Guided index investing: invest in ETFs and get advice

What is guided index investing?

Guided index investing is based on two elements.

Index investing involves investing in funds that seek to replicate the performance of a benchmark index, such as a global stock index or a bond index. An ETF, or Exchange-Traded Fund, is a fund listed on a stock exchange. It can provide exposure to a wide range of securities, sectors, and countries through a single investment.

Guidance involves tailoring this strategy to the investor’s specific situation. In particular, the advisor can help the investor determine:

• their financial goals;
• their investment horizon;
• their risk tolerance;
• their liquidity needs;
• how their investments fit into their overall financial portfolio.

Index-based investing therefore primarily addresses the question, “Which assets should I invest in?” Wealth management, on the other hand, addresses a broader question: “How can I integrate these investments into my financial, family, and professional situation?”

How does index-based investing work?

An index fund seeks to track an index composed of stocks, bonds, or other assets. A global ETF can thus provide exposure to several hundred or thousand companies.

This diversification reduces reliance on any single company or sector, without eliminating market risk. If the relevant markets decline, the value of the ETF may also decrease.

Passive and active management

Passive, or index-based, management seeks to track a market. Active management, on the other hand, relies on the decisions of a portfolio manager, who selects securities and adjusts the portfolio’s composition in the hope of outperforming a benchmark index. This difference is not merely theoretical. It affects the fees borne by the investor and, consequently, the net performance of the investor’s portfolio.

International data supports this view regarding the difficulty of consistently outperforming indices. In the SPIVA Europe Mid-Year 2025 Scorecard, S&P Dow Jones Indices states that “61% of all equity funds [...] underperformed their respective category benchmarks.”

In practice, very few fund managers manage to consistently outperform the market. Our study “Nobody beats the market in Belgium” confirms this for the Belgian market: almost no active manager outperformed the market for more than five consecutive years over the entire period analyzed. Furthermore, the few funds that outperform over a given period remain very difficult to identify in advance, and their outperformance must still offset their costs.

Guided Index Investing vs. Active Management: The Differences

Both approaches may involve human oversight, but they differ in how they construct portfolios.

None of these approaches guarantees a positive return. Active management may be appropriate for certain strategies or asset classes. The choice depends on the investor’s objectives, costs, risk tolerance, and preferences.

Why do fees play such an important role?

The performance of an active manager is uncertain. Fees, on the other hand, are known and charged regardless of the results achieved. That is why costs are one of the main levers an investor can use over the long term. For the same gross return, a less expensive option automatically leaves a larger portion of the return in the portfolio.

The impact of these fees can grow over time, as the amounts saved on fees can themselves remain invested and benefit from compounding.

The issue of costs must therefore be considered from the very beginning, when choosing a strategy and not just when comparing two investment options.

How much does managed index investing cost?

Costs have a direct impact on a portfolio’s net performance. Unlike future returns, they are largely known in advance and can therefore be compared before investing.

In August 2024, the FSMA stated regarding Belgian funds that “the average management fees and other administrative and operating expenses [...] is 1.4% per year.”

In a guided index investing solution, several types of fees may apply:

• fees specific to ETFs, generally expressed as the TER (Total Expense Ratio);
• management and advisory fees, charged by the manager;
• any transaction costs, such as brokerage fees.

At Easyvest, a single annual management fee ranging from 0.4% to 1% per year, depending on the amount under management, is applied to clients’ portfolios.

However, comparing fees alone is not enough. It is also important to examine the services they cover, such as portfolio construction, monitoring, rebalancing, access to an advisor, or wealth management support.

Why add advisory services?

Reducing costs does not necessarily mean foregoing advice.

Placing an order for an ETF is technically simple. Choosing the right ETF is much less so: the index it tracks, the replication method, the currency, the jurisdiction, tax treatment, fees, and liquidity must all be analyzed. Developing a strategy that is consistent with one’s overall portfolio is even more complex.

• defining investment objectives;
• allocating assets between stocks and bonds;
• adapting the portfolio to the investment horizon;
• retirement planning;
• structuring personal and business assets;
• asset transfer and estate planning;
• joint or divided ownership accounts;
• portfolio monitoring;
• decisions to be made during periods of high volatility.

The financial strategy can therefore remain simple, even when the client’s financial situation requires in-depth analysis.

