NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

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pt32
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NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Mon Jun 08, 2015 11:25 am

Hello,

I'd like to create a Simplified Ultimate Buy and Hold Portfolio.
Based on my research, it provides better risk adjusted historical returns than Total US/Total International stock mix.
All comments, critique and alternative fund recommendations are very welcome.

1. LARGE US BLEND (S&P 500)
CSPX - iShares Core S&P 500 UCITS ETF - TER 0.07%
-accumulating (dividends are automatically reinvested)

Alternative: VUSA - Vanguard S&P 500 UCITS ETF - non-accumulating and seems to perform a bit worse


2. SMALL US VALUE - I didn't find a non-US domiciled fund, so the US domiciled one seems to be the only option:
VBR - Vanguard Small-Cap Value ETF - TER 0.09% + ~0.30%* = 0.39%
* the 0.3% is an additional "withholding tax drag" for me (15% extra withdolding tax out of average 2% dividend)

If you know any 'Small US Value' funds NOT domiciled in the US, please let me know.


3. INTERNATIONAL LARGE VALUE
IDJV - iShares EURO Total Market Value Large UCITS ETF - TER 0.40% (0.32% with security lending return) - only 52 stocks
EMSV - Source MSCI Europe Value UCITS ETF - TER 0.35% - 226 stocks

Why does the IDJV constantly outperform the index for the last 5 years? Is that a bad thing?
Which of these funds, or an alternative, would you recommend? The first one has only 52 stocks, which is not optimal.


Alternatives:
iShares MSCI Europe Value Factor UCITS ETF - TER 0.25% (this one would be great, but isn't available at my broker)
XDEV - db x-trackers Equity Value Factor UCITS ETF - TER 0.25% (44% USA, so not very international)
iShares MSCI World Value Factor UCITS ETF - TER 0.30 (36% USA, so not very international, also don't like the 26% Japan exposure)



4. INTERNATIONAL SMALL BLEND
SMC - SPDR® MSCI Europe Small Cap UCITS ETF - TER 0.30% (Europe only)

Alternative: db x-trackers MSCI Europe Small Cap Index UCITS ETF - TER 0.40% (Europe only)

Suggestions for other funds are welcome.


5. EMERGING MARKETS
VFEM - Vanguard FTSE Emerging Markets UCITS ETF - TER 0.25%


Percentages - not sure, but probably 20% for each fund.
I'll use government bonds in the bond part of my portfolio (will post separate thread about that)

Would you recommend adding also these, or ignore them to make the portfolio simpler?
REITS?: IUSP - iShares US Property Yield UCITS ETF - TER 0.4%
DEVELOPED ASIA?: VAPX - FTSE Developed Asia Pacific ex Japan UCITS ETF - TER 0.22%


ABOUT ME:
-I'm 32; AA: 75% Stocks, 25% Bonds; Investment horizon: 20-30 years; $440.000 to invest + regular contributions
-I don't pay any local income or capital gain taxes
-Need NON-US (Ireland UCITS) ETFs - can't claim back half of the 30% US withholding tax, so Ireland domiciled ETFs (which pay only 15% withholding tax on US dividends) are better in most cases (except when the saving on the dividend withholding tax is smaller than additional costs - like higher TER)
-I'm a non US person (no US citizenship or greencard); My company will own these funds, so the US estate tax will not apply
Last edited by pt32 on Thu Jun 11, 2015 5:53 am, edited 1 time in total.

pt32
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Wed Jun 10, 2015 5:12 am

Any comments about this portfolio or strategy?

Would adding the REITs improve risk adjusted return or lower volatility?

Thanks..

HurdyGurdy
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by HurdyGurdy » Wed Jun 10, 2015 7:46 pm

Hello pt32,

a bump, since your idea is interesting and deserves more comments.

Nobody here will disapprove strongly of your strong tilt to Value.

However, if brokers charge a separate fee for deposits into each fund, to have so many funds may get expensive.

normaldude
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by normaldude » Wed Jun 10, 2015 7:59 pm

I assume that you are NOT a US person (no US citizenship, no US permanent residency).

Here's a simpler way, using 2 Ireland-domiciled ETFs.

Developed Countries Stocks: iShares Core MSCI World UCITS ETF, acc, no distributions (*SWDA in GBP/Lon, or IWDA in USD/Lon, or *IWDA in EUR/Amsterdam/Netherlands; 0.20% expense ratio; volume ~70,000/day).

- https://www.ishares.com/uk/individual/e ... f-acc-fund

Emerging Market Stocks: iShares Core MSCI Emerging Markets IMI UCITS ETF, acc, no distributions (*EMIM in GBP/Lon, or ?EIMI in USD/Lon, or *EMIM in EUR/Amsterdam/Netherlands; 0.25% expense ratio; volume ~40,000/day).

- https://www.ishares.com/uk/individual/e ... -ucits-etf


Or, if you have a large portfolio, and want to avoid the thin-volume issue with non-US-listed ETFs, you could just use traditional Vanguard index funds (domiciled in Ireland), by opening an account with TD Direct Luxembourg ( tddirectinvesting.com ).

