How to invest in Portugal PSI 20 index funds in 2024

Find out how to invest in the Portugal PSI 20 index, learn which trading platforms have the lowest fees, and what’s easiest for beginners.
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Updated: May 12, 2023
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It only takes a few minutes to invest in the Portugal PSI 20 index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard Portugal PSI 20 ETF through an online trading platform.

Where can I invest in the Portugal PSI 20 index?

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According to our expert research, Plus500 is the best ETF broker to invest in Portugal PSI 20 index funds. 

Both Portugal PSI 20 ETFs and Portugal PSI 20 CFDs are available to invest in through Plus500 .

Here are three more places to buy the Portugal PSI 20, ranked according to their cost, security, and features.

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1
Min. Deposit
100 €
Best offer
User Score
10
Negocie +2000 CFD en acciones, opciones, productos básicos y más
Cuenta Demo ilimitada sin riesgos
0 comisiones y spreads atractivos
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Payment Methods:
American Express, Apple Pay, Discover, Google Pay, Mastercard, PayPal, SEPA, Tarjeta de crédito, Tarjeta de débito, Transferencia bancaria, Trustly, Visa, , skrill
Full Regulations:
ASIC, FCA, FSA, MAS, cysec-250-14-regulator, isa-regulator

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2
Min. Deposit
40 €
Best offer
User Score
9.9
Oferta especial limitada: ¡0% de comisión y 0% de impuesto de timbre en TODAS las acciones!
Plataforma galardonada: compre activos físicos o negocie con apalancamiento
11 métodos de pago, incluido PayPal
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Payment Methods:
American Express, Apple Pay, Discover, Google Pay, Ideal, Klarna, Maestro Master, Mastercard, POLi, Przelewy24, Rapid Transfer, SEPA, Sofort, Tarjeta de crédito, Tarjeta de débito, Transferencia bancaria, Transferencia bancaria, Trustly, Visa, Visa Electron, neteller, , , , , , , skrill
Full Regulations:
ASIC, CySEC, FCA

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3
Min. Deposit
10 €
Best offer
User Score
9.5
Plataforma totalmente automatizada con transacciones instantáneas
Una amplia variedad de opciones de pago
Bueno para principiantes
Start Trading
Payment Methods:
American Express, Apple Pay, Discover, EPS, Giropay, Google Pay, Mastercard, Rapid Transfer, SEPA, Sofort, Tarjeta de crédito, Tarjeta de débito, Transferencia bancaria, neteller, skrill
Full Regulations:
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong

How do I invest in the PSI20 index?

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The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an Portugal PSI 20 ETF or CFD. This guide explains how to do it:

Step 1. Sign up to Plus500

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We recommend using Plus500 to invest in Portugal PSI 20. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.

1
Min. Deposit
100 €
Best offer
User Score
10
Negozia +2000 CFD su azioni, opzioni, materie prime e altro
Conto demo illimitato e privo di rischi
0 commissioni e spread interessanti
Start Trading
Payment Methods:
American Express, Apple Pay, Carta di Credito, Carta di Debito, Discover, Google Pay, Mastercard, PayPal, SEPA, Trasferimento Bancario, Trustly, Visa, ,
Full Regulations:
ASIC, FCA, FSA, MAS, cysec-250-14-regulator, isa-regulator

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Step 2. Decide how to buy Portugal PSI 20

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This boils down to choosing between an Portugal PSI 20 ETF or CFD. ETFs are generally better suited to investors who want to passively track the Portugal PSI 20’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.

Step 3. Invest in the Portugal PSI 20

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Sign into your trading account and search for the Portugal PSI 20. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.

Step 4. Monitor your investment

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When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.

Your trading account will show the price change in the Portugal PSI 20 since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the Portugal PSI 20 and close your position, ideally at a profit!

 

The different ways to invest in the PSI20

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As we mentioned above, there are numerous ways to put your money into the Portugal PSI 20. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.

Portugal PSI 20 ETFs

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An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.

An Portugal PSI 20 ETF is one way of investing in the Portugal PSI 20. It’s simply an investment fund that mirrors the performance of the Portugal PSI 20. When you buy shares in the fund, the value of your investment will rise or fall with the Portugal PSI 20 itself. 

ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the Portugal PSI 20 index, because you can buy or sell shares in the fund throughout the day.

Examples of popular PSI20 ETFs

  • iShares PSI 20 UCITS ETF (PSI20)
  • Caixagest ETF PSI 20 (PSI20)
  • BPI Portugal ETF (BPIT)

Portugal PSI 20 index funds

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An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the Portugal PSI 20. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.

However, there are a couple of differences. Portugal PSI 20 index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in Portugal PSI 20 index funds.

That means an Portugal PSI 20 mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.

Portugal PSI 20 CFDs

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CFDs (contracts for difference) are a way to speculate on Portugal PSI 20 price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the Portugal PSI 20 – but it’s separate from it.

As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.

All of this means Portugal PSI 20 CFDs offer the potential to outperform a fund that passively tracks the Portugal PSI 20’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.

Portugal PSI 20 futures

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Futures contracts are agreements to buy or sell the PSI20 at an agreed price on a set date in the future. Portugal PSI 20 futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.

Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.

Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the Portugal PSI 20 then you might want to short the Portugal PSI 20 so that you still make some money if the price falls.

Portugal PSI 20 stocks

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Another way to invest in the Portugal PSI 20 is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the Portugal PSI 20 in order to get broad exposure to its performance.

The most heavily weighted stocks in the Portugal PSI 20 tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.

One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.

For the Portugal PSI 20 index, the largest stocks you might choose to invest in are:

CompanyIndex weight
EDP Energias de Portugal SA (EDP)14.40%
Galp Energia SGPS SA (GALP)10.60%
Jerónimo Martins SGPS SA (JMT)9.50%
Banco Comercial Português SA (BCP)6.40%
EDP Renováveis SA (EDPR)5.50%
CTT Correios de Portugal SA (CTT)5.10%
Sonae SGPS SA (SON)4.80%
Altri SGPS SA (ALTR)4.30%
Pharol SGPS SA (PHRA)4.00%
Mota-Engil SGPS SA (MOTA)3.60%

The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.

How much does it cost to invest in the Portugal PSI 20 index?

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From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.

InstrumentTrading feeManagement fee
Exchange traded funds$0-$5.990-0.2%
Index fund / mutual fund$0-$5.990.1-2%
Individual stock$0-$3None
CFD$0None

*A fee comparison of 3 leading brokers for example purposes

ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.

All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars. 

Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.

Should I invest in the Portugal PSI 20 index? 

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Yes, Portugal PSI 20 investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.

The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The Portugal PSI 20 is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.

What are the advantages of investing in the Portugal PSI 20 index?

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An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the Portugal PSI 20 index:

  • The PSI20 provides exposure to the best companies in Portugal. The PSI 20 index comprises the top 20 companies listed on the Euronext Lisbon Stock Exchange. Investing in the index will expose you to some of Portugal’s largest companies. 
  • It’s a diverse index. The PSI20 includes companies from a range of sectors, such as energy, banking and telecommunications. This diversity helps reduce portfolio risk. 
  • The index has historically performed well. The Portugal PSI 20 Index has performed well over the long term. While past performance does not guarantee future returns, the index has an annual average return of around 7% since its inception in 1992. 
  • The PSI20 provides exposure to the Eurozone currency. The PSI20 is priced in Euros, which means by investing in it; you’ll gain exposure to the Eurozone currency, which may be beneficial to diversify your currency holdings. 

What are the disadvantages of investing in the Portugal PSI 20 index?

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The main risk of investing in the Portugal PSI 20 is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of Portugal PSI 20 investing.

  • It is concentrated in a few industries. While the PSI 20 Index exposes investors to a range of sectors, it is heavily concentrated in a few key industries. One of the most prominent industries is banking, which could make investing in the index more vulnerable to sector-specific risk. 
  • The PSI20 can be volatile. Similar to many other equity indexes, the PSI 20 index can be volatile, and it is not uncommon for investors to experience significant fluctuations in their portfolios, especially over the short term. 
Invest in the PSI20 Index

FAQs

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Should I invest in the Portugal PSI 20 through an index fund or ETF?
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Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.