Vanguard and Norway

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retire@45
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Vanguard and Norway

Post by retire@45 » Tue May 14, 2013 1:02 pm

Hello everyone.

I have been reading here for some time now - and loving it!

My partner and I have a goal to be financial independent (with a massive margin) 16 year from now. I feel we are on the right track. We are debt free (January this year) and we are now saving 37 % of our take home pay. In addition I save all profits from my business. Including these savings the total savings rate is close to 75 % after taxes.

We want to have a lazy portfolio. I would really like to invest in Vanguard index funds but apparently Vanguard is not available in Norway. I have been in contact with the UK branch but they were not very helpful. Does anyone know if it could be done somehow? Or does anyone know of any similar funds I could go for instead.

I have done extensive research and I am not happy with the cost on the funds available with my brokers. Most are 2 %.

hakos
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Re: Vanguard and Norway

Post by hakos » Sat May 25, 2013 9:50 am

I don't know how to buy Vanguard index funds here in Norway, but there are some good alternatives available:

Equities:

- KLP AksjeVerden Indeks: Tracking the MSCI All Country World Index (TER 0.3%)
- DNB Global Indeks: Tracking the MSCI World Index (TER 0.3%)

Bonds:

- KLP Pensjon II: Norwegian bonds (TER 0.2%)
- KLP Obligasjon Global II: International bonds (TER 0.2%)

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LadyGeek
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Re: Vanguard and Norway

Post by LadyGeek » Sat May 25, 2013 10:13 am

Welcome to both! I recognize that Norway is not a member of the European Union countries, but perhaps you can find suggestions in this wiki article: EU investing
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nun
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Re: Vanguard and Norway

Post by nun » Sat May 25, 2013 11:26 am

Where do you live? If it's Norway you need to look at their rules governing investing in foreign funds. I know for the UK most foreign funds are taxed as if all gains are income, that includes all US Vanguard mutual funds, but not the ETFs and the only way to buy the ETFs is if you already have a US brokerage or Vanguard account.

You might be able to buy the UK Vanguard funds through a broker, I don't really know, but they have very large minimum initial purchases, some of 100,000 GBPs

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retire@45
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Re: Vanguard and Norway

Post by retire@45 » Mon May 27, 2013 10:51 am

Thanks for all the response.

Yes, I live in Norway. Norway seems to be one of few Western countries where Vanguard does not operate. I hope this will change!

It is correct that Scandinavian customers must purchase for a minimum of 100,000 GBP.

The tip about KLP funds was great. I will do some more research and hopefully soon have a low cost, lazy assets allocation plan in place.

allsop
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Re: Vanguard and Norway

Post by allsop » Mon May 27, 2013 11:58 am

www.SPP.se, owned by Storebrand, offers several no-load passive mutual funds with low costs.

The SPP passive funds for Europe, Japan and Global now have much broader indices to follow and have TER in the range of 0.2% to 0.3%

The above assumes that you can buy them from Norway without fees when using Norwegian Krone.

Hallman
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Re: Vanguard and Norway

Post by Hallman » Mon May 27, 2013 3:49 pm

We have more stock index funds than you might think. We definitely aren't the worst country out there. Bonds on the other hand are sparse (KLP has some, which has been mentioned above).

KLP AksjeVerden Indeks (14% MSCI Emerging markets, 86% MSCI World, 0.3% ER).

DNB Global Indeks (0.3% ER, MSCI World).

KLP AksjeFremvoksende Markeder Indeks II (MSCI Emerging markets, 0.3% ER)

KLP AksjeGlobal Indeks IV (currency hedged to NOK, MSCI World, 0.35% ER)

Storebrand Indeks - Nye Markeder (MSCI Emerging markets, 0.75% ER)

Storebrand Indeks - Alle Markeder. I don't know much about this fund but it's a mix of Storebrand Global Indeks I, SPP Emerging Markets SRI and iShares MSCI Emerging. It's supposed to total 86% MSCI World and 14% MSCI Emerging Markets, so the same as KLP AksjeVerden, ER is 0.4%)

Handelsbanken MSCI USA Index (0.4% ER)

Handelsbanken MSCI Emerging Markets Index (0.8% ER)

Handelsbanken Europafond Index (MSCI Europe) (0.4% ER)

XACT Norden - ETF that follows NASDAQ OMX Nordic 120 (0.4% ER)

XACT also has many sector index funds

You have a number of index funds that follow the norwegian market (most in OSEBX, which is a little more diversified than the OBX) - Alfred Berg Indeks (0.25% ER), Carnegie Norge Indeks (0.8% ER, OBX fund), DNB Norge Indeks (0.3% ER), KLP AksjeNorge Indeks II (0.2% ER), XACT OBX (ETF, OBX, 0.3%), PLUSS Indeks (0.7% ER, OBX).

Hallman
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Re: Vanguard and Norway

Post by Hallman » Tue May 28, 2013 5:46 am

Landkreditt actually has a fund that invests in Vanguard Global Stock Index Fund. ER is 1.25% and front fee (or whatever it's called in english..what you pay to purchase the fund) is 3% and fee to sell is 1.25%.

