How should you pick your ETF?
How Paasa selects the best ETFs for your Index Investing portfolios
Investing is not just about growth, it is about choosing the right tools to get you there. At Paasa, we believe that selecting high-quality ETFs sets the foundation for long-term success. Let us take you behind the scenes of our decision-making process so you can see how we build portfolios that are efficient, transparent, and easy to understand.
The Power of a Well-Chosen ETF
Think of an ETF as the engine under the hood of your investment vehicle. The sturdier and more efficient that engine is, the smoother your financial journey becomes. A poorly chosen ETF can slow you down with high fees, make you swerve off track with unexpected performance issues, or leave you stuck in traffic when you need liquidity the most. On the other hand, a carefully selected ETF can help you glide toward your goals with minimal friction.
Criteria for Selecting ETFs at Paasa
At Paasa, we do not just pick ETFs off a shelf. We use a meticulous, criteria-based approach to ensure that every ETF we include has what it takes to help your investments thrive. Here are the key factors we evaluate:
UCITS Compliance:
UCITS (Undertakings for Collective Investment in Transferable Securities) standards exist to protect investors and improve transparency. UCITS-compliant ETFs are typically easier to own across multiple countries in Europe and often feature robust regulatory safeguards. In short, UCITS compliance helps ensure that the ETF you are buying is held to high investor protection standards.Low Expense Ratios:
Every euro you pay in fees is one euro less working for you. We look for ETFs with low expense ratios so that the majority of your investment gains remain in your pocket. Over time, these savings can add up to a significant difference in your total returns.
Reputable Asset Managers:
Trust matters. We focus on ETFs from well-established brands like iShares and Vanguard. They have a proven track record, strong risk management frameworks, and robust infrastructures to handle market turbulence. By selecting ETFs from these managers, we know that the fund is in expert hands.
High Liquidity:
Liquidity is your ability to get in and out of the market easily. High liquidity means tighter bid-ask spreads and quicker execution times. This reduces the hidden costs of trading and ensures that when you need to rebalance or withdraw, you can do so without unnecessary hassle.Low Tracking Error:
The point of an index ETF is to mirror its benchmark. A low tracking error means the ETF closely follows the index it is designed to track, so you get what you expect. If you invest in an S&P 500 ETF, you want it to follow the S&P 500, not meander away from it. By choosing ETFs with low tracking errors, we ensure performance reliability.
Pulling It All Together
By following these criteria, Paasa strives to give you an investment experience that is both rewarding and reassuring. UCITS compliance ensures investor protection and broad accessibility, low costs keep more gains in your hands, and reputable managers maintain product quality. With high liquidity and minimal tracking errors, you stay close to your intended benchmarks and maintain the flexibility to pivot as needed.
In a world flooded with ETF choices, Paasa takes the guesswork out of selection, enabling you to focus on your goals. Whether you are eyeing developed markets, emerging economies, corporate bonds, or tech-heavy indexes, our approach aims to help your investments stay on the right track.