ETF v praxi
Read the Index, Not the Fund Name: How Similarly Named ETFs Can Differ Radically
Key takeaways
- An ETF's name describes its intention, not its precise contents — always read the index methodology.
- Two ETFs on "global equities" can have completely different compositions due to different index definitions.
- The key factors are: weighting methodology, geographic exposure, number of holdings and top-10 concentration.
- Comparing TER alone is not enough — even a cheap ETF can hide a disadvantage in its methodology.
- The source of truth is the fund's fact sheet and KIID, not its marketing name.
An ETF's name tells you the fund's intention, not its precise contents. Two funds called "Global Equity ETF" or "Emerging Markets ETF" may track entirely different indices — and deliver very different results. Here is how to find out before you buy.
Why similarly named ETFs differ
An index is what an ETF actually tracks. And there are hundreds of indices. For every theme — emerging markets, global equities, technology — there are multiple competing indices with different methodologies:
- Different definition of "emerging markets" — one index classifies South Korea and Taiwan as developed markets; another does not. This fundamentally changes the fund's composition.
- Different weighting — market capitalisation vs. equal weighting vs. fundamental factors.
- Different sector filters — ESG screening excludes different companies depending on the data provider.
- Different number of holdings — one "global ETF" may hold 500 companies; another 1,500.
Where to find the truth about a fund
The marketing name is not enough. Every investor should work through at least these steps before buying:
- Read the fact sheet (or KIID) — it states the exact name of the index.
- Look up the index methodology on the provider's website (MSCI, FTSE, Solactive, etc.).
- Compare the top-10 holdings of two candidate funds — a difference of 20–30% is normal.
- Check the geographic breakdown — especially for global funds, the differences can be surprising.
A practical approach to ETF selection
Always compare the specific indices, not just the fund names. Only then compare TER, AUM, domicile and replication type. Correct selection starts with the question: "Which index do I want to own?" — not "Which ETF is popular?"
If you are starting out, you will find a basic guide to selection on the ETF navigator page, or read about why UCITS and fund domicile matter.
FAQ
Why is it not enough to compare ETFs only by TER?
TER tells you what you pay for management. It does not tell you what the fund holds. Two funds with the same TER may have entirely different geographic exposure, weighting and number of holdings — and therefore very different results.
How do I find out which index an ETF tracks?
The fund name often includes the index or the index provider. You will find the exact index name in the fact sheet and KIID document. The index methodology is then available on the provider's website — MSCI, FTSE Russell, Solactive and others.
What is MSCI World and how does it differ from FTSE All-World?
MSCI World covers only developed markets (excluding emerging markets). FTSE All-World also includes developing markets. They are therefore significantly different indices — even though both sound like "world equities". Always read the exact index name.