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by normaldude » Wed Jun 10, 2015 8:06 pm

pt32 wrote:2. SMALL US VALUE - I didn't find a non-US domiciled fund, so the US domiciled one seems to be the only option:
VBR - Vanguard Small-Cap Value ETF - TER 0.09% + ~0.30%* = 0.39%
* the 0.3% is an additional "withholding tax drag" for me (15% extra withdolding tax out of average 2% dividend)

If you know any 'Small US Value' funds NOT domiciled in the US, please let me know.
If you are NOT a US person (US citizen, US permanent resident), then you should completely avoid US-domiciled ETFs & funds. If a non-US citizen / non-US person invests in US-domiciled funds & ETFs, then if they die, the US government will impose a brutal estate tax, up to 40% on amounts over $60,000.

viewtopic.php?t=165478#p2487313

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by daffyd » Wed Jun 10, 2015 8:38 pm

Part of the reason for the Simplified UBH is that international small cap value funds aren't common in the US. You might do better departing from the international small blend. Here are some potential components I found interesting (thanks Google!)

SPDR® MSCI USA Small Cap Value Weighted UCITS ETF (TER 0.30%)

You didn't ask for, but given the above I mention:
SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF (TER 0.30%)

Combine these two with a total world fund (SWDA iShares Core MSCI World UCITS ETF perhaps?), or consider a separate emerging markets or Asia fund (as you don't have these covered in small caps, which is fine but you may want to diversify into these regions with large caps at least).

Other choices similar to (large cap) value exposure are Powershares RAFI ETFs. They're a bit pricey at around 0.5% p.a. though.
http://www.invescopowershares.net/porta ... ps/prices/

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by LadyGeek » Wed Jun 10, 2015 9:19 pm

Would this wiki article help? Nonresident alien with no US tax treaty & Irish ETFs Take a look at the funds listed and the references.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 11, 2015 5:38 am

HurdyGurdy wrote:However, if brokers charge a separate fee for deposits into each fund, to have so many funds may get expensive.
This won't be an issue when doing the initial purchase as each fund will be around $55.000, so the brokerage fee will be relatively low. With subsequent purchases, I'll focus primarily on keeping the target bond/equity allocation and worry less about sub-classes allocation.
normaldude wrote:If you are NOT a US person (US citizen, US permanent resident), then you should completely avoid US-domiciled ETFs & funds. If a non-US citizen / non-US person invests in US-domiciled funds & ETFs, then if they die, the US government will impose a brutal estate tax, up to 40% on amounts over $60,000.
My company will own the brokerage account that will hold the funds, so this will not be an issue.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 11, 2015 5:43 am

normaldude wrote: Here's a simpler way, using 2 Ireland-domiciled ETFs.
Developed Countries Stocks: iShares Core MSCI World UCITS ETF, acc, no distributions (*SWDA in GBP/Lon, or IWDA in USD/Lon, or *IWDA in EUR/Amsterdam/Netherlands; 0.20% expense ratio; volume ~70,000/day).
- https://www.ishares.com/uk/individual/e ... f-acc-fund

Emerging Market Stocks: iShares Core MSCI Emerging Markets IMI UCITS ETF, acc, no distributions (*EMIM in GBP/Lon, or ?EIMI in USD/Lon, or *EMIM in EUR/Amsterdam/Netherlands; 0.25% expense ratio; volume ~40,000/day).
- https://www.ishares.com/uk/individual/e ... -ucits-etf
These funds look good, however I wanted to tilt my portfolio towards small cap and value

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Thu Jun 11, 2015 6:29 am

pt32 wrote:
normaldude wrote: Here's a simpler way, using 2 Ireland-domiciled ETFs.
Developed Countries Stocks: iShares Core MSCI World UCITS ETF, acc, no distributions (*SWDA in GBP/Lon, or IWDA in USD/Lon, or *IWDA in EUR/Amsterdam/Netherlands; 0.20% expense ratio; volume ~70,000/day).
- https://www.ishares.com/uk/individual/e ... f-acc-fund

Emerging Market Stocks: iShares Core MSCI Emerging Markets IMI UCITS ETF, acc, no distributions (*EMIM in GBP/Lon, or ?EIMI in USD/Lon, or *EMIM in EUR/Amsterdam/Netherlands; 0.25% expense ratio; volume ~40,000/day).
- https://www.ishares.com/uk/individual/e ... -ucits-etf
These funds look good, however I wanted to tilt my portfolio towards small cap and value
You might want to consider DB x-trackers Equity Value Factor UCITS ETF (DR) 1C as part of your portfolio.

http://etf.deutscheawm.com/DEU/DEU/ETF/ ... S-ETF-(DR)

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 11, 2015 6:57 am

chatbotte wrote:You might want to consider DB x-trackers Equity Value Factor UCITS ETF (DR) 1C as part of your portfolio.
http://etf.deutscheawm.com/DEU/DEU/ETF/ ... S-ETF-(DR)
Actually I did. It has the same TER as 'iShares EURO Total Market Value Large UCITS ETF', but the ishare fund has additional 0.08% security lending return (which effectively lowers the TER, I guess) and is not synthetic. It has also for some strange reason constantly outperformed it's index for the last 5 years (tracking error?).
On the other hand the x-trackers is accumulating and has also UK exposure.

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Thu Jun 11, 2015 7:09 am

pt32 wrote:
chatbotte wrote:You might want to consider DB x-trackers Equity Value Factor UCITS ETF (DR) 1C as part of your portfolio.
http://etf.deutscheawm.com/DEU/DEU/ETF/ ... S-ETF-(DR)
Actually I did. It has the same TER as 'iShares EURO Total Market Value Large UCITS ETF', but the ishare fund has additional 0.08% security lending return (which effectively lowers the TER, I guess) and is not synthetic. It has also for some strange reason constantly outperformed it's index for the last 5 years (tracking error?).
On the other hand the x-trackers is accumulating and has also UK exposure.
Oh, I'm sorry, I didn't notice you mentioned the x-trackers ETF as an alternative investment.

