Začínáme s investováním
How to Choose Your Very First ETF
Key takeaways
- For a beginner, an ETF tracking a global equity index is ideal — diversification across thousands of companies in one fund.
- Look for ETFs labeled UCITS with Irish domicile (ISIN starting with IE) — advantageous for Czech investors from a tax perspective.
- An accumulating ETF (Acc) automatically reinvests dividends and saves you work on your tax return.
- TER (Total Expense Ratio) should ideally be below 0.25 % per year.
Your first ETF should be simple, cheap, and well diversified — a global equity index meets all three criteria.
What those abbreviations mean: UCITS, Acc, TER
UCITS is the European regulatory standard for funds — it guarantees that the fund meets strict diversification and transparency requirements. Acc (accumulating) means that dividends are automatically reinvested back into the fund, so you don't have to do anything and have no tax obligation for dividends. TER (Total Expense Ratio) is the annual fund management fee — the lower the better. For more on the difference between accumulating and distributing, read accumulating vs. distributing ETF.
What type of ETF we recommend to start with
The ideal start is an ETF copying a global equity index (e.g. MSCI World or FTSE All-World). It contains hundreds to thousands of companies from all over the world — the US, Europe, Asia, emerging markets. With a single purchase you get maximum risk diversification. The difference between All-World and S&P 500 is explained in the article All-World vs. S&P 500.
Three criteria for a good first ETF
- UCITS + Irish domicile — regulation and tax advantage.
- Accumulating (Acc) — automatic reinvestment, less paperwork.
- TER below 0.25 % — low annual costs, more return for you.
What to do after choosing an ETF
Write down the fund name, its ticker, and the exchange it trades on. Find it via search on your broker's platform. Then follow the steps in the article how to buy an ETF for the first time.
FAQ
Do I have to understand all the companies in the ETF I'm buying?
No. One of the main reasons people choose ETFs is precisely that you don't need to analyze individual companies. The fund copies an index — and the index is professionally constructed by market capitalization. All you need to understand is the fund as a whole.
What is the difference between MSCI World and FTSE All-World?
MSCI World covers developed markets (US, Europe, Japan...). FTSE All-World additionally includes emerging markets (China, India, Brazil...). FTSE All-World is therefore slightly more diversified, but both are an excellent choice for beginners.
Is it better to buy ETFs in euros or in CZK?
UCITS ETFs are traded primarily in euros on European exchanges. This doesn't change the fact that your fund invests globally. The CZK/EUR exchange rate affects the value of the investment in CZK, but that is a normal part of international investing.