Comparing VWRA with IWDA+EMIM combination

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BeBH65
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Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Vanguard has started a an accumulating version VWRA of their Vanguard FTSE All-World UCITS ETF all world funds.
This opens perspectives for investor prefering accumulating fund.

Until now they turn to other fundproviders.
The combination of IWDA - iShares Core MSCI World ETF USD Acc and EMIM - iShares Core MSCI EM IMI ETF USD Acc is popular.

I would like to analyse if switching to VWRA would make sense.
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
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

VWRA is really new, but the distributing version already exists since 2012. Both have an ER of 0,25%. Fund started in 30/04/2012
Based on Morningstar, looking at the asset split between developped markets and emerging markets it looks like a combination of 87% IWDA and 13% EMIM would be very similar in regional splits as well as style box. The ER of these funds are 0,20 and 0,18% respectively.
The Total return grapsh also look roughly the same.

Would this be a correct comparison?

If I compare the total return of both using Morningstr Xray, I see that 10K Euro invested on 30/04/2012 would have following returns:
- Portfolio1: 22,831.58
- Vanguard FTSE All-World UCITS ETF: 21,917.12

Could one conclude from this that the difference in ER leads to a difference of 900 Euro over this period?
IS this significant?
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Sinsji
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Sinsji »

After gave advise on my personal plan, I found out about VWRA on this forum as well: (viewtopic.php?f=22&t=287965).

Currently I've got IWDA and EMIM.

The little link below compares iShares MSCI World ETF (88%) + iShares Core MSCI Emerging Markets ETF (12%) with 100% VT between Jan 2013 - Jul 2019. The difference is 16 dollar on a total of 17,693 for iShares vs 17,709 for VT. So the clear winner in this one is Vanguard. :happy
Couldn't find IWDA, EMIM and VWRD on portfolio visualizer.

https://www.portfoliovisualizer.com/ba ... 0&total3=0
silverex
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Re: Comparing VWRA with IWDA+EMIM combination

Post by silverex »

BeBH65 wrote: Tue Aug 13, 2019 1:48 pm VWRA is really new, but the distributing version already exists since 2012. Both have an ER of 0,25%. Fund started in 30/04/2012
Based on Morningstar, looking at the asset split between developped markets and emerging markets it looks like a combination of 87% IWDA and 13% EMIM would be very similar in regional splits as well as style box. The ER of these funds are 0,20 and 0,18% respectively.
The Total return grapsh also look roughly the same.

Would this be a correct comparison?

If I compare the total return of both using Morningstr Xray, I see that 10K Euro invested on 30/04/2012 would have following returns:
- Portfolio1: 22,831.58
- Vanguard FTSE All-World UCITS ETF: 21,917.12

Could one conclude from this that the difference in ER leads to a difference of 900 Euro over this period?
IS this significant?
Good topic, I'm also wondering whether to switch new money to VWRA. It would be good to see how Portfolio1 and Portfolio2 contents differ - maybe by country, but I don't have the tools for that. Of course, all differences would be small enough to make a big impact on returns. Also, I don't have the data how ER for all ETFs was changing since 2012 - wasn't IWDA and EMIM more expensive at the start?

Regarding ER, it's only a target ratio that funds strive to achieve, and the difference with target is called tracking error. All 3 ETFs use optimized sampling replication method, that means they don't buy all the securities anyway. iShares does have a better economy of scale at this point, however Vanguard has the knowledge and experience from US funds for optimized fund management regarding transactions, taxes, and share classes.

At this point, other considerations might be important. iShares at least once, instead of lowering TER of iShares MSCI World UCITS ETF, opened a cheaper iShares Core MSCI World UCITS ETF, leaving investors money tax-locked in expensive funds. It's always a possibility they'll do the same with current funds. To be fair to iShares, many other fund managers, incuding Lyxor, X-trackers, did similar things. Vanguard, on the other hand, does not do that.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Sinsji wrote: Tue Aug 13, 2019 3:30 pm After gave advise on my personal plan, I found out about VWRA on this forum as well: (viewtopic.php?f=22&t=287965).

Currently I've got IWDA and EMIM.