I think the x-trackers ETF is a directly replicated ETF. It has a "DR" next to the actual ETF name. Also, I don't think DB will want to forfeit any securities lending return if it can be had. Are you sure this particular x-tracker generates zero securities lending return?

Re tracking: That could be a tax issue ("wrong" benchmark). Net Return indexes assume dividend withholding taxes that may be greater than what the ETF actually has to pay.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 11, 2015 8:28 am

chatbotte wrote:I think the x-trackers ETF is a directly replicated ETF. It has a "DR" next to the actual ETF name. Also, I don't think DB will want to forfeit any securities lending return if it can be had. Are you sure this particular x-tracker generates zero securities lending return?

Re tracking: That could be a tax issue ("wrong" benchmark). Net Return indexes assume dividend withholding taxes that may be greater than what the ETF actually has to pay.
What's the ticker of the fund?

Securities lending: I'm not sure, but they don't mention it, so I have assumed the don't do it. Found an article mentioning that iShares and Vanguard do it.
Last edited by pt32 on Thu Jun 11, 2015 8:34 am, edited 2 times in total.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 11, 2015 8:32 am

daffyd wrote:SPDR® MSCI USA Small Cap Value Weighted UCITS ETF (TER 0.30%)

You didn't ask for, but given the above I mention:
SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF (TER 0.30%)
The 'USA Small Cap Value Weighted' isn't available at my broker, so looks like I'm stuck with 'Vanguard Small-Cap Value ETF' for US small value.

And 'Value Weighted' fund wouldn't be as much value titled as 'Value' fund, right?

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Fri Jun 12, 2015 1:42 am

pt32 wrote:
chatbotte wrote:I think the x-trackers ETF is a directly replicated ETF. It has a "DR" next to the actual ETF name. Also, I don't think DB will want to forfeit any securities lending return if it can be had. Are you sure this particular x-tracker generates zero securities lending return?

Re tracking: That could be a tax issue ("wrong" benchmark). Net Return indexes assume dividend withholding taxes that may be greater than what the ETF actually has to pay.
What's the ticker of the fund?

Securities lending: I'm not sure, but they don't mention it, so I have assumed the don't do it. Found an article mentioning that iShares and Vanguard do it.
Sorry I don't know the ticker. Please follow the link above. DB have migrated some of their ETFs to physical replication because they were losing their market share to iShares and other ETF providers who don't offer synthetic ETFs.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 12, 2015 11:03 am

I'm thinking about replacing:
Vanguard FTSE Emerging Markets UCITS ETF and
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETFTSE Developed Asia Pacific ex Japan UCITS ETF

with:
iShares Core MSCI Emerging Markets IMI UCITS ETF - same TER as Vanguard FTSE Emerging Markets and is accumulating. Also includes South Korea, so I'm thinking about ditching 'Vanguard FTSE Developed Asia Pacific ex Japan' (and ignore the lack of Australia, Hong Kong and Singapore).
The only problem is higher tracking error (0.67%). What do you think?

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Fri Jun 12, 2015 1:46 pm

pt32 wrote:I'm thinking about replacing:
Vanguard FTSE Emerging Markets UCITS ETF and
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETFTSE Developed Asia Pacific ex Japan UCITS ETF

with:
iShares Core MSCI Emerging Markets IMI UCITS ETF - same TER as Vanguard FTSE Emerging Markets and is accumulating. Also includes South Korea, so I'm thinking about ditching 'Vanguard FTSE Developed Asia Pacific ex Japan' (and ignore the lack of Australia, Hong Kong and Singapore).
The only problem is higher tracking error (0.67%). What do you think?
The iShares EM ETF only holds about 1,900 stocks, while the index it tracks is made up of roughly 2,600 constituents. The 700 small caps not held by the ETF have performed better than the 1,900 stocks held by the ETF.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by herpfinance » Fri Jun 12, 2015 6:23 pm

As a non-US investor, I'm happy to see discussion from fellow investors in the same boat.
normaldude wrote: Here's a simpler way, using 2 Ireland-domiciled ETFs.

Developed Countries Stocks: iShares Core MSCI World UCITS ETF, acc, no distributions (*SWDA in GBP/Lon, or IWDA in USD/Lon, or *IWDA in EUR/Amsterdam/Netherlands; 0.20% expense ratio; volume ~70,000/day).

- https://www.ishares.com/uk/individual/e ... f-acc-fund

Emerging Market Stocks: iShares Core MSCI Emerging Markets IMI UCITS ETF, acc, no distributions (*EMIM in GBP/Lon, or ?EIMI in USD/Lon, or *EMIM in EUR/Amsterdam/Netherlands; 0.25% expense ratio; volume ~40,000/day).

- https://www.ishares.com/uk/individual/e ... -ucits-etf
These are exactly the ETF's that I use for equities. Accumulating is only a plus.

OP: I'm looking forward to your thread on bonds.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Sat Jun 13, 2015 1:29 am

What are the respective weights of the two ETFs in your portfolio? 90% WORLD and 10% EM?

Do you hold any developed small caps, like SPDR MSCI World Small Cap ETF? I think you'd be missing out on some diversification opportunities and/or extra returns if you omitted small caps completely.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by herpfinance » Sat Jun 13, 2015 3:22 am

My equity allocation is as follows:

SWDA - 80% (.20%) iShares Core MSCI World
EIMI - 15% (.25%) iShares Core MSCI Emerging Markets IMI
OMXC20 - 5% (.00%) Nordnet Superfonden

I do not hold any developed small caps. I prefer to keep it as simple as possible and try to somewhat match market capitalisation. The only reason I even hold the latter fund is because it is truly an index fund (the others being ETF's) which means no brokerage costs.

