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For residents of Spain.
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hdas
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Post by hdas »

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Last edited by hdas on Wed Jan 29, 2020 10:33 am, edited 1 time in total.
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Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: [Spain Person] Fund Options, between scylla and charybdis

Post by Valuethinker »

hdas wrote: Wed Oct 24, 2018 10:13 am Hi All,
Helping my brother to set up his retirement contributions for next year. AFAWK is max 8000 Euros/Year. The options are very limited, we are looking for low cost (administration and fund fees), good fund options and flexibility. The rest of his investments are in taxable accounts. After looking at different options seems we have narrowed to two:

Option # 1 - ING
> Fees: 0.85%/Year for Fixed Income, 1.25% for Stocks. There could be another hidden costs, but haven't found them yet.
> Simple enough but perhaps too simple. They build their own funds and they offer SP500, EuroStoxx, European Bonds

Option # 2 - Indexa
> Fees: 0.85% all in.
> The only issue is that they slice and dice into way too many funds.
> Robo advisors are not flexible and its even more complex to coordinate with another taxable account outside.

These are the funds they suggest:

Stocks
Image
Option 2 and the Vanguard fund - 60%. That has the lowest costs and covers 85% of world markets. You could put 10-15% (ie 6-9%) in an Emerging Market fund, but it's not essential.
Bonds
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What would you choose and why?

Thanks
Global Govt Bond fund EUR hedged - 40%. Unfortunately after costs this will have an average return quite close to zero (because it is currency hedged). Nonetheless it will be welcome when we hit our next equity bear market.

As in other threads I argue Eurozone investors should not just have Eurozone government bonds. Italy is the largest govt bond market in the Eurozone, and it is not risk free. Of course if Italy goes wrong then Spain is likely to follow due to "contagion" (the way debt crises hop from country to country). So that makes it even less desirable for a Spanish investor to hold just Eurozone bonds.
Topic Author
hdas
Posts: 1395
Joined: Thu Jun 11, 2015 8:24 am

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Post by hdas »

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Last edited by hdas on Wed Jan 29, 2020 10:33 am, edited 1 time in total.
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Valuethinker
Posts: 48954
Joined: Fri May 11, 2007 11:07 am

Re: [Spain Person] Fund Options, between scylla and charybdis

Post by Valuethinker »

hdas wrote: Wed Oct 24, 2018 10:45 am
Valuethinker wrote: Wed Oct 24, 2018 10:22 am
Option 2 and the Vanguard fund - 60%. That has the lowest costs and covers 85% of world markets. You could put 10-15% (ie 6-9%) in an Emerging Market fund, but it's not essential.

Global Govt Bond fund EUR hedged - 40%. Unfortunately after costs this will have an average return quite close to zero (because it is currency hedged). Nonetheless it will be welcome when we hit our next equity bear market.

As in other threads I argue Eurozone investors should not just have Eurozone government bonds. Italy is the largest govt bond market in the Eurozone, and it is not risk free. Of course if Italy goes wrong then Spain is likely to follow due to "contagion" (the way debt crises hop from country to country). So that makes it even less desirable for a Spanish investor to hold just Eurozone bonds.
Thanks for the answer. However, the issue is that Option 2 is a robo advisor, we don't get to chose anything, and the portfolio would be split into all those 15+ funds. Hence our dilema.
However each one adds to 100%? So what is the bond-equity split?
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