Investors are increasingly drawn to exchange-traded funds (ETFs) for passive income and capital growth, with demand surging recently. By June, European ETFs surpassed $2 trillion in assets under management, with a notable 88% year-on-year increase in funds raised.

Two notable ETFs for passive income are the iShares Euro Dividend UCITS ETF, which offers a 6% yield, and the L&G Quality Equity Dividends ESG Exclusions UK UCITS ETF, with a 4.6% yield. Both funds provide solid dividend income and diversification, though they have their own risks, including economic downturns in their respective regions.

ETFs offer significant advantages, such as risk management through diversification across various assets, including stocks, bonds, and commodities. While individual stocks might yield higher returns, ETFs can still be highly profitable over time.

Finsum: Now might be an important time to diversify to the UK with elections and interest rate volatility shocking U.S. and Asian markets.