The little link below compares iShares MSCI World ETF (88%) + iShares Core MSCI Emerging Markets ETF (12%) with 100% VT between Jan 2013 - Jul 2019. The difference is 16 dollar on a total of 17,693 for iShares vs 17,709 for VT. So the clear winner in this one is Vanguard. :happy
Couldn't find IWDA, EMIM and VWRD on portfolio visualizer.

https://www.portfoliovisualizer.com/ba ... 0&total3=0
Thank you for your feedback.

I like portfoliovizualiser a lot. It is unfortunate that it does not cover the non-US UCITS ETFs.
Good suggestion to add some extra data points. I will make a table below comparing the returns of several alternatives. I will make the comparison in Euro
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

silverex wrote: Wed Aug 14, 2019 2:21 am Good topic, I'm also wondering whether to switch new money to VWRA. It would be good to see how Portfolio1 and Portfolio2 contents differ - maybe by country, but I don't have the tools for that. Of course, all differences would be small enough to make a big impact on returns. Also, I don't have the data how ER for all ETFs was changing since 2012 - wasn't IWDA and EMIM more expensive at the start?

Regarding ER, it's only a target ratio that funds strive to achieve, and the difference with target is called tracking error. All 3 ETFs use optimized sampling replication method, that means they don't buy all the securities anyway. iShares does have a better economy of scale at this point, however Vanguard has the knowledge and experience from US funds for optimized fund management regarding transactions, taxes, and share classes.

At this point, other considerations might be important. iShares at least once, instead of lowering TER of iShares MSCI World UCITS ETF, opened a cheaper iShares Core MSCI World UCITS ETF, leaving investors money tax-locked in expensive funds. It's always a possibility they'll do the same with current funds. To be fair to iShares, many other fund managers, incuding Lyxor, X-trackers, did similar things. Vanguard, on the other hand, does not do that.
I use Morningstar, more particularly morningstar XRay on a self defined portfolio to look at composition and performance.
I think I succeeded in getting a good match>

It is true that the ER is only the published cost, next to it there are some extra internal costs, and some income (e.g. securities lending).
This is one of the reasons why I want to do this exercise to look at the real return.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by DJN »

Hi,
thanks for pointing this one out. I have added VWRA (+ VWRP and VWCE) to Wiki page on suggested options for accumulating Boglehead portfolios for non-US investors: https://www.bogleheads.org/wiki/Buildin ... _investors
DJN
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Schlabba »

DJN wrote: Thu Aug 15, 2019 7:31 am Hi,
thanks for pointing this one out. I have added VWRA (+ VWRP and VWCE) to Wiki page on suggested options for accumulating Boglehead portfolios for non-US investors: https://www.bogleheads.org/wiki/Buildin ... _investors
DJN
I appreciate your updates to the wiki, but I think its getting out of hand.

The title of the section says ‘sample portfolio’ and the table says ‘Suggested Portfolio 1 - accumulating’ but it is not a suggested portfolio you should follow, it is now a list of 9 etf’s which meet the right criteria for being part of a portfolio.

Can you mention the list of etf’s separately from 2 (acc and distr) sample portfolio’s?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by DJN »

Hi,
thanks for the helpful suggestion. The next step would be to carve out some suggested portfolios where the etfs are grouped.
Maybe I will get some time later this week.
thanks again for your input.
DJN
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Goal of the comparison: determine if it would make sense to replace to replace the often advised IWDA+EMIM combo by the new VWRA or VWCE
Assumption: 'costs matter" VWRA/VWCE has a ER of 0,25% 0.22% the ishares combo 0,20% hence oe would expact the ishares fund to have a slightly higher total return.
Methodology: Use Morningstar to create different portfolios and compare the results via XRAY.
notes:
XRAY has results until the end of July. So without the decline of this month.
We have performance results of the funds going back until 31/12/2012. Hence we do not have any info on behaviour during a crash.
It is assumed that neither of this matters in the comparison.

