The Vanguard Total Stock Market ETF (VTI) tracks the CRSP US Total Market Index, giving investors exposure to over 3,700 stocks in a single fund; including large caps, mid caps, small caps, and even micro caps.
However, for long-term Indian investors, VTI carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like VTI) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. While no UCITS ETF perfectly replicates the 3,700-stock portfolio of VTI, the alternatives listed below track the S&P 500, which has a high historical correlation with VTI, providing virtually identical returns without the estate tax risk.
Table of Contents
Why Indians are looking for UCITS alternatives to VTI
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like VTI while providing the exact same exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): Unlike VTI, which forces taxable cash dividends on you, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for VTI
Here are the top three UCITS funds that serve as the best proxies for the US Total Market.
1. Vanguard S&P 500 UCITS ETF
Since Vanguard does not offer a "Total US Market" UCITS ETF in Europe, this is the official Vanguard alternative. While it holds 500 stocks instead of VTI's 3,700, the performance difference is negligible.
Because the US market is weighted by market cap, the top 500 companies drive the vast majority of VTI's returns. This fund offers the classic Vanguard low-cost structure with the safety of an Ireland domicile.
- Ticker: VUSA (Dist) / VUAA (Acc) (LSE)
- Structure: Available in both Distributing and Accumulating
- Top Holdings: NVIDIA, Apple, Microsoft, Amazon, Alphabet.
2. iShares Core S&P 500 UCITS ETF
CSPX is the largest US Equity UCITS ETF in the world and uses an Accumulating (Acc) structure.
Instead of paying out dividends (which would be taxed at your income slab in India), the fund uses that cash to buy more shares internally. This creates a "tax-deferred" compounding effect that significantly boosts net returns over a 10-20 year horizon.
- Ticker: CSPX (LSE)
- Total Expense Ratio (TER): 0.07%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: NVIDIA, Apple, Microsoft, Amazon, Alphabet.
3. Invesco S&P 500 UCITS ETF
With an expense ratio of just 0.05%, SPXS is significantly cheaper than VUSA (0.07%) and competitive with VTI's US expense ratio (0.03%).
This fund uses a "Swap-based" (Synthetic) structure. While it tracks the same index, this structure often allows it to bypass dividend withholding taxes internally, leading to slight performance advantages over physical funds like CSPX or VUSA.
- Ticker: SPXS (LSE)
- Total Expense Ratio (TER): 0.05%
- Structure: Accumulating (Reinvests dividends)
- Top Holdings: Synthetic Swap (Tracks S&P 500 Index perfectly).
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like the QQQ; you can also buy tax-efficient UCITS equivalents using Paasa.
The Compliance Advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: Guidance on FEMA regulations and LRS limits to ensure compliance.
Paasa also provides access to managed strategies, along with remittance, FEMA and tax advisory.
Disclaimer
This article is intended for information only and does not constitute investment or tax advice. Investing in global markets entails risks, including currency risk, political risk, and market volatility. Please seek advice from qualified financial and tax professionals before acting.
