Many investors prefer ETFs (Exchange Traded Funds) because of their simplicity, liquidity, and significant diversification. The growth of ETFs has been the most significant trend in the asset management industry in the past 20 years. As of the end of December 2022, total ETF assets under management (AUM) reached $1.4 trillion in the US and Europe, growing at an annual compound annual growth rate (CAGR) of approximately $1.5 trillion since 2010. This is almost three times faster than traditional mutual funds.<\/p>\n\n\n\n
However, when changing residency to European, the question arises: how to continue investing, taking into account special EU regulations?<\/strong><\/p>\n\n\n\n In Europe there is a separate UCITS directive<\/a> (undertakings for collective investment in transferable securities).<\/p>\n\n\n\n UCITS<\/strong> is a set of security standards aimed at protecting investors from dangerous investment channels.<\/p>\n<\/blockquote>\n\n\n\n We wrote in detail about what UCITS is here<\/p>\n\n\n\n UCITS ETF<\/a><\/p>\n\n\n\n The very concept of UCITS is about a set of rules and regulations. Funds may or may not comply with them. All investors who DO NOT yet have the status of a qualified investor* and are EU residents can invest exclusively in UCITS ETFs. However, in essence, UCITS gives the investor more protection and transparency than non-UCITS funds<\/p>\n\n\n\n *a qualified investor must meet two of the three criteria:<\/p>\n\n\n\n https:\/\/ibkr.info\/node\/3783<\/a><\/p>\n\n\n\n Company Interactive Brokers<\/strong><\/a> has several legal entities around the world, serving customers in different regions. The main legal entity is American Interactive Brokers LLC<\/strong>, registered in the state of Connecticut, in the city of Greenwich. For Ukrainian clients, service is provided through this American division. American Interactive Brokers LLC also operates in many countries in Asia, Latin America and Africa.<\/p>\n\n\n\n In the European Union, residents cannot be provided with services from legal entities not registered in the EU. Until recently, two divisions operated in Europe Interactive Brokers<\/strong> \u2014 Interactive Brokers Ireland<\/strong> (Dublin) and Interactive Brokers Central Europe<\/strong> (Budapest). However, after recent merger<\/a> both units merged into Interactive Brokers Europe S.\u00e0 rl<\/strong> (IBE), based in Luxembourg.<\/p>\n\n\n\n Now all clients who are residents of European Union countries are served through Interactive Brokers Europe S.\u00e0 rl<\/a>., which is licensed and regulated in accordance with EU regulations.<\/p>\n\n\n\n If the client remains a resident outside the European Union (for example, in Georgia, Armenia or Moldova), then there is no need to open a new account. It is enough to update the profile, change the residential address and provide documents confirming the new place of residence to change the tax residency.<\/p>\n\n\n\n It is advisable to start opening a new account and transferring assets after receiving a local tax number and proof of residence<\/strong>For example, in Estonia, all refugees are given a personal identification number, which also serves as a tax identification number. Once you have this number, you can open a new account, fill out a W-8 tax form, provide your local tax identification number, and request an asset transfer.<\/p>\n\n\n\n \ud83d\udca1 Importantly: <\/strong>The old account can be used until the transfer process is complete. When the transfer of assets is scheduled, the system will warn you not to carry out transactions on the old account.<\/p>\n\n\n\n If the client changes his\/her residency from Ukrainian to European, it is necessary to open a new account in Interactive Brokers Europe<\/strong>. In this case:<\/p>\n\n\n\n When you transfer your assets from a Ukrainian Interactive Brokers account to a new account in a European jurisdiction, there are several important points regarding the further management of American ETFs.<\/p>\n\n\n\n After transferring assets from an Interactive Brokers US account to a European one, EU investors will no longer be able to invest in US ETFs. However, European investors will have access to UCITS ETFs that meet European standards. And you can create a similar portfolio.<\/p>\n\n\n\n Example of similar ETFs on similar indices\/regions<\/p>\n\n\n\n There are several useful resources where you can find UCITS ETFs by industry, index, country, direction or asset class:<\/p>\n\n\n\n JustETF<\/strong><\/a>: a site where you can find and analyze various ETFs, including UCITS.<\/p>\n\n\n\n\n
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So, what should a Ukrainian who had an account with Interactive Brokers and is changing his residency to European do:<\/h2>\n\n\n\n
European market and rules for EU residents<\/h2>\n\n\n\n
When should you start the asset transfer process?<\/h2>\n\n\n\n
Account opening procedure for EU residents<\/h2>\n\n\n\n
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Asset management on a European account<\/h2>\n\n\n\n
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Further investments and asset purchases<\/h2>\n\n\n\n
US<\/strong><\/th> TER<\/strong><\/th> Fund size<\/strong><\/th> Irish<\/strong><\/th> TER<\/strong><\/th> Fund size<\/strong><\/th> Name<\/th><\/tr><\/thead> SPY<\/strong><\/td> 0.09%<\/td> $564.09B<\/td> CSPX<\/strong><\/td> 0.07%<\/td> $82,419 m<\/td> S&P (US developed)<\/td><\/tr> IXUS<\/strong><\/td> 0.07%<\/td> $37.17B<\/td> EXUS<\/strong><\/td> 0.15%<\/td> $248 m<\/td> Xtrackers MSCI World ex USA UCITS ETF 1C<\/td><\/tr> TLT<\/strong><\/td> 0.15%<\/td> $54.43B<\/td> DTLA<\/strong><\/td> 0.07%<\/td> $2,711 m<\/td> US treasury 20+yr<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Where to choose UCITS ETF:<\/strong><\/h2>\n\n\n\n