Another fund worthy of consideration could be 'Vanguard FTSE All-World UCITS ETF (VWRL) (0.25% ER)' which provides both developed and emerging large+mid cap exposure.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Mon Jun 15, 2015 10:07 am

chatbotte wrote:
pt32 wrote:I'm thinking about replacing:
Vanguard FTSE Emerging Markets UCITS ETF and
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETFTSE Developed Asia Pacific ex Japan UCITS ETF

with:
iShares Core MSCI Emerging Markets IMI UCITS ETF - same TER as Vanguard FTSE Emerging Markets and is accumulating. Also includes South Korea, so I'm thinking about ditching 'Vanguard FTSE Developed Asia Pacific ex Japan' (and ignore the lack of Australia, Hong Kong and Singapore).
The only problem is higher tracking error (0.67%). What do you think?
The iShares EM ETF only holds about 1,900 stocks, while the index it tracks is made up of roughly 2,600 constituents. The 700 small caps not held by the ETF have performed better than the 1,900 stocks held by the ETF.
Thanks.. Which of these 2 funds would you guys buy?

iShares Core MSCI Emerging Markets IMI UCITS ETF with higher tracking error, or
Vanguard FTSE Emerging Markets UCITS ETF with lower exchange volume and distributions?

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Mon Jun 15, 2015 10:41 am

According to Morningstar, iShares Core EM IMI seems to have a SMALLER tracking error than the other ETF.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Mon Jun 15, 2015 12:45 pm

chatbotte wrote:
pt32 wrote:
chatbotte wrote:I think the x-trackers ETF is a directly replicated ETF. It has a "DR" next to the actual ETF name. Also, I don't think DB will want to forfeit any securities lending return if it can be had. Are you sure this particular x-tracker generates zero securities lending return?

Re tracking: That could be a tax issue ("wrong" benchmark). Net Return indexes assume dividend withholding taxes that may be greater than what the ETF actually has to pay.
What's the ticker of the fund?

Securities lending: I'm not sure, but they don't mention it, so I have assumed the don't do it. Found an article mentioning that iShares and Vanguard do it.
Sorry I don't know the ticker. Please follow the link above.
The link redirects me to their homepage.

The Key Investor Information for that fund shows 3% entry and exit charges! http://etf.deutscheawm.com/LUX/ENG/Down ... F-%28DR%29
I'm curious, how do they take these 3%+3% charges when I buy and sell the fund on an exchange?

There's also '2C share class' of that fund, which seems to be the same fund, but with different TER (0.25% vs 0.40% for the one above). http://etf.deutscheawm.com/GBR/ENG/Down ... F-%28DR%29
Very confusing, it might be better to stay off db x-trackers.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by TedSwippet » Mon Jun 15, 2015 12:51 pm

pt32 wrote:...The Key Investor Information for that fund shows 3% entry and exit charges! http://etf.deutscheawm.com/LUX/ENG/Down ... F-%28DR%29
The Key Investor Information you cite also says:
Entry and exit charges will only apply when shares are subscribed or redeemed directly from the Fund, and will not apply when
investors buy or sell such shares on stock exchanges. Investors dealing on exchange will pay fees charged by their stock brokers.
Such charges can be obtained from stock brokers.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Mon Jun 15, 2015 3:36 pm

pt32 wrote: The link redirects me to their homepage.

The Key Investor Information for that fund shows 3% entry and exit charges! http://etf.deutscheawm.com/LUX/ENG/Down ... F-%28DR%29
I'm curious, how do they take these 3%+3% charges when I buy and sell the fund on an exchange?

There's also '2C share class' of that fund, which seems to be the same fund, but with different TER (0.25% vs 0.40% for the one above). http://etf.deutscheawm.com/GBR/ENG/Down ... F-%28DR%29
Very confusing, it might be better to stay off db x-trackers.
The cheaper class trades on the Stuttgart Stock Exchange in Germany: https://www.boerse-stuttgart.de/en/stoc ... N=47666513

The more expensive class trades on other European stock exchanges.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Wed Jun 17, 2015 1:30 pm

chatbotte wrote:According to Morningstar, iShares Core EM IMI seems to have a SMALLER tracking error than the other ETF.
Can't find it, could you please send a link?
According to their Factsheet the tracking error is 0.67% which is higher that Vanguard's...

chatbotte
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by chatbotte » Wed Jun 17, 2015 3:08 pm

pt32 wrote:
chatbotte wrote:According to Morningstar, iShares Core EM IMI seems to have a SMALLER tracking error than the other ETF.
Can't find it, could you please send a link?
According to their Factsheet the tracking error is 0.67% which is higher that Vanguard's...
I guess you're right on that one, after all. Morningstar use the wrong benchmarks for their analysis. My apologies.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by hafius500 » Thu Jun 18, 2015 4:23 am

Re accumulating versus distributing shares and registered versus unregistered funds:

IMO posters should resist to recommend one of these classes because it could be a bad choice in other countries.
Why do I see advisors who avoid accumulating shares ?

IIRC the Wiki article mentions the withholding and estate taxes but it does not mention the personal annual income tax.
The point is investors in offshore accumulating funds might pay higher income taxes:

SPDR ETFs Tax Reference Guide 2013 [link format fixed by admin LadyGeek]

This guide explains how distributing and accumulating (offshore) funds are taxed in Austria, France, Germany, Ireland, Italy, Luxemburg, Netherlands, Switzerland. and in the UK in 2013.

Furthermore, it explains how investors in foreign "unregistered" or "non-reporting" funds are taxed (i.e. punished).