Advantages and limitations of guided index investing

The advantages

• Diversification: An ETF can hold a large number of securities.
• Transparency: The index being tracked and the fund’s composition are generally publicly available.
• Discipline: A predefined strategy can limit impulsive decisions.
• Cost of advisory services: Fees associated with index-based management are generally lower than the total cost of traditional active management.
• Personalized advice: Investors can receive guidance on matters beyond simply choosing an ETF.

Limitations

This approach also has limitations that should be taken into account:

• Market risk: An ETF declines when its benchmark market declines.
• Tracking error: The ETF’s performance may differ slightly from that of its index.

The cost must therefore be weighed against the services actually provided: monitoring, advisor availability, wealth analysis, and operational management.

How does Easyvest implement guided index investing?

At Easyvest, portfolios are primarily based on diversified index ETFs. The personalized guidance focuses on the investor’s goals, risk profile, and financial decisions that require a tailored analysis.

Depending on the situation, this guidance may include:

• a portfolio review;
• retirement planning;
• structuring personal and professional assets;
• issues related to wealth transfer;
• monitoring the strategy over time.

The goal is not to predict future market movements, but to build a strategy consistent with the investor’s situation and to implement it with discipline.

Like any investment, this approach involves a risk of capital loss and does not guarantee any future returns.

Who might this approach be suitable for?

Guided index investing may be suitable for individuals who wish to invest in the markets without having to manage all decisions related to their assets on their own.

It may be of particular interest to:

• a beginner investor who wants to define their risk profile;
• an experienced investor who prefers to delegate day-to-day management;
• an executive who needs to coordinate their business assets, pension, and personal assets;
• a family facing estate planning or wealth transfer issues;
• a high-net-worth individual seeking straightforward financial management and wealth advisory support.

This approach is less suitable for someone who wants to select stocks on their own, make frequent trades, or attempt to capitalize on short-term market movements.

An approach suited to large estates?

A large estate does not automatically require active stock selection. Its complexity can stem from other factors: business, real estate, taxes, retirement, estate planning, income needs, or the distribution of assets among multiple family members.

Read the Easyvest article on its wealth management services

Guided index investing can therefore be suitable for both an individual who is gradually building their wealth and a family that already has substantial assets. The level of advice depends on each person’s situation and needs.

Conclusion

Guided index investing combines diversified, index-based management with personalized advice tailored to the investor’s situation.

ETFs can offer broad market exposure at generally low costs. Over the long term, keeping fees under control is a key factor in net performance, while the guidance provided helps address issues that go beyond simply selecting a fund: investment goals, retirement planning, tax planning, estate planning, and wealth structuring.

This approach does not eliminate market risk or management costs. It offers a different way of allocating roles: using index-based management to invest in the markets and focusing human expertise where it can add the most value.

For an investor, the question is therefore not just about which ETFs to choose. It also involves determining which strategy aligns with their goals, time horizon, and overall wealth. It is precisely in making these decisions that advisory support can be most valuable.

FAQ

Is guided index investing the same thing as a robo-advisor?

Not necessarily. A robo-advisor generally automates the process of building and monitoring a portfolio based on information provided by the client.

Guided index investing may also use digital tools, but it adds human guidance for financial decisions. Before choosing a solution, it’s helpful to check the availability of an advisor, the services included, the fees, the portfolio’s composition, and the manager’s regulatory status.

Why not just buy an ETF on your own?

Buying ETFs on your own can be a suitable solution for an investor who has the necessary knowledge, time, and discipline.

However, guidance can be helpful when issues go beyond fund selection: risk level, retirement, taxes, estate planning, or wealth structuring. The cost of the service should be weighed against the investor’s actual needs.

Does index investing guarantee better returns than active management?

No. No ETF or index strategy guarantees better performance.

Historical statistics show that a large proportion of actively managed funds have underperformed their index over various time periods. Our study, “No One Beats the Market in Belgium” shows that, over the 2005–2015 period, only 7% of actively managed funds distributed in Belgium outperformed the global market for three consecutive years, and almost none outperformed the market for more than five consecutive years.

Can you lose money with an index portfolio?

Yes. An index portfolio remains exposed to market fluctuations. An equity ETF can experience a significant decline during a crisis or recession. Bonds also carry risks, particularly interest rate risk and credit risk related to issuers' creditworthiness.

Diversification reduces certain specific risks, but it does not eliminate the risk of loss. The portfolio must therefore be tailored to the investor’s time horizon and ability to withstand market fluctuations.