Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
mxz
Posts: 9
Joined: Wed Dec 14, 2016 9:57 pm

Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by mxz » Thu Dec 06, 2018 4:20 am

Hi guys,

When I set up my portfolio a year or two ago (with some great help from this forum!), I went with a simple three fund (well ETF) portfolio with US domiciled ETFs:
  • VTI
  • VXUS
  • BND

I didn't take the Hong Kong domiciled ETF's for a number of reasons and at the time, I didn't have access to Vanguard's Irish domiciled ETFs.

I've started using Interactive Brokers and so now I can buy the Irish domiciled ETFs. I'm still living in Hong Kong.

I've got two main questions:
  1. Which are the best Irish domiciled Vanguard ETFs that mirror my current portfolio?
  2. How should I go about moving my portfolio from the US to the Irish domiciled ETFs?
Thanks in advance for any guidance! :happy

DJN
Posts: 163
Joined: Mon Nov 20, 2017 12:30 am

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by DJN » Thu Dec 06, 2018 4:24 am

Hi,
have a look here at the few different model EU investor portfolios fitting with BH principles:
https://www.bogleheads.org/wiki/EU_investing
All Ireland based and UCITS.
DJN

msk
Posts: 949
Joined: Mon Aug 15, 2016 10:40 am

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by msk » Thu Dec 06, 2018 4:31 am

1. VTI+VXUS +> VWRD
NB. VWRD is total world including Emerging Markets, by market weight

2. BND. I have nil interest in bonds hence somebody else might chime in.

3. To transfer from a TDAmeritrade account to IB, all I did was sell all my holdings at TDAmeritrade, received cash in my bank (3 days?), transferred to IB and executed the buys. Since you probably have neither income nor capital gains tax concerns, you may wish to do the same. I did the above for several million $ in one go. My only anxiety was that my bank might get suspicious of something or other and launch some money laundering/corruption investigation. They did not, so everything took around a week to be fully invested in IB.

mxz
Posts: 9
Joined: Wed Dec 14, 2016 9:57 pm

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by mxz » Thu Dec 06, 2018 4:36 am

Thanks for such fast replies!

I've moved my portfolio from my bank to Interactive Brokers, but it's still all US domiciled. I'd like to get out of that position and hold the Irish ETFs instead. I'm just not sure the best way to make the "swap" so to speak :)

DJN
Posts: 163
Joined: Mon Nov 20, 2017 12:30 am

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by DJN » Thu Dec 06, 2018 4:53 am

You can buy the UCITS from IB, the only thing to take care about is when you die. Don't have more than $60,000 in your cash account with IB.

mxz
Posts: 9
Joined: Wed Dec 14, 2016 9:57 pm

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by mxz » Thu Dec 06, 2018 5:05 am

I shouldn't have much cash held with IB as in general I transfer funds in before buying ETFs.

So should I just sell my current US ETFs and buy the Irish ones? No real strategy to it? :happy

DJN
Posts: 163
Joined: Mon Nov 20, 2017 12:30 am

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by DJN » Thu Dec 06, 2018 6:07 am

Although I have an IB account I have never switched a position like that, I would guess that they will not help you other than to sell existing and buy new UCITS etfs. Maybe someone else will comment in due course. You could always try and ask them.
Good luck
DJN

mxz
Posts: 9
Joined: Wed Dec 14, 2016 9:57 pm

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by mxz » Thu Dec 06, 2018 6:19 am

Thanks DJN!

I doubt there's anything IB can do to help, it was more, should I just sell all my existing ETF and buy the new ones in one go? Or should I sell over a period of time?

I know for buying the rule of thumb is to just buy in one go, but I wasn't sure if the same was true for selling.

DJN
Posts: 163
Joined: Mon Nov 20, 2017 12:30 am

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by DJN » Thu Dec 06, 2018 6:58 am

OK, sorry didn't catch the second part of your question, two schools of thought here:
- all in one go
- dollar cost averaging
You didn't mention the quantum of dosh, but in some ways that wouldn't matter early on for you. If I was in your shoes I would go all in now. Up to you to gauge your ability to stomach any market changes in the next year, i.e. your risk appetite. If you want to see what the BH thoughts on the choices are have a look at:
https://www.bogleheads.org/wiki/Dollar_ ... s_lump_sum

TedSwippet
Posts: 1881
Joined: Mon Jun 04, 2007 4:19 pm

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by TedSwippet » Thu Dec 06, 2018 6:58 am

mxz wrote:
Thu Dec 06, 2018 6:19 am
... should I just sell all my existing ETF and buy the new ones in one go? Or should I sell over a period of time?
Assuming IB will allow you to buy with the (uncleared) proceeds of earlier sales -- and most if not all brokers do, at least any I have encountered, but no direct experience of IB -- all in one go should be fine. You would sell some VTI and VXUS and then immediately put in an order for that amount of VWRD, so total time 'out of the market' should be on the order of minutes at the most.

In essence this is a straight swap so that you own more or less the same underlying assets after as you did before, just through non-US vehicles and so without any of the horrible US tax consequences of US domiciled ETFs for US NRAs. No real strategy required (but do be sure not to die in the middle of this process if the amount is above $60k!).

If IB don't offer this for some reason, you can minimise time 'out of the market' by shifting gradually, perhaps through a cash float buffer. However, that will probably increase your trading costs, perhaps substantially, so better not if it's avoidable.

TedSwippet
Posts: 1881
Joined: Mon Jun 04, 2007 4:19 pm

Re: Switching out US domiciled ETFs for Irish domicilied ETFs (living in Hong Kong)

Post by TedSwippet » Thu Dec 06, 2018 7:01 am

DJN wrote:
Thu Dec 06, 2018 6:58 am
OK, sorry didn't catch the second part of your question, two schools of thought here:
- all in one go
- dollar cost averaging
The OP has already built out a portfolio using one or the other of these. The question now revolves around changing the enclosing ETF framework but leaving the current asset allocation (and in fact, for the most part the actual underlying assets themselves) the same. No change in asset allocation then, so no change in risk profile either.

Post Reply