See 4. Austria:
Reporting funds are required to appoint an Austrian tax representative to calculate and report
“Deemed Distributed Income” (DDI) and the 25% withholding tax on DDI to the Oesterreichische
Kontrollbank (OeKB) within seven months of the funds financial year end (FYE).
It is assumed that the accumulating fund distributed the dividends or interest payments annually.
But it happens that the fund company reports the deemed distributed income a f t e r the investor has received the annual tax statement of the broker. In such cases, the investor needs to add the taxable income to the tax declaration manually.
The DDI is subject to 25% tax on annual basis.
All else equal, the investor needs to sell a few shares every year to pay the taxes.This adds transaction costs.
On the sale of shares, the difference between the sales price and the purchase price (adjusted by the
already taxed DDI
) is subject to 25% tax irrespective of the holding period. As an example, if an
Austrian investor purchases shares for EUR 100 and the DDI during the holding period amounts to
EUR 10, if the shares are sold for EUR 120 the taxable capital gains will be EUR 10 (sales price EUR
120 minus purchase price EUR 100 minus already taxed DDI EUR 10)
(Emphasis added)

A similar problem for German investors:
These [annual] taxes apply equally to investment income (irrespective of whether distributed or accumulated)...
and capital gains realized by the fund to the extent that these gains within the fund are distributed to
the investors.
Furthermore, capital gains from an investor’s disposal of fund units / shares are taxable. The taxation
regime of the capital gains provides for deductions of the amounts that have already been taxed as
undistributed income
.
This means that the accumulated income is taxed twice (annually and after the sale). To regain the additional taxes investors have to prove that they already had paid the taxes. Will your broker know how much deemed distributed income was accumulated after a holding period of,say, 30 years? Tax statement often are summary statements. How can you prove that you already paid the taxes on that particular fund? And if you regain something, will you be in a position to figure out if it is enough?
You need to store all of the relevant documents for the total holding period.

In short, there is the risk that you can't (fully) avoid the double-taxation and, furthmore, it can be more complicated to manage a portfolio of accumulating shares.

And there are other problems (no rebalancing, inability of elderly people to sell shares, no income during retirement).

Note that the taxation of capitalizing (offshore) physical and synthetic funds can be different.
Physical funds like the MSCI or SPDR factor-tilted portfolios can be disadvantaged in some countries.
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by hafius500 » Thu Jun 18, 2015 5:00 am

normaldude wrote:
pt32 wrote:2. SMALL US VALUE - I didn't find a non-US domiciled fund, so the US domiciled one seems to be the only option:
VBR - Vanguard Small-Cap Value ETF - TER 0.09% + ~0.30%* = 0.39%
* the 0.3% is an additional "withholding tax drag" for me (15% extra withdolding tax out of average 2% dividend)

If you know any 'Small US Value' funds NOT domiciled in the US, please let me know.
If you are NOT a US person (US citizen, US permanent resident), then you should completely avoid US-domiciled ETFs & funds. If a non-US citizen / non-US person invests in US-domiciled funds & ETFs, then if they die, the US government will impose a brutal estate tax, up to 40% on amounts over $60,000.

viewtopic.php?t=165478#p2487313
WisdomTree (small-cap) ETFs have been registered in some EUR countries.
I'm not sure if they invest in "small-value stocks".
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 18, 2015 6:01 am

hafius500 wrote:IMO posters should resist to recommend one of these classes because it could be a bad choice in other countries.
Good point. However this is not an issue for me and other people who live in an "offshore" country with no taxes for capital income.
hafius500 wrote:WisdomTree (small-cap) ETFs have been registered in some EUR countries.
I'm not sure if they invest in "small-value stocks".
They don't have small value..
Here's a list of their Ireland domiciled ETFs, if anybody is interested. But they seem to have higher TERs than Ireland domiciled Vanguard and iShares.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 19, 2015 11:06 am

I just found out that my broker has 0.5% currency conversion fee when buying securities listed in currencies other than USD. For specific reasons, I wanna stick with this broker. This would mean additional 1% cost when buying and selling these funds:
SMC - SPDR® MSCI Europe Small Cap UCITS ETF (INTERNATIONAL SMALL BLEND)
IDJV - iShares EURO Total Market Value Large UCITS ETF (INTERNATIONAL LARGE VALUE)


So I'm thinking about ditching them and getting all Value and Small cap from VBR - Vanguard Small-Cap Value ETF.

So the equity part of the portfolio would look like:

10% CSSPX:xswx - iShares Core S&P 500 UCITS ETF
30% VBR - Vanguard Small-Cap Value ETF
25% Developed Europe - Didn't find any USD listed Ireland domiciled Europe ETF, do you know any?
20% EIMI:xlon - iShares Core MSCI Emerging Markets IMI UCITS ETF
15% VDPX:xlon - Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF


What are your thoughts?

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by hafius500 » Fri Jun 19, 2015 1:57 pm

pt32 wrote:I just found out that my broker has 0.5% currency conversion fee when buying securities listed in currencies other than USD. For specific reasons, I wanna stick with this broker. This would mean additional 1% cost when buying and selling these funds:
SMC - SPDR® MSCI Europe Small Cap UCITS ETF (INTERNATIONAL SMALL BLEND)
IDJV - iShares EURO Total Market Value Large UCITS ETF (INTERNATIONAL LARGE VALUE)


So I'm thinking about ditching them and getting all Value and Small cap from VBR - Vanguard Small-Cap Value ETF.