VWRA or VWCE is really new. It is the accumulating version of VRWL/VWRD. Follows the FTSE All-World index
Morningstar Style box is
28 29 27
05 05 03
00 00 00
Regional split key numbers
Europe 22,1
USA 53,8
Emerging Asie (4 tigers) 4,4 and (ex 4 tigers) 6,0

ER is 0,25% 0.22%


Combination of 87,5% IWDA and 12,5% EMIM Follows the MSCI indexes - EMIM tracks the IMI index
Similar style box as VWRA/VWCE, similar regional split with higher USA (55,5 vs 53,8)
Combined ER is 0,20% (0,20% and 0,18%)

Combination of 87,5% IWDA and 12,5% IEMA
IEMA is the non-core version of EMIM. It tracks MSCI EM. ER is 0,68%
Added to this comparison to validate the impact of higher ER.
Similar style box as VWRA/VWCE, similar regional split with higher USA (55,3 vs 53,8)
Combined ER is 0,26% (0,20% and 0,68%)

100% VT Vanguard Total World Stock Index Fund ETF Shares follozing qn index "inspired" on FTSE
US domiciled fund -- might not be available for European investor. Is a distributing fund.
slightly lower % in EM, USA is 54,4%, Europe is 21,3%
Stylebox includes 5% small caps
ER = 0,09%

As this is a US domiciled fund dividend taxation will be different then for the Ireland based funds.
Level 1 taxation is controlled by the tax treaties between the US and the countries of the assets; compared with the Irish tax treaties for Irish funds. The impact of this is included in the published results.
Level 2 taxation: Ireland does not have any level 2 taxation. For US funds this is 30% or

87,5% URTH and 12,5% IEMG MSCI indexes
US domiciled funds -- might not be available for European investor. Is a distributing fund.
slightly lower % in EM, USA is 55%, Europe is 21,3%
ER = 0,23%

Comparison

Code: Select all

 ER  | 3yr | 5yr |oct | Fund
     |     |     | 2012| 
0.25 |10.49|10.54|21451| VWRD
0.20 |10.6 |10.58|22097| IWDA+EMIM
0.26 |10.6 |10.58|21377| IWDA+IEMA
0.23 |10.48|08.9 |21445| URTH + IEMG
0.09 |10.20|10,58|21573| VT
ER: published expense ratio
3yr: 3 year total return as reported by Morningstar Xray
5yr: 5 year total return as reported by Morningstar Xray
Oct2012: total return growth of 10000 Euro since 31/10/2012 until 31/07/2019


My conclusions: The difference is small. The ER seems to be a good predictor of the performance.
US funds underperform - not sure why? maybe the result of differences in the L1 taxation

edit: added reference to VWCE and the lower ER of 0.22%
Last edited by BeBH65 on Tue Nov 19, 2019 12:18 pm, edited 3 times in total.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by glorat »

There's a key difference that's not been mentioned. VWRD/VWRA don't have small caps, whereas all the other ones do.

Since we're talking about global market cap weighted, missing out small caps doesn't have a significant effect on returns but missing them will cause noise in returns in the similar range as the expense ratio. In other words, trying to compare past returns of all these combos is fairly meaningless for predicting future relative returns - sometimes those small caps will add +0.25% (or more), sometimes they will cause -0.25% (or more)

Instead, you'll just have to by looking at the portfolio. Accept that small caps are missing from VWRA. Accept that ER is slightly higher. Accept the benefits of having only a single fund to manage (both time and transaction cost). Factor in the intangible Vanguard corporate structure benefit. That's all I'd consider.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Well according to Morningstar the only combination that had a real amount of small caps is VT, as mentioned. All the other combinations show 0% small caps in the Morningstar xray. Presumably the small amount of small caps that the EMIM is dwarfed by all the other assets.

Note that M* defines small cap as the lower 10% of the market.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Vanguard seems to have completed their offering on the Accumulating All-world UCITS ETF with Euro en GBP version.

Naam Ticker Valuta
Vanguard FTSE All-World ETF USD Acc LSE:VWRA USD
Vanguard FTSE All-World ETF USD Acc EUR XTER:VWCE EUR
Vanguard FTSE All-World ETF USD Acc EUR FRA:VWCE EUR
Vanguard FTSE All-World ETF USD Acc GBP LSE:VWRP GBP
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Re: Comparing VWRA with IWDA+EMIM combination

Post by vstariradev »

I want to thank BeBH65 for going through the numbers for us to compare the two options.

