Ireland domiciled ETF vs Unit Trust [Non-US]

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rsasub
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Ireland domiciled ETF vs Unit Trust [Non-US]

Post by rsasub » Thu Jan 18, 2018 7:17 pm

I'm a non US resident looking at investing in Ireland domiciled funds. Still new to all this but wanted to understand more about the difference between ETFs and other classes like Unit Trusts.

My example: What is the difference between the two following:

iShares MSCI Europe ex-UK UCITS ETF
Type = ETF
Ongoing costs = 0.4
Minimum invest = none?

iShares Europe ex-UK Index Fund (IE)
Type = Unit Trust
Ongoing costs = 0.02
Minimum invest = EUR1m

Assuming one could afford the minimum, is there any reason to choose the ETF over the Unit Trust? The seem to track the same index and on Morningstar the unit trust performed about 7% better over a period of about 10 years (not sure if Morningstar factors in the cheaper cost or why the difference).

One thought was it might be harder to buy and sell, but I assume for a long term strategy that wouldn't matter as much.

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Tyler Aspect
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Re: Ireland domiciled ETF vs Unit Trust [Non-US]

Post by Tyler Aspect » Fri Jan 19, 2018 11:18 pm

A Unit [Investment] Trust represent a fixed pool investment offered for sale on the open market. Only sophisticated investors should consider them, because there might be wide spread between buyers and sellers. You might have to take a considerable spread loss when you try to sell it off.

[Edited for correctness]
Last edited by Tyler Aspect on Sat Jan 20, 2018 2:12 pm, edited 1 time in total.
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Epsilon Delta
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Re: Ireland domiciled ETF vs Unit Trust [Non-US]

Post by Epsilon Delta » Sat Jan 20, 2018 12:06 am

Tyler Aspect wrote:
Fri Jan 19, 2018 11:18 pm
A Unit Trust represent a fixed pool investment offered for sale on the open market.
I don't believe that is the case here. A UIT (unit investment trust) is a closed ended fund in the US. In Ireland and the UK a Unit Trust can be an open ended investment vehicle that operates similarly to the open-ended mutual funds we are familiar with in the US. And in fact the BlackRock Index Selection Fund, of which this Unit Trust is a part, is open ended and can be bought or sold at net asset value.

It is likely that if you have enough money the difference is similar to the difference between a Vanguard ETF and Vanguard Mutual Fund, i.e. many minor differences which really don't amount to very much.
Last edited by Epsilon Delta on Sat Jan 20, 2018 12:30 am, edited 2 times in total.

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Tyler Aspect
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Re: Ireland domiciled ETF vs Unit Trust [Non-US]

Post by Tyler Aspect » Sat Jan 20, 2018 12:10 am

Epsilon Delta wrote:
Sat Jan 20, 2018 12:06 am
Tyler Aspect wrote:
Fri Jan 19, 2018 11:18 pm
A Unit Trust represent a fixed pool investment offered for sale on the open market.
I don't believe that is the case here. A UIT (unit investment trust) is a closed ended fund in the US. In Ireland and the UK a Unit Trust can be an open ended investment vehicle that operates very similarly the open-ended mutual funds we are familiar with in the US. And in fact the BlackRock Index Selection Fund, of which this Unit Trust is a part, is open ended and can be bought or sold at net asset value.
You are probably right. Similar terms but different meanings.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

Valuethinker
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Re: Ireland domiciled ETF vs Unit Trust [Non-US]

Post by Valuethinker » Sat Jan 20, 2018 4:09 am

Epsilon Delta wrote:
Sat Jan 20, 2018 12:06 am
Tyler Aspect wrote:
Fri Jan 19, 2018 11:18 pm
A Unit Trust represent a fixed pool investment offered for sale on the open market.
I don't believe that is the case here. A UIT (unit investment trust) is a closed ended fund in the US. In Ireland and the UK a Unit Trust can be an open ended investment vehicle that operates similarly to the open-ended mutual funds we are familiar with in the US. And in fact the BlackRock Index Selection Fund, of which this Unit Trust is a part, is open ended and can be bought or sold at net asset value.

It is likely that if you have enough money the difference is similar to the difference between a Vanguard ETF and Vanguard Mutual Fund, i.e. many minor differences which really don't amount to very much.
That is correct a Unit Trust here is an American mutual fund.

I'd have to check my tax rules re ETFs here, depends on country of residence even though ucits 6 is generic.

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