New ETFs for USA-NRA Investors [Non-Resident Alien]

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galeno
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New ETFs for USA-NRA Investors [Non-Resident Alien]

Post by galeno »

Two new Ireland domiciled ETFs from I-shares that I will probably use in our portfolio at rebalance time in January. AGGG (ER = 0.10%) and WSML (ER = 0.35%).

AGGG is the Barklay Global Bond Index. We used to use SUAG: (Barklay USA Bond Index) with a ER = 0.25. We now use two Ireland Vanguard bond ETFs (VDTY: US Treasuries and VDCP: Global USD corporate bonds) which have an ER = 0.12%. I'll subsitute AGGG for the VDTY/VDCP combo. Cheaper. Simpler. Globally diversified. At some point about 6% of AGGG will be mainland Chinese bonds. I like that.

WSML is the first real good global small cap ETF that I've been waiting for. I will sell 1/3'd of our VWRD (FTSE all world equity) and replace it with WSML next year.

Any thoughts or opionions?
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bigbug
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Re: New ETFs for USA-NRA Investors

Post by bigbug »

Hi,

Just one question, why not use AGGU (USD hedged & accumulating) vs AGGG which is distributing without hedging?

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

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Jeremy
silverex
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Re: New ETFs for USA-NRA Investors

Post by silverex »

I agree, you should hedge your bonds into your expense currency, if possible. The purpose of bonds in a portfolio is to provide stability, and avoiding currency volatility in this part of portfolio is advised.

If you sell 1/3 of VWRL to replace it with WSML, you are severely overweighting small caps. FTSE All-World index factsheet states this index covers 90-95% of investable market cap (in other part of factsheet even mentions 98%), so it leaves just 5-10% for small caps.

Also, if you want to be exact, WSML only covers developed markets small cap, where VWRL includes emerging markets, so you'd be missing emerging markets small caps. And even in the developed markets part, since you are using different index providers, there might be a gap or overlap between mid and small caps part of your portfolio. See more: https://www.bogleheads.org/wiki/Stock_m ... _providers
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galeno
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Re: New ETFs for USA-NRA Investors

Post by galeno »

Regarding the equity part I don't mind tilting toward small caps. There is some overlap with midcaps. I like midcaps.

I've been waiting a few years for either Ireland Vanguard or iShares to come up with a reasonable small cap ETF. WSML is reasonable enough. If a better ETF comes along I'll just sell WSML and buy it.

Fixed income frustrates me the most. As a USA-NRA living near the USA, I did not even consider using another currency other than the USD.

Now I believe the world is moving towards a "basket of currencies". So the reason I'd go for non-hedged AGGG is because I want to diversify out of the USD somewhat. Also AGGG will soon hold about 6% in Chinese bonds which will increase over time. I like that too.


What I don't like is AGGG's YTM = 2.0% while SUAG's YTM = 3.5%. If we subtract the ERs (0.10% and 0.25%) then AGGG's goes to 1.9% and SUAG's goes to 3.3%.
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CnC
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Re: New ETFs for USA-NRA Investors

Post by CnC »

Lol I totally read this as

NRA sponsored investments.
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galeno
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Re: New ETFs for USA-NRA Investors

Post by galeno »

It's pretty funny. We non-USA person investors describe ourselves relative to our status in the USA. Citizen. Ex-pat. Resident alien. Non-resident alien. I should use "non-USA person". Less confusion perhaps?
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ElJefe302
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Re: New ETFs for USA-NRA Investors

Post by ElJefe302 »

CnC wrote: Thu May 17, 2018 10:01 pm Lol I totally read this as

NRA sponsored investments.
As did I! Lol thought that would be an interesting fund to invest in.
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LadyGeek
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Re: New ETFs for USA-NRA Investors [Non-Resident Alien]

Post by LadyGeek »

ElJefe302, Welcome! I retitled the thread to help with the acronym.
galeno wrote: Fri May 18, 2018 7:29 pm It's pretty funny. We non-USA person investors describe ourselves relative to our status in the USA. Citizen. Ex-pat. Resident alien. Non-resident alien. I should use "non-USA person". Less confusion perhaps?
How does your home country's tax law describe someone living outside its borders? Is "ex-patriot" a common term?

We've already changed the wiki. See: Non-US domiciles
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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galeno
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Re: New ETFs for USA-NRA Investors [Non-Resident Alien]

Post by galeno »

In Costa Rica and Panama people are taxed on a territorial basis. Not on the basis of citizenship or legal residency.

I'm far from an expert on these matters. I learned the term "ex-pat" from English speakers. It seems to come from citizens and residents of the USA and the UK countries.
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