iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

I'd like to invest a small percentage of my assets in a world small cap fund or ETF. I can get these 2 through my broker:

iShares MSCI World Small Cap UCITS ETF USD (Acc) (EUR) TER: 0.35
IE00BF4RFH31

Vanguard Global Small-Cap Index Fund Institutional Plus EUR (Acc) TER: 0.3
IE00BFRTDD83

Which one would you prefer and why? (I'm rather new to investing and would like to learn more)
Last edited by YRT70 on Wed May 01, 2019 1:47 pm, edited 1 time in total.
danielbird193
Posts: 36
Joined: Thu Mar 21, 2019 2:15 pm

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by danielbird193 »

Hello and welcome to the forum. I'm thinking of adding a small cap fund as all so was interested in your post.

I was a bit confused by your comment that you're new to bonds. Both of these are equity funds - specifically investing in the equity of smaller firms which historically have out-performed large cap stocks (albeit at the price of higher volatility).

The two funds you mention are very similar in terms of the assets they invest in. All else being equal I'd pick the Vanguard fund which has lower charges, unless you have a special reason for preferring an ETF (some brokers have lower platform fees for ETFs compared to funds, which might outweigh the lower fund manager fee).
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

danielbird193 wrote: Wed May 01, 2019 1:12 pm Hello and welcome to the forum.
Thank you.
I was a bit confused by your comment that you're new to bonds.
My mistake. I was asking questions about bonds in another thread. I've edited it now.
The two funds you mention are very similar in terms of the assets they invest in. All else being equal I'd pick the Vanguard fund which has lower charges, unless you have a special reason for preferring an ETF (some brokers have lower platform fees for ETFs compared to funds, which might outweigh the lower fund manager fee).
Good to know. Thanks for the input.
stan1
Posts: 8939
Joined: Mon Oct 08, 2007 4:35 pm

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by stan1 »

Are you EU based? You'll get more and better answers in the non-US investor section. You can ask the mods to move your post.
User avatar
Misenplace
Moderator
Posts: 2613
Joined: Mon Feb 01, 2016 9:46 pm

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by Misenplace »

This topic has been moved to the Non-US Investing forum.

Moderator Misenplace
QuantOfAsia
Posts: 78
Joined: Sun Apr 14, 2019 7:57 pm
Location: Hong Kong

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by QuantOfAsia »

If you've already narrowed down that you want a low-cost global small cap UCITS fund, it's hard to go wrong with any of the big three.

In addition to iShares and Vanguard, I'd also add this SPDR State Street one (this is the USD version, but believe they also have one in EUR): https://www.londonstockexchange.com/exc ... ml?lang=en

The main differences I might look for when comparing them are country overweights/underweights (e.g. some will include Chinese small caps, while another may not), and any differences you can see in reported P/E, dividend yield, etc. of each fund. Otherwise, it's generally a price war of similar main index funds between the big three.
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

QuantOfAsia wrote: Wed May 01, 2019 7:55 pm If you've already narrowed down that you want a low-cost global small cap UCITS fund, it's hard to go wrong with any of the big three.

In addition to iShares and Vanguard, I'd also add this SPDR State Street one (this is the USD version, but believe they also have one in EUR): https://www.londonstockexchange.com/exc ... ml?lang=en

The main differences I might look for when comparing them are country overweights/underweights (e.g. some will include Chinese small caps, while another may not), and any differences you can see in reported P/E, dividend yield, etc. of each fund. Otherwise, it's generally a price war of similar main index funds between the big three.
Thank you.
User avatar
BeBH65
Posts: 1697
Joined: Sat Jul 04, 2015 7:28 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by BeBH65 »

According to the documentation the vanguard fund has normally a minimum of 200k, maybe not at your broker.

As mentioned above one is an etf and the other one a mutual fund. Check the cost to buy and sell of both+what ere the taxes related to it. Does your broker charge holding costs

Both are accumulating, I assume you checked that this is advantageous for your personal tax position ; mainly depend on your tax-domicile.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

BeBH65 wrote: Thu May 02, 2019 1:29 am According to the documentation the vanguard fund has normally a minimum of 200k, maybe not at your broker.
Thanks. Here it's mentioned as 200,000,000: https://www.vanguard.nl/portal/instl/nl ... /?overview

I guess this applies to the fund, and not to individual investors, correct?

Do you know what "Institutional Plus" indicates?
As mentioned above one is an etf and the other one a mutual fund. Check the cost to buy and sell of both+what ere the taxes related to it. Does your broker charge holding costs

Both are accumulating, I assume you checked that this is advantageous for your personal tax position ; mainly depend on your tax-domicile.
Yes. Thanks.
QuantOfAsia
Posts: 78
Joined: Sun Apr 14, 2019 7:57 pm
Location: Hong Kong

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by QuantOfAsia »

Non-exchange traded mutual funds often have different share classes with different minimums and different fee/expense ratios, and I have seen share classes with minimums as high as 200 million per investor, intended for large institutional investors of course.

One reason I prefer exchange traded funds is that an investor who buys one share gets the same access and pricing as an investor who buys 100 million shares.
User avatar
BeBH65
Posts: 1697
Joined: Sat Jul 04, 2015 7:28 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by BeBH65 »

Sometimes brokers offer funds with high minimum investments to their clients as a special service. I remember a post some months ago where the broker was charging more for this device then the ER of the actual fund; check the costs.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

Thanks guys. My bank is offering the Vanguard fund at decent costs. There's no mention of any minimum quantity.

The iShares ETF I can get through my broker, which has slightly lower costs. The small difference in transaction costs isn't that important to me.
danielbird193
Posts: 36
Joined: Thu Mar 21, 2019 2:15 pm

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by danielbird193 »

Where are your other investments held - at the bank or with your broker? It may be sensible to add this new small cap holding to the same account which makes it easier to rebalance when necessary.

Other than that I think both sound like good choices and would just urge you to go with the lowest cost option (taking account of platform fee as well as find manager's fee).
Topic Author
YRT70
Posts: 691
Joined: Sat Apr 27, 2019 8:51 am

Re: iShares World Small Cap ETF vs. Vanguard Global Small Cap fund. Which one would you choose?

Post by YRT70 »

danielbird193 wrote: Fri May 03, 2019 1:20 am Where are your other investments held - at the bank or with your broker? It may be sensible to add this new small cap holding to the same account which makes it easier to rebalance when necessary.
That would make sense.

But my bank is probably a safer place than my broker. My bank charges slightly more but I think I'm willing to live with the costs. I plan on investing a lot more in the future so I'm considering spreading my assets between my bank and my broker, or gradually moving all assets to my bank.
danielbird193 wrote: Fri May 03, 2019 1:20 am Other than that I think both sound like good choices and would just urge you to go with the lowest cost option (taking account of platform fee as well as find manager's fee).
Thanks.
Post Reply