EU - Trouble finding an alternative to the VEA fund

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pecunia
Posts: 15
Joined: Sun Dec 31, 2017 8:23 am

EU - Trouble finding an alternative to the VEA fund

Post by pecunia » Sun Sep 23, 2018 10:19 am

Since the EU in all its wisdom :oops: removed a lot options from the US ETF table, I've been struggling to find a decent alternative to the Vanguard VEA fund https://investor.vanguard.com/etf/profile/portfolio/vea

Does anyone here have a decent alternative that closely resembles the country market exposure of the VEA fund that can be purchased from the EU?

Many thanks in advance!

ICH
Posts: 69
Joined: Wed Jun 13, 2018 3:08 am

Re: EU - Trouble finding an alternative to the VEA fund

Post by ICH » Sun Sep 23, 2018 10:55 am

It seems VEA follows the FTSE Developed All Cap ex US Index.
I have searched for something similar in European exchanges in the past but could not find one. I guess you can build something similar with 3-4 ETFs, but it will carry plenty of brokerage costs.

I have settled with VWRD as a cheaper, more diversified option.

pecunia
Posts: 15
Joined: Sun Dec 31, 2017 8:23 am

Re: EU - Trouble finding an alternative to the VEA fund

Post by pecunia » Sun Sep 23, 2018 11:23 am

ICH wrote:
Sun Sep 23, 2018 10:55 am
It seems VEA follows the FTSE Developed All Cap ex US Index.
I have searched for something similar in European exchanges in the past but could not find one. I guess you can build something similar with 3-4 ETFs, but it will carry plenty of brokerage costs.

I have settled with VWRD as a cheaper, more diversified option.
I see what you mean..just really want to make my own decisions on how to split my funds across certain countries/regions instead of 1 ETF that decides the allocation for me.

TedSwippet
Posts: 1840
Joined: Mon Jun 04, 2007 4:19 pm

Re: EU - Trouble finding an alternative to the VEA fund

Post by TedSwippet » Sun Sep 23, 2018 12:01 pm

pecunia wrote:
Sun Sep 23, 2018 10:19 am
Does anyone here have a decent alternative that closely resembles the country market exposure of the VEA fund that can be purchased from the EU?
Since World Ex-<country_name> tracker funds are primarily designed for investors in the named country to balance against domestic holdings, there won't be much of a market for such things outside of that country.

The only other Ex-US ETF I know of is VIU from Vanguard Canada. This could be useful to some folk as it is specifically not US domiciled. Probably no use to you though, since I doubt that it is any more available in Europe than is VEA.

PRIIPS and MiFID 2 really are a bit of a nuisance. Moreover they are nuisances without any apparent or visible compensating investor benefits. I wonder if they are actually a form of retaliation against US protectionism. Recall that US investors are effectively barred by US tax rules from buying any EU domiciled ETFs. Perhaps PRIIPS and MiFID 2 could simply be seen as regulatory 'rebalancing'.
Last edited by TedSwippet on Sun Sep 23, 2018 1:52 pm, edited 1 time in total.

ICH
Posts: 69
Joined: Wed Jun 13, 2018 3:08 am

Re: EU - Trouble finding an alternative to the VEA fund

Post by ICH » Sun Sep 23, 2018 12:19 pm

The problem with this approach is that it is somewhat difficult to follow the below points from the Bogleheads Investment Philosophy (particularly #10):
1 Develop a workable plan
5 Never try to time the market
7 Keep costs low
9 Invest with simplicity
10 Stay the course

I thought about it in another way: the world market capitalization is set by the trillion of dollars invested worldwide. The active investors/fund managers set the price for each and every company in each and every country. One dollar invested in Asian equities cannot be more "clever" than one dollar invested in EU equities. Else it would create an arbitrage opportunity and it would be corrected as soon as was discovered. Since it is unlikely that I will be the one to arbitrage, it makes sense to follow the market and hope that it will be as generous as it has been in the past.

Anyway, good luck.

pecunia
Posts: 15
Joined: Sun Dec 31, 2017 8:23 am

Re: EU - Trouble finding an alternative to the VEA fund

Post by pecunia » Sun Sep 23, 2018 12:35 pm

I think you are correct @TedSwippet when it comes to the "payback" it seems from the EU.
The VIU is the exact ETF someone would need if you would like to slice/dice a portfolio in certain pieces but yet it cannot be purchased from the EU how very frustrating :x

Thanks @ICH.

Valuethinker
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Re: EU - Trouble finding an alternative to the VEA fund

Post by Valuethinker » Mon Sep 24, 2018 5:17 am

TedSwippet wrote:
Sun Sep 23, 2018 12:01 pm
olk as it is specifically not US domiciled. Probably no use to you though, since I doubt that it is any more available in Europe than is VEA.

PRIIPS and MiFID 2 really are a bit of a nuisance. Moreover they are nuisances without any apparent or visible compensating investor benefits. I wonder if they are actually a form of retaliation against US protectionism. Recall that US investors are effectively barred by US tax rules from buying any EU domiciled ETFs. Perhaps PRIIPS and MiFID 2 could simply be seen as regulatory 'rebalancing'.
I don't think that was the case. Remember that EU Directives like this take *years* to draft and get the EU Parliament to vote on, then more time to implement. This all took place at a time when the thrust was towards less protectionism with USA, not more.

Law of Unintended Consequences at work, I suspect. US citizens in Europe face PFIC, PRIIPS + MiFID 2 mean that they cannot buy US funds from European brokers. I doubt anyone thought that through, or that it mattered.

Rather it might have been the European Fund Management industry squelching competition. If European investors can only buy funds domiciled within Europe (that have the KiiD key features document). Or at the very least, they didn't go to pains to point out the consequence.

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