Question about Vanguard ETFs for non-US investors

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nobsinvestor
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Joined: Sat Jul 19, 2014 1:36 pm

Question about Vanguard ETFs for non-US investors

Post by nobsinvestor »

Hi All-

Question for you guys.

For a non-US based investor, it would still be possible to own the 3 fund portfolio using Vanguard ETFs in a foreign brokerage account, right?

So for example, if you lived in Canada or Spain, you could use a Spanish or Canadian brokerage account to hold the ETFs.

I'm assuming it's not possible for non-US investors to own Vanguard Muni bond funds since there are no ETFs for it?

Thanks!!
BC_Doc
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Re: Question about Vanguard ETFs for non-US investors

Post by BC_Doc »

Welcome to Bogleheads!

Here in Canada, the answer to your question is yes. I use a discount brokerage account-- RBC Direct Investments. For tax reasons, I hold VT-N in my Registered Retirement Savings Plan. All other US traded Vanguard ETFs are available, so VT-N could be combined with BND-N for a two fund portfolio if one were inclined to go that route.

Vanguard Canada also has a solid offering of its own ETFs traded over the Toronto Stock Exchange. I use these products in my non-registered (ie, taxable) accounts.

Which country are you/will you be living in and investing from?
Topic Author
nobsinvestor
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Re: Question about Vanguard ETFs for non-US investors

Post by nobsinvestor »

Thanks for the reply. Actually the question was just out of intellectual curiosity.

So am I correct that Vanguard's excellent muni bond funds aren't really an option if you don't live in the US?

Thanks!
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asset_chaos
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Re: Question about Vanguard ETFs for non-US investors

Post by asset_chaos »

The interest from US municipal bonds is free from US federal income tax. This means the interest rate they pay is typically (though not strictly always) lower than for taxable US bonds of similar credit quality and duration. A non-US person who doesn't pay US tax anyway wouldn't benefit from owning US municipal bonds.

Municipal bond ETFs exist, e.g. here's a list http://etfdb.com/type/bond/municipal-bond/, but none from Vanguard. I suppose it's possible that some of these ETFs are accessible through your home country brokerage account (though I doubt it), but I don't see how such an investment would benefit a non-US person.
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thursdaysd
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Re: Question about Vanguard ETFs for non-US investors

Post by thursdaysd »

I don't see how such an investment would benefit a non-US person.
It might benefit a US ex-pat being taxed on a remittance basis in the host country.
Thursday's child has far to go
Topic Author
nobsinvestor
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Re: Question about Vanguard ETFs for non-US investors

Post by nobsinvestor »

Thanks for the replies.

So for a non-US citizen living outside the US, what's generally considered the best core bond holding? Total Bond Market? Or is it considered better to hold bonds of the country you live in, assuming its a stable country?

Thanks!
Karamatsu
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Re: Question about Vanguard ETFs for non-US investors

Post by Karamatsu »

Unless you're an expatriate US citizen, or someone who otherwise plans to retire in the US, the most useful might be bonds in your home country. If you wanted to invest in US bonds, then you'd probably want to find a bond fund that is hedged into your home currency, otherwise, with interest rates so low, the bond fund essentially becomes a play on foreign exchange rates.

Among US citizens/residents the bond allocation that I seem to hear about most (a totally unscientific survey!) is either TBM or TBM+TIPS in some ratio (50/50 seems popular).

A more conservative allocation, in either case (assuming a stable country), would be to use only government bonds.

As for municipal or other tax-advantage bonds or bond funds, remember that the interest from these will likely be taxed by your home country, so there's often no advantage to them at all.
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