ETF v praxi
Annual ETF Review: What to Check Once a Year — and When to Switch
Key takeaways
- An annual ETF review takes an hour and can reveal reasons to adjust your strategy.
- Key metrics: TER, tracking difference, fund size, and liquidity.
- You switch a fund rarely — only when there is a structural change or a significantly cheaper alternative.
- Rebalancing the portfolio is an opportunity, not an obligation to change funds.
- Never switch a fund because of short-term performance — that is the most common mistake.
An annual ETF review is an hour of work that helps you verify your fund still serves its purpose — tracking the right index at reasonable cost without unexpected changes. It is not a reason to panic, but to manage your portfolio consciously.
What exactly to check
- TER (total expense ratio): Has it risen since last year? If the provider has increased fees, investigate alternatives.
- Tracking difference: How closely does the fund follow its benchmark? Ideally it should be negative or low — meaning the fund lags the index by the minimum. Look on the provider's website or JustETF.
- Fund size (AUM): Very small funds (below EUR 100 million) risk closure. If a fund has fallen significantly, find out why.
- Liquidity and spread: An excessively high spread makes every purchase and sale more expensive.
- Fund structure: Has the replication method changed (physical vs. synthetic)? Has the domicile changed?
When to actually switch a fund
You should switch funds rarely. Frequent moves bring transaction costs and tax events. A switch makes sense if:
- The provider has raised costs significantly (by 0.15%+ per year) and a cheaper alternative exists.
- The fund has merged or changed its benchmark and the new index no longer fits your strategy.
- The fund has fallen below the threshold where closure is a risk and the provider has given no explanation.
What is not a reason to switch
Short-term underperformance versus the benchmark or other funds is not a reason to switch — it is the most common investor mistake. A three-year or longer comparison gives a more accurate picture. See active vs. passive investing. Find an overview of funds and their parameters at Hřivna ETF.
FAQ
What is tracking difference and why track it?
Tracking difference shows how much the fund lagged its benchmark annually. A negative value (e.g. −0.05%) means the fund beat the index — ideal. A negative or low value is a better indicator of fund quality than TER alone.
How often should I rebalance an ETF portfolio?
Once a year, or when the allocation deviates significantly from your target (e.g. by 5+ percentage points). Rebalancing is not the same as switching funds — you are simply restoring the planned allocation ratio.
When is the right time to switch an ETF?
When the fund has changed structurally (benchmark, domicile, costs have risen significantly) or when closure is a risk. Never just because of short-term performance — that is reacting to noise, not facts.
What should I do if a provider closes a fund?
You must sell your shares — either before closure or you will receive cash from the liquidation. Good news: this rarely happens with large funds above EUR 500 million. That is why monitoring AUM is one of the parameters in an annual review.