So the equity part of the portfolio would look like:

10% CSSPX:xswx - iShares Core S&P 500 UCITS ETF
30% VBR - Vanguard Small-Cap Value ETF
25% Developed Europe - Didn't find any USD listed Ireland domiciled Europe ETF, do you know any?
20% EIMI:xlon - iShares Core MSCI Emerging Markets IMI UCITS ETF
15% VDPX:xlon - Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF


What are your thoughts?
No, I don't know such a fund.
The vast majority of all the ETFs I have seen in Europe are tradable in EURO, CHF or GBP.

According to the db x-website the trading currency of the db x-trackers MSCI EUROPE INDEX UCITS ETF (DR) 1C (ISIN: LU0274209237) is the USD in London and Switzerland. But it seems it's a Luxembourgish company.

Did you visit the website of the Swiss Exchange to see which ETFs can be traded (if you want to buy there) ?

Re (US) small value:

Several posters believe that the WisdomTree (US) small-value ETF is a proxy for (US) small-value stocks.
IIRC the new 'value-weighted' funds (SPDR, iShares) have been discussed in some threads. I can't find them at the moment.

BTW, the Total Expense Ratios do not include the transaction costs. Different strategies ( eg. WisdomTree funds versus 'value-weighted' funds) can generate different transaction costs.
The TER does not reveal the true operating costs.
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by galeno » Fri Jun 19, 2015 2:43 pm

We are USA-NRAs (w/o USA tax treaty). We hold a simple 2-ETF port of 60% VWRD + 35% IUAG + 5% CASH.

We hope VWRD will soon go "all cap" as well as incorporate China "A" shares. China comprises 2.7% of the FTSE all world equity index. We'd like to see it go to its real global weight of 10%.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 19, 2015 3:28 pm

hafius500 wrote:According to the db x-website the trading currency of the db x-trackers MSCI EUROPE INDEX UCITS ETF (DR) 1C (ISIN: LU0274209237) is the USD in London and Switzerland. But it seems it's a Luxembourgish company.
Hey thanks! Luxembourgh funds should be pretty much the same as Irish, as they also don't have any additional withholding tax (correct me if I'm wrong).
That ETF looks good - Factsheet - Website - Annual report
TER is 0.3%, but the difference between fund and index performance for the past 5 years seems to be only 0-0.07% p.a. (see the factsheet) so I guess this is the "real TER".
Shouldn't the tracking error be at least as big as the TER (I assume the fund performance is net TER)?
Anybody knows why it's so low? I found in the annual report that security lending return was about 0.1%, but this doesn't cover the whole difference.

hafius500 wrote:Several posters believe that the WisdomTree (US) small-value ETF is a proxy for (US) small-value stocks.
IIRC the new 'value-weighted' funds (SPDR, iShares) have been discussed in some threads. I can't find them at the moment.

BTW, the Total Expense Ratios do not include the transaction costs. Different strategies ( eg. WisdomTree funds versus 'value-weighted' funds) can generate different transaction costs.
The TER does not reveal the true operating costs.
Can't find the WisdomTree fund, do you have a link/ticker?
iShares S&P Small-Cap 600 Value ETF is more Smallcap than VBR, but has slightly higher TER (0.25%) - which of these funds has lower transaction costs and how can I find them out?

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by LadyGeek » Fri Jun 19, 2015 7:43 pm

hafius500 wrote:...SPDR ETFs Tax Reference Guide 2013 [link format fixed by admin LadyGeek]

This guide explains how distributing and accumulating (offshore) funds are taxed in Austria, France, Germany, Ireland, Italy, Luxemburg, Netherlands, Switzerland. and in the UK in 2013.
Thanks to a suggestion by Epsilon Delta in Suggestions for the Wiki, this tax guide is now in the wiki: EU investing (External links)

(I fixed a typo in the link format.)
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by daffyd » Fri Jun 19, 2015 10:16 pm

pt32 wrote:
hafius500 wrote:Several posters believe that the WisdomTree (US) small-value ETF is a proxy for (US) small-value stocks.
IIRC the new 'value-weighted' funds (SPDR, iShares) have been discussed in some threads. I can't find them at the moment.

Can't find the WisdomTree fund, do you have a link/ticker?
I think hafius500 means using the WisdomTree US SmallCap Dividend UCITS ETF with dividend fundamental-weighting as a proxy for value.

Your slice-and-dice seems to have broken down a bit due to other (perfectly reasonable) cost concerns. I'd reiterate being careful about using a US-domiciled fund while residing in a country without a US tax treaty. Estate taxes can be particularly nasty in such a case.

Since there's not much slice and dice left, why not just use VWRD and something like the WisdomTree ETF above as a single tilt? Or also keep searching for an ex-US or Europe Value ETF to keep your regions more in balance. Having fewer funds also saves on transaction (commission) costs if there are any.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by Micks » Sat Jun 20, 2015 3:49 am

pt32 wrote:
hafius500 wrote:According to the db x-website the trading currency of the db x-trackers MSCI EUROPE INDEX UCITS ETF (DR) 1C (ISIN: LU0274209237) is the USD in London and Switzerland. But it seems it's a Luxembourgish company.
Hey thanks! Luxembourgh funds should be pretty much the same as Irish, as they also don't have any additional withholding tax (correct me if I'm wrong).
That ETF looks good - Factsheet - Website - Annual report
TER is 0.3%, but the difference between fund and index performance for the past 5 years seems to be only 0-0.07% p.a. (see the factsheet) so I guess this is the "real TER".
Shouldn't the tracking error be at least as big as the TER (I assume the fund performance is net TER)?
Anybody knows why it's so low? I found in the annual report that security lending return was about 0.1%, but this doesn't cover the whole difference.
The index they compare the returns to is a net total return index, which means dividends are reinvested after-tax. May very well be that they suffer less withholding tax than the index (which often assumes the worst case scenario). It seems to track its index very nicely.