I want to add 3 other factors we should consider. Tracking errors, commission fees when buying 2 ETFs and differences in indexes tracked.

AFAIK tracking errors can introduce differences in the funds returns so it’s possible any advantage in TER to be eliminated them. See tracking differences section in these two links
https://www.trackinsight.com/fund/IE00B ... _perf,flow

https://www.trackinsight.com/fund/IE00B ... _perf,flow
I know the number of companies they cover is different but I’m trying to make a point that tracking errors matter.


I remember a discussion on the forum some time ago comparing the differences in the way FTSE and MSCI track countries. Essentially we must treat them as funds tracking two different indices.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Indeed tracking difference and tracking error matter.
Here is some info: https://www.etf.com/etf-education-cente ... error.html
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Re: Comparing VWRA with IWDA+EMIM combination

Post by oldchap »

BeBH65 wrote: Thu Aug 15, 2019 8:55 am Goal of the comparison: determine if it would make sense to replace to replace the often advised IWDA+EMIM combo by the new VWRA.
Assumption: 'costs matter" VWRA has a ER of 0,25% the ishares combo 0,20% hence oe would expact the ishares fund to have a slightly higher total return.
Methodology: Use Morningstar to create different portfolios and compare the results via XRAY.
notes:
XRAY has results until the end of July. So without the decline of this month.
We have performance results of the funds going back until 31/12/2012. Hence we do not have any info on behaviour during a crash.
It is assumed that neither of this matters in the comparison.
BeBH65 could you please provide the right Morningstar Xray website that you are using to do so?

I've only found the 2 following, but it doesn't seem to match:
https://www.morningstar.com/instant-x-ray
https://www.morningstar.com/InvGlossary ... x-ray.aspx

Thank you!
NRA, LSE-based ETFs only | 1-fund portfolio powered by Vanguard: 120% VWRA | Following the Lifecycle Investing Strategy
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

There are differences in the regional Morningstar sites. In addition some sites (i.e. us one) seem to be undergoing an update.

Here is how it works on the .be site:
- on the home page there is a tab portfolio.
- when you sign in you can make up to 5 portfolio's. A portfolio has a benchmark.
- on the portfolio section there is a tab xray. This will generate a report in the composition of your portfolio at the end of precious month including: sectorsplit, styleboxes, overlap between the positions. There is also a graph that visualizes the performance of the portfolio.

Using this allows you to analyse the IWDA+EM portfolios and then compare with the one fund portfolios.

Our wiki has a very short info that might help you: https://www.bogleheads.org/wiki/Tools_a ... olio_tools
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
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Re: Comparing VWRA with IWDA+EMIM combination

Post by oldchap »

BeBH65 wrote: Thu Sep 19, 2019 9:57 pm There are differences in the regional Morningstar sites. In addition some sites (i.e. us one) seem to be undergoing an update.

Here is how it works on the .be site:
- on the home page there is a tab portfolio.
- when you sign in you can make up to 5 portfolio's. A portfolio has a benchmark.
- on the portfolio section there is a tab xray. This will generate a report in the composition of your portfolio at the end of precious month including: sectorsplit, styleboxes, overlap between the positions. There is also a graph that visualizes the performance of the portfolio.

Using this allows you to analyse the IWDA+EM portfolios and then compare with the one fund portfolios.

Our wiki has a very short info that might help you: https://www.bogleheads.org/wiki/Tools_a ... olio_tools
Thanks ! Awesome, indeed Xray is only proposing the LSE ETFs on the .be website, but not on the .com one!
NRA, LSE-based ETFs only | 1-fund portfolio powered by Vanguard: 120% VWRA | Following the Lifecycle Investing Strategy
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Re: Comparing VWRA with IWDA+EMIM combination

Post by buf »

Now that the dust has settled a bit, what were your final decisions regarding above two choices and what was the reasoning that finally persuaded you to choose one over the other?

For those who are only starting to build up a portfolio, which option did you chose?

For those who already had considerable amounts of IWDA+EMIM, did you move the assets over to VWRA? Did you decide to stay with IWDA+EMIM? If you had the option to move from IWDA+EMIM to VWRA without incurring any taxes, fees and etc. would you do it? Why?

