reliable, low-cost, and simple way to invest in ETFs. Whether you are a beginner or an experienced investor, ETFmatic offers a variety of investment options to meet your needs. However, it’s important to keep in mind that the company is still relatively new in the market and has a limited track record during periods of crisis. Nevertheless, with the protection provided by the Belgian law and a strong parent company in Aion Bank, ETFmatic is definitely a platform worth considering for those who are looking for a robo-advisor in Europe.