I by the way think the SPDR's guide is a good addition to the wiki! Thanks :)
Kind regards, Mick

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by neobavesten » Sat Jun 20, 2015 10:08 am

I was recently in a similar situation. Even though your approach seems reasonable I would be very careful with expanses. If you invest $400,000 over a period of 20-30 years expanses can be significant if you hold complex portfolio. Periodic portfolio balancing fees will also contribute to total expanses. I have therefore decided to keep simpler portfolio and going for "IWDA iShares III PLC - iShares MSCI World Acc IWDA USD" makes sense to me. More details can be found on:
viewtopic.php?f=1&t=162365&p=2442709#p2442709

I believe that following bogleheads is as much of being stingy as it is about having a proper portfolio so I would be really careful with complex portfolios over 20-30 years period.

I believe you should also completely avoid US domiciled funds. Useful discussion can be found on:
viewtopic.php?f=1&t=160878&p=2454791#p2454791

Hope this helps.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by hafius500 » Sat Jun 20, 2015 1:02 pm

I'm not sure if an (many) investor(s) in mutual funds or ETFs that are domiciled in Europe can create a lasting 'factor-tilted' portfolio.

IIRC in contrast to the USA size- or style-oriented active or index funds have played a less meaningful or a neglectable role in most European countries (UK investor have had small-cap and income funds)

The ETF offerings are not different although in Europe ETFs are mainly traded by institutional investors who presumably know everything about 'factor premiums'.

IIRC, after the crash of growth-stocks after 2000 a couple of RAFI ETFs were launched (and I believe the ETFs that track value indexes were launched later).
Despite this advantage, the RAFI funds never collected any meaningful assets and most (?) of them had been closed quickly.
Two Lyxor RAFI funds still exist. The last time I visited the European Powershares Website I noted that neither factsheets nor data about AUM or tracking-error were published. Other sources suggest that these Powershares RAFI ETFs have tiny AUM.

Without regard to the Irish Vanguard funds (which can have very high minimum investments) I recall these value-tilted ETFs with more than 50 m € AUM (assets under management):

iShares EuroStoxx Value Large
Lyxor MSCI EMU Value
Source MSCI Europe Value
SPDR MSCI Europe Small Cap Value Weighted
SPDR MSCI USA Small Cap Value Weighted
UBS MSCI USA Value
Then there are several DJ or Stoxx high-dividend ETFs which are less diversified than the WisdomTree ETFs.

IIRC minimum-volatility ETFs became quite popular recently.

Re: WisdomTree funds and small-value stocks:

According to the promotional 'research reports' posted on the quoted website the performance of the WisdomTree small-cap ETFs is related to the performance of (Fama/French) small-cap value stocks.

Re: tracking-error:

IIRC even swap-based funds have a tracking-error. It seems randomness can play a role, especially, if we look at short time periods.
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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Thu Jun 25, 2015 4:55 pm

So I made a few changes to my portfolio:
-REITs - not going to add them to keep it simpler
-Small cap and Value - probably going to keep it all on the US side
-added developed asia-pacific

Here's the current version of the (equity part of the) portfolio:
Image

The problem is with low liquidity of these funds:
'db x-trackers MSCI Europe Index UCITS ETF (DR)' - https://www.google.com/finance?q=SWX%3AXMEU-USD
'Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF'
CSPXJ:xsws - 'iShares Core MSCI Pacific ex Japan UCITS ETF' (alternative to the above)
DESD:xlon - 'WisdomTree US SmallCap Dividend UCITS ETF' (alternative to VBR)

Should I avoid these funds because of the liquidity issue?



Here's Morningstar Instant X-ray for my portfolio and for 2 alternatives (changes highlighted in red)
Image

And here are 2 versions of Trev H 'Simplified Ultimate Buy and Hold' Portfolio and Vanguard Total World Stock for comparison:
Image

Comments are welcome, let me know what you think. Thanks..

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by galeno » Thu Jun 25, 2015 9:46 pm

I think you're complicating something that really is super simple.

Depending upon your tax status with the USA, to start, use either VT or VWRD as your only equity holding and BND or IUAG as your only bond holding. E.g. X% VT (VWRD) + Y% BND (IUAG) = 100%.

IMHO, X% VT (VWRD) + Y% BND (IUAG) = 100% is a superb portfolio and I would leave it at that. Any tilting, slicing or dicing should be viewed as speculation.

My advice to both USA and non-USA Bogleheads = KISS.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by normaldude » Thu Jun 25, 2015 10:03 pm

galeno wrote:I think you're complicating something that really is super simple.

Depending upon your tax status with the USA, to start, use either VT or VWRD as your only equity holding and BND or IUAG as your only bond holding. E.g. X% VT (VWRD) + Y% BND (IUAG) = 100%.

IMHO, X% VT (VWRD) + Y% BND (IUAG) = 100% is a superb portfolio and I would leave it at that. Any tilting, slicing or dicing should be viewed as speculation.

My advice to both USA and non-USA Bogleheads = KISS.
For NON-US persons, I no longer recommend VWRD/VWRL. Using SWDA/IWDA & EMIM/EIMI is better (lower overall expense ratios, higher ETF volume, and most importantly, accumulating shares with no quarterly distrubutions to deal with).

https://www.vanguard.co.uk/uk/portal/de ... ode=EQUITY

https://www.ishares.com/uk/individual/e ... f-acc-fund

https://www.ishares.com/uk/individual/e ... -ucits-etf

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by galeno » Thu Jun 25, 2015 10:37 pm

And I respectively disagree with normaldude. I used to think like him. We did slice and dice for 9 years (2006-2014). We tilted our equities smaller and more non-USA because in 2006, reason and logic said that smaller and more non-USA were the best "bets". Also by doing this (using 5 equity ETFs instead of just VT) we shaved 0.08% off VT's ER = 0.18%.