I wouldn't touch it. Too expensive.

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retire@45
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Re: Vanguard and Norway

Post by retire@45 » Tue May 28, 2013 5:53 am

Hallman, thank you so much for reply. I will check them.

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Re: Vanguard and Norway

Post by Hallman » Tue May 28, 2013 11:08 am

Another thing, many of the funds mentioned have a purchasing fee (usually pretty low - 0.2-0.3%) if you buy them from the companies that run the funds, but you can omit this by buying them at Nordnet or Skandiabanken (these are the only 2 places I know that don't charge purchasing fees for any funds).

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retire@45
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Re: Vanguard and Norway

Post by retire@45 » Tue May 28, 2013 11:15 am

Thank you. Good thing I am customer at both companies then.

I buy my private investments though Skandiabanken (funds) and my business investments though Nordnet (individual dividend stocks).

Fees seems not to be a very much discussed topic, they are not easily accessible and I miss ability to sort available funds by fees.

Hallman
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Re: Vanguard and Norway

Post by Hallman » Tue May 28, 2013 1:54 pm

retire@45 wrote:Thank you. Good thing I am customer at both companies then.

I buy my private investments though Skandiabanken (funds) and my business investments though Nordnet (individual dividend stocks).

Fees seems not to be a very much discussed topic, they are not easily accessible and I miss ability to sort available funds by fees.
If you go to morningstar.no --> fond --> "ikke-institusjonell" as investortype and "norskregistrerte fond" where it originally says "alle typer fond" --> click from "oversikt" to "avgifter" --> click 'totalkostnad' to arrange funds after expenses.

The Handelsbanken funds I mentioned are actually registered in Sweden and Norway and for some reason won't show up on that list.


I have to say that KLP AksjeVerden is a great fund. It's cheap (0.3% ER), you get exposure to emerging markets and developed markets (14% vs 86%) and rebalancing is done by the fund manager.

I agree with you that many of the actively managed funds in Norway are very expensive. 1.5% to 2% ER is the norm. Also the global funds (active and index funds) usually compare themselves to MSCI World net return, which has lagged MSCI World total return by about 0.55% the last 10 years due to 'tax leakage', i.e. witholding taxes on dividend from countries abroad. Norwegian funds have done about 0.15% better than this due to tax treaties, making it about 0.4%, but that's still more than the ER of many of the funds!

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FNK
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Re: Vanguard and Norway

Post by FNK » Tue May 28, 2013 2:02 pm

Is there no way to buy Vanguard ETFs?

Hallman
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Re: Vanguard and Norway

Post by Hallman » Tue May 28, 2013 2:14 pm

FNK wrote:Is there no way to buy Vanguard ETFs?
It is possible to buy them, I know several who have done so, but it's been mentioned on here in another thread that it might not be a good idea due to estate taxes (I don't know what this is).

I sent Vanguard an email regarding it yesterday but haven't received a response yet.


It won't be much better anyway. The vanguard funds have lower expense ratios, but they also distribute dividends (norwegian funds don't) and you'll be double taxed on them. First the fund will pay witholding taxes on the dividends (which you won't get a tax deduction for), then you'll pay witholding taxes to the US for the dividend you receive -- which will most likely offset the dividend tax to Norway.

You'll also need to do mork paperwork during tax season. The norwegian funds will do the work for you, you only need to check that it's reported correctly. Vanguard won't do that.

EDIT:

For 2012 the total cost of owning FTSE All-World ex-US Index Fund would look like this:

0.15% ER + 0.18% witholding taxes taken when the fund received the dividends + 0.46% witholding taxes taken by the US when the dividend is distributed to the norwegian holder = 0.79% total cost

For Vanguard Total Stock Market (VTI, US fund) it would look like this:

0.05% ER + 0.32% witholding taxes taken by the US when the dividend is distributed to Norwegian holder = 0.37%


A global portfolio of 45% US and 55% international would cost .1665 + .4345 = 0.6% after taxes and the ER


The calculations are so simple that I won't show my work. I'll do so if it's requested.

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LadyGeek
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Re: Vanguard and Norway

Post by LadyGeek » Tue May 28, 2013 3:26 pm

Hallman wrote:
FNK wrote:Is there no way to buy Vanguard ETFs?
It is possible to buy them, I know several who have done so, but it's been mentioned on here in another thread that it might not be a good idea due to estate taxes (I don't know what this is).
Are you asking about the definition of estate tax? Estate tax in the United States
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TedSwippet
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Re: Vanguard and Norway

Post by TedSwippet » Wed May 29, 2013 3:40 am

Hallman wrote:
FNK wrote:Is there no way to buy Vanguard ETFs?
It is possible to buy them, I know several who have done so, but it's been mentioned on here in another thread that it might not be a good idea due to estate taxes (I don't know what this is).
Short summary here. Only $60k exemption and no unlimited spouse transfer. Compare with $5m exemption and unlimited spouse transfers for US citizens.

Take a look at Vanguard UK's range of ETFs. Trademark low Vanguard charges, no silly 100k GBP minimums, and domiciled in Ireland so no US tax entanglements.

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