For those who are simply passing by and have no interest in any of above ETFs, which option attracts you more and why?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Personally I am currently staying with IWDA+EMIM.
I see no compelling reason to switch, the difference in ER confirms to me that my choice is good.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by oldchap »

Same here : IWDA + EIMI. It's only 2 ETF, very easy to manage :-)
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Re: Comparing VWRA with IWDA+EMIM combination

Post by nick_r »

TER for VWRA went down from 0.25% to 0.22%
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Re: Comparing VWRA with IWDA+EMIM combination

Post by oldchap »

Now we are talking! Getting interesting!
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Atlantis »

1) Does "switching" mean buying VWRA from henceforth and keeping existing IWDA+EMIM intact? (vs selling IWDA+EMIM to buy VWRA)

2) Is the reduction to 0.22% TER a compelling enough reason to switch?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by vstariradev »

Atlantis wrote: Tue Nov 19, 2019 8:01 am 1) Does "switching" mean buying VWRA from henceforth and keeping existing IWDA+EMIM intact? (vs selling IWDA+EMIM to buy VWRA)
It can be interpreted in both ways. For most, selling the old shares involve hefty transaction costs which in itself eat up some profits. That’s why I think most will keep the old shares but buy new. I don’t like the approach because I like a simple, clean portfolio.
Atlantis wrote: Tue Nov 19, 2019 8:01 am 2) Is the reduction to 0.22% TER a compelling enough reason to switch?
That’s a personal choice. Based on the above info from other forum members, I don’t see a right or wrong answer.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Jarmaniac »

If I'm not mistaken, VWRP and VWRA are both on the LSE but one is priced in GBP and the other in USD.

For bonds, in addition to VAGP there is also an accumulating version VAGS.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Ubersetzer »

A simple backtest was performed with the following parameters - (i) time period May 2010-2020, (ii) 2000€ recurring investment per month, (iii) yearly balancing and (iv) 0€ transaction costs.

IDWA (87%) + EMIM (13%) = €390,605
FTSE Distributing = €392,849
FTSE Accumulating = €392,849


I played with multiple time periods and FTSE(distributing or accumulating) always came out trumps in comparison to IWDA + EMIM (87/13) combination.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by xiaohaengbok »

How were the values derived?
Ubersetzer wrote: Wed Jun 03, 2020 7:11 pm A simple backtest was performed with the following parameters - (i) time period May 2010-2020, (ii) 2000€ recurring investment per month, (iii) yearly balancing and (iv) 0€ transaction costs.

IDWA (87%) + EMIM (13%) = €390,605
FTSE Distributing = €392,849
FTSE Accumulating = €392,849


I played with multiple time periods and FTSE(distributing or accumulating) always came out trumps in comparison to IWDA + EMIM (87/13) combination.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by glorat »

Ubersetzer wrote: Wed Jun 03, 2020 7:11 pm (iii) yearly balancing

IDWA (87%) + EMIM (13%)
Yearly balancing of what? The benchmarks are market cap weighted so you should actually let the ratios float up and down as their value changes. That gets the comparison more fair. (Probably won't change any result much though)
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Re: Comparing VWRA with IWDA+EMIM combination

Post by dasus »

currently what is better, taken into account return and costs (TE VWRA 0,22%?) : IWDA+EIMI OR VWRA ?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by tre3sori »

dasus wrote: Thu Nov 26, 2020 11:13 am currently what is better, taken into account return and costs (TE VWRA 0,22%?) : IWDA+EIMI OR VWRA ?
better in what sense? simplicity: VWRA
The information provided is intended to be entertaining. It is not to be construed as professional advice. Use it at your own risk.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Rosales »

tre3sori wrote: Thu Nov 26, 2020 11:33 am
dasus wrote: Thu Nov 26, 2020 11:13 am currently what is better, taken into account return and costs (TE VWRA 0,22%?) : IWDA+EIMI OR VWRA ?
better in what sense? simplicity: VWRA
I agree.
VWRA & chill
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Re: Comparing VWRA with IWDA+EMIM combination

Post by zarci »

