How do you compare two ETFs?
When two ETFs cover the same theme, the difference rarely lies in the name. It lies in six things: which index the fund follows, what it costs per year (TER), how big it is, how it holds the shares, whether it reinvests dividends — and how it is taxed where you live. Past returns are the least reliable of all.
The six things
- The index. Two "semiconductor ETFs" can follow two different indices with different companies and weights. Compare the index first — it decides the return.
- TER. The yearly cost is deducted every year. If two funds follow the same index, the cheaper one is usually the better one.
- Size. Large funds (several billion) are cheaper to trade and rarely close. Small funds can be closed, and then you are sold out.
- Replication. Physical means the fund owns the shares. Synthetic means it gets the index return through an agreement with a bank. Both are legal; physical is easier to see through.
- Accumulating or distributing. Does the fund reinvest dividends, or pay them out?
- Tax where you live. In Denmark, for example, it matters whether the fund is on the "positive list". Other countries have their own rules — see the tax section.
Why return is not on the list
If two funds follow the same index, they deliver almost the same return — minus costs. So the return is not a difference between the funds.
If they follow different indices, you are really comparing two markets, not two funds. And the last five years' winners mostly tell you about the last five years. Themes that did best in a period of inflation or war are not necessarily the ones that do best in the next.
The typical beginner's mistake
Picking the ETF that rose the most over the last five years. If the two funds follow different indices, you have picked a market — not a fund. And you have not checked what it costs or how it is taxed.
How you see it in Kiggo
For every ETF, Kiggo shows a checklist with TER, accumulating or distributing, size and replication — and the fund's ten largest holdings, so you can see what you actually own. Kiggo does not recommend specific funds; the checklist is there so you can compare for yourself.
Related terms
Frequently asked questions
Which ETF is best?
There is no single answer, and Kiggo does not recommend specific funds. But if two funds follow the same index, the cheapest, largest and most tax-favourable one is usually preferable.
What is tracking difference?
The gap between the fund's return and the index's return over a year. It should be close to the TER. If it differs a lot, the fund costs more than its TER shows.
Are synthetic ETFs dangerous?
No, but they depend on an agreement with a bank that has to post collateral. The rules for European UCITS funds limit the risk. Physical funds are simply easier to see through.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-22.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