We lost the non-USA tilt and won the smaller stock tilt so it was basically a wash vs VT's CAGR over those 9 years.

So we purified our souls and went 100% Boglehead KISS: one bag for all stocks (portfolio growth and income) and one for investment grade bonds (ballast and income).

Having artificial borders separating USA vs non-USA, big vs small, etc. may save a tiny bit of ER but it's penny wise and dollar foolish. Any inter-asset rebalancing will more than wipe out any ER savings when you use more than 1 equity or 1 bond ETF where rebalancing happens inside for free.

Leave all your stocks and bonds in one bag each. If a small stock turns into a big stock and or vice versa, they're all always in your one VT bag at the correct proportions. Same with the bond ETF.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by normaldude » Thu Jun 25, 2015 11:13 pm

galeno wrote:So we purified our souls and went 100% Boglehead KISS:
I agree with the KISS approach, and that's why I think it's simpler to go with accumulating ETFs with no distributions (SWDA/IWDA & EMIM/EIMI) rather than ETFs with quarterly distributions (VWRD/VWRL).

Most foreign brokers will not be able automatically reinvest dividends/distributions into partial shares. So by going with accumulating shares (no distributions), you have a more "set it and forget it" portfolio. You could walk away for 10 years, and your portfolio would still be 100% invested, rather than having a mountain of cash piling up doing nothing.

Plus, with accumulating shares, you don't have any taxable events until you sell.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by TedSwippet » Fri Jun 26, 2015 2:05 am

normaldude wrote:Plus, with accumulating shares, you don't have any taxable events until you sell.
That's not universally true. Many countries tax 'accumulated' dividends in the same way as any that have been paid out. This leaves investors with a considerable headache. They have to find the cash to pay the tax from elsewhere annually. And they face a set of complex calculations to strip already-taxed dividends out of the sales proceeds when capital gains tax becomes payable.

If you are lucky enough to live somewhere that does not tax dividends or capital gains, or that allows dividends to become capital gains via reinvesment, all well and good. But if you don't, using accumulating ETFs can be an awfully painful route to take, and not KISS at all.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 26, 2015 5:43 am

galeno wrote:And I respectively disagree with normaldude. I used to think like him. We did slice and dice for 9 years (2006-2014). We tilted our equities smaller and more non-USA because in 2006, reason and logic said that smaller and more non-USA were the best "bets". Also by doing this (using 5 equity ETFs instead of just VT) we shaved 0.08% off VT's ER = 0.18%.
BTW, 0.10% saving on TER on my equity portfolio means $1700 saved over 5 years, not taking reinvestment of those savings, portfolio growth and additional contributions into account. I can do rebalancing when doing additional contributions to my potrfolio to minimize trading costs.

But the main reason why I'm 'complicating' it, is that I want to overweight small cap and value stocks, which have higher expected return (based on academic research and 87 years of historical data).
https://www.ifa.com/12steps/step8/size_ ... sk_factor/
http://paulmerriman.com/the-ultimate-bu ... tegy-2014/
viewtopic.php?t=38374
Your 9 year period is too short, Small caps, and especially small cap value, have significantly outperformed total market over long term.
normaldude wrote:So by going with accumulating shares (no distributions), you have a more "set it and forget it" portfolio. You could walk away for 10 years, and your portfolio would still be 100% invested, rather than having a mountain of cash piling up doing nothing.
I agree, that's why I try to use accumulating funds whenever possible.

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 26, 2015 12:28 pm

Can anybody comment on the low volume issue?

XMEU - 'db x-trackers MSCI Europe Index UCITS ETF (DR)'
-VERY low volume: https://www.google.com/finance?q=SWX%3AXMEU-USD
-I wanna buy for $85.000

CSPXJ - 'iShares Core MSCI Pacific ex Japan UCITS ETF'
-average volume: 823 (around $100.000) - https://www.google.com/finance?q=SWX%3ACSPXJ-USD
-I wanna buy for $51.000

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by pt32 » Fri Jun 26, 2015 12:40 pm

Also I ran some backtesting (1972-2014) with Simba's backtesting spreadsheet
And found out that replacing S&P 500 portion of my portfolio from this post with increase CAGR and decrease stddev.

Original portfolio:
Large Cap Blend 8.00%
SCV 24.00%
EM 16.00%
Intl Pacific 12.00%
Intl Europe 20.00%
5 Yr T-Bills 20.00%

CAGR 12.15%
Std. Dev. 15.49%
Sharpe 0.53



Replaced Large Cap with REITs:
REIT 8.00%
SCV 24.00%
EM 16.00%
Intl Pacific 12.00%
Intl Europe 20.00%
5 Yr T-Bills 20.00%

CAGR 12.32%
Std. Dev. 15.31%
Sharpe 0.55



Based on this wiki page, REITs have lower withholding taxes than stocks (5% vs. 15%), so the higher expense ratio of the REIT fund should be offset by this.

Is it reasonable to ditch LC and replace them with REITs?

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Re: NON-US (Ireland) ETFs - Simplified Ultimate Buy and Hold Porfolio

Post by galeno » Sun Jun 28, 2015 11:37 am

If you're confident of your convictions of FUTURE outperformance, use only REITS and SCV stocks for your 80% equity allocation.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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