I would also add that Vanguard scores higher on the integrity and fiduciary scoreboards than BlackRock. But others may disagree.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by glorat »

zarci wrote: Fri Nov 27, 2020 6:14 am I would also add that Vanguard scores higher on the integrity and fiduciary scoreboards than BlackRock. But others may disagree.
For those concerned about that, the valid comparison that has been available for just over a year is VWRD vs VDEV/VDEM (or its accumulation flavour). Morever, VDEV/VDEM is cheaper than IWDA/EMIM (but wider bid/ask spreads)
Hustlinghustling
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Hustlinghustling »

zarci wrote: Fri Nov 27, 2020 6:14 am I would also add that Vanguard scores higher on the integrity and fiduciary scoreboards than BlackRock. But others may disagree.
Can you elaborate please?
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zarci
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Re: Comparing VWRA with IWDA+EMIM combination

Post by zarci »

Hustlinghustling wrote: Fri Nov 27, 2020 7:09 am
zarci wrote: Fri Nov 27, 2020 6:14 am I would also add that Vanguard scores higher on the integrity and fiduciary scoreboards than BlackRock. But others may disagree.
Can you elaborate please?
Vanguard is the embodiment of Bogle's principle that a mutual fund company must act in the best interest of the investor. That translates to optimising investor return by minimising fund operation cost.

That's the idea behind the original structure of Vanguard's mutual funds. Those were the only mutual funds that were owned by the fund's investors. By investing in Vanguard mutual funds you were also the owner of the fund.

That was the original idea, and Vanguard is a different company today.


But BlackRock operates on a different set of principles. So my distrust is mainly emotional. However, one example I personally encountered is this one: I wanted to know what portion of the fund's holdings were turned over over a one year period. This influences internal transaction cost and performance.

Vanguard clearly stated 3% for the VWRL fund.

For Ishares IWDA I could not find a relevant figure.
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Re: Comparing VWRA with IWDA+EMIM combination

Post by sublimelaconic »

I'm currently holding 88% IWDA and 12% EIMI. But I want to make the shift to VWRA.

1. Do I sell IWDA+EIMI?

2. Keep it as is and just buy VWRA? If so, do I still need to rebalance IWDA+EIMI in the future?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by alpine_boglehead »

sublimelaconic wrote: Fri Dec 04, 2020 11:49 pm I'm currently holding 88% IWDA and 12% EIMI. But I want to make the shift to VWRA.

1. Do I sell IWDA+EIMI?

2. Keep it as is and just buy VWRA? If so, do I still need to rebalance IWDA+EIMI in the future?
As always, it depends.

1. If you incur significant capital gain taxes when selling IWDA+EIMI then financially it probably doesn't make any sense. I used the March 2020 opportunity to simplify my portfolio towards VWRA without incurring taxes (and even doing some tax loss harvesting). Also, you will have some small losses due to the spreads when selling and buying (you can expect these to the in the ballpark of 0.2-0.4%).

2. That's the easiest option. If your existing IWDA+EIMI holdings will be small in the future compared to what you put into VWRA, then you could just leave it as is without rebalancing, as it won't make a big difference.
phixion
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Re: Comparing VWRA with IWDA+EMIM combination

Post by phixion »

Hello all,

What is the general consensus regarding this now?

Portfolio allocation (Based on Market Cap):

Vanguard VWRP (TER 0.22%) 100%

vs.

iShares SWDA (TER 0.20%) 78.1 %
iShares WLDS (TER 0.35%) 11.3 %
iShares EMIM (TER 0.18%) 10.6 %

Both VWRP and SWDA/WLDS/EMIM perform similarly over 5 and 10 year periods.

The way I see it, 2 or 3 fund iShares ETF gives you the opportunity for custom allocation, if you want more in Emerging Markets or Small Cap you can adjust to your requirements, a nice option to have if you believe a certain sector will outperform over periods.

With the 2 or 3 fund portfolio you may need to rebalance or you could just let it do it's thing, results seem to be close either way with "No rebalancing" edging it out in terms of profit over an 10 year period.

