Invest in Vanguard Index Funds (from Germany)

Question

I am planning to invest in Vanguard Index Funds while living/working in Germany, but only interested in specific ones (see below). But I cannot seem to find them via brokers that I usually do my tradings with, namely DKB, ING-Diba. I am currently looking at (as examples):

• Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
• Vanguard Information Technology Index Fund ETF (VGT)
• etc.

Also checked a few others like Consorsbank that was recommended by a friend due to low fees, also they are not available. eToro seems to offer some of these funds, but I have never traded at eToro, and STILL missing somes like VTSAX I am interested in!

Questions:

• Curious to know why is that? Still surprised to see banks like DKB are missing a large number of these matching index funds (perhaps there is a regularity reason!!) Aren't those funds regulated to be traded in EU (Germany)? Or maybe there are ways that I failed to find them there?
• How about a reliable broker that offers most of Vanguard Index Funds to be traded within Germany? Any experience trading at eToro? I'm personally hesitant to use such platforms due to security reasons (say I am old-fashion or too conservative).

Answer 1

Curious to know why is that?

Generally each region in the world has it's own regulations and specific financial products. The VTSAX is an American product. You also can't buy it in Australia or even in Canada.

So to a large extent it really boils down to regulations. German (or generally EU) brokers are only allowed to offer UCITS regulated funds to their retail customers. Furthermore the EU Directive 2014/65/EU massively restricted the investable universe for retail customers in the name of consumer protection.

You may bypass this regulations by becoming a customer of an international broker, but the really serious downside with that route as a German citizen (which you are?) lies in complicating your tax return. While german brokers handle all tax issues and withhold the appropiate amounts for their retail customers directly, as a customer of an international broker you must handle the tax completely yourself.

eToro is one of those international brokers, quoting from their help page "Do I need to pay taxes on my trades?"

It is our clients’ responsibility to calculate and pay any applicable taxes in their country or countries of tax residence.

Especially with funds, that really is a can of worms, which I wouldn't advise you to open. Just in 2018 Germany passed a law (InvStG), which massively complicates the tax handling of accumulating investment funds. That's really no fun to do by yourself. :-)

How about a reliable broker that offers most of Vanguard Index Funds to be traded within Germany?

The international divisions of Vanguard decide by themself, which funds are interesting for their local markets. Instead of searching a different broker, you may be better of finding alternative funds:

• Maybe use the Vanguard FTSE All-World UCITS ETF (USD) Accumulating instead of VTSAX?
• Have a look at the iShares S&P 500 Information Technology Sector UCITS ETF USD (Acc) as replacement for the VGT?

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On a general note:

If I recall correctly the international Vanguard divisions are for profit organizations and not organized in the same way as in the US, were the fund shareholders are the owners of Vanguard (making it work like some kind of cooperative, which makes Vanguard so special in the US market).

It somewhat has a downside, if you get all your financial literacy from US books/online forums, while not being located in the US. Literally all the products that get talked about aren't available to you, also a lot of the concepts (especially in regards to retirement strategies) don't apply to you, as the tax regime is totally different.

Answer 2

Any search platform or random browsing or recommendations?

Justetf.com is indeed a good recommendation as a ETF search plattform. In most cases it will be superior to your brokers own search function.

If you choose your location in the topbar. The page will automatically preselect the appropriate trading locations:

In this case it preselected XETRA (the trading system of the Frankfurt Stock Exchange) and the Stuttgart stock exchange.

Those both result in 1559 investable ETFs in Germany, which you can filter further through the filternavigation on the left side, or through keyword-search.

I would dare to say, that with almost all German retail brokers you will have access to most of those, either directly or through a market maker.