I'm curious as to why people tend to omit WLDS (iShares MSCI World Small Cap), it appears to have performed slightly better than both SWDA and EMIM over the same period, but has a slightly higher OCF at 0.35%. Does this fee offset the benefit in a relatively low value portfolio?
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Laurizas »

phixion wrote: Sun Oct 10, 2021 1:34 pm What is the general consensus regarding this now?

Portfolio allocation (Based on Market Cap):

Vanguard VWRP (TER 0.22%) 100%

vs.

iShares SWDA (TER 0.20%) 78.1 %
iShares WLDS (TER 0.35%) 11.3 %
iShares EMIM (TER 0.18%) 10.6 %
Consensus is simplicity.
phixion wrote: Sun Oct 10, 2021 1:34 pm The way I see it, 2 or 3 fund iShares ETF gives you the opportunity for custom allocation, if you want more in Emerging Markets or Small Cap you can adjust to your requirements, a nice option to have if you believe a certain sector will outperform over periods.
But does not this opportunity exist with VWRP? If you have VWRP you still could add tilts to EM and Small Caps.
phixion wrote: Sun Oct 10, 2021 1:34 pm I'm curious as to why people tend to omit WLDS (iShares MSCI World Small Cap), it appears to have performed slightly better than both SWDA and EMIM over the same period, but has a slightly higher OCF at 0.35%.
SPDR MSCI World Small Cap UCITS ETF tracks the same MSCI World Small Cap index as WLDS does but has inception date on 25 November 2013. Since then it has not beaten SWDA
https://www.justetf.com/en/find-etf.htm ... Field=none

But I think the performance is not the decisive factor of omitting WLDS. Even if WLDS had outperformed, it would still not have had a significant impact on the end result because it is just 10 % of portfolio.
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BeBH65
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

phixion wrote: Sun Oct 10, 2021 1:34 pm Hello all,

What is the general consensus regarding this now?

Portfolio allocation (Based on Market Cap):

Vanguard VWRP (TER 0.22%) 100%

vs.

iShares SWDA (TER 0.20%) 78.1 %
iShares WLDS (TER 0.35%) 11.3 %
iShares EMIM (TER 0.18%) 10.6 %

Both VWRP and SWDA/WLDS/EMIM perform similarly over 5 and 10 year periods.

The way I see it, 2 or 3 fund iShares ETF gives you the opportunity for custom allocation, if you want more in Emerging Markets or Small Cap you can adjust to your requirements, a nice option to have if you believe a certain sector will outperform over periods.

With the 2 or 3 fund portfolio you may need to rebalance or you could just let it do it's thing, results seem to be close either way with "No rebalancing" edging it out in terms of profit over an 10 year period.

I'm curious as to why people tend to omit WLDS (iShares MSCI World Small Cap), it appears to have performed slightly better than both SWDA and EMIM over the same period, but has a slightly higher OCF at 0.35%. Does this fee offset the benefit in a relatively low value portfolio?
VWRP does not contain small caps so SWDA+EMIM would be sufficient to match that.
You could add small caps (through WLDS or others) to both propositions.
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
Genghis
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Re: Comparing VWRA with IWDA+EMIM combination

Post by Genghis »

[/quote]
VWRP does not contain small caps so SWDA+EMIM would be sufficient to match that.
You could add small caps (through WLDS or others) to both propositions.
[/quote]

Doesn’t EMIM contain emerging markets small cap?
hithere
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Re: Comparing VWRA with IWDA+EMIM combination

Post by hithere »

Personally, I prefer to just increase my stock exposure, if possible, rather than invest in small caps. The effect should be more or less the same as having small caps in my portfolio. Remember, investing in small caps is just another way of many to increase risk and return.

I also like to use a tiny bit of leverage, but that's just my preference.

P.S. Check out SWRD/SPPW - it tracks the same index as IWDA, but the TER is lower and there are no additional costs such as transactional ones.
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BeBH65
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Re: Comparing VWRA with IWDA+EMIM combination

Post by BeBH65 »

Genghis wrote: Fri Oct 15, 2021 5:37 am
VWRP does not contain small caps so SWDA+EMIM would be sufficient to match that.
You could add small caps (through WLDS or others) to both propositions.
Doesn’t EMIM contain emerging markets small cap?
correct, if you want to avoid them you can take IEMA instead of EMIM.
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
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