Vanguard

candlegrease

Is it possible to invest with vanguard from Ireland?

topper_harley2

Asked almost daily on this forum. Vanguard funds directly - NO.
Vanguard ETFs - YES. Note these are all distributing, as opposed to accumulating.

candlegrease

topper_harley2 wrote: »

Asked almost daily on this forum. Vanguard funds directly - NO.
Vanguard ETFs - YES. Note these are all distributing, as opposed to accumulating.

Thanks for response. What does that mean on a practical level?

To give context, I've basically been reading the bogleheads website and want to emulate their investing strategies and am trying to figure out if it's achievable in Ireland.

Peregrinus

The Vanguard ETFs follow the same investments strategy as the Vanguard mutual funds, but they don't reinvest dividends they receive - they distribute them onwards to investors.

Of course, there's nothing to stop you using the distributions you receive (after you've paid tax on them, of course) from purchasing more Vanguard ETF shares, so reinvesting them yourself rather than having the managers do it for you.

candlegrease

Peregrinus wrote: »

The Vanguard ETFs follow the same investments strategy as the Vanguard mutual funds, but they don't reinvest dividends they receive - they distribute them onwards to investors.

Of course, there's nothing to stop you using the distributions you receive (after you've paid tax on them, of course) from purchasing more Vanguard ETF shares, so reinvesting them yourself rather than having the managers do it for you.

Thanks peregrinus.

In your view is that a significant barrier to pursuing an investment strategy in Ireland? I wish to follow a strategy with a diversified portfolio, 75% stocks, 25% bonds

Peregrinus

candlegrease wrote: »

In your view is that a significant barrier to pursuing an investment strategy in Ireland?

I'd say arranging the reinvestment of the dividends is not in itself a problem. A bit more paperwork, a bit of a nuisance, but not a problem.

The main issue, I think, is that the Vanguard ETFs are listed securities, quoted on the New York Stock Exchange and traded in US dollars. So to buy them, you'll have to first convert your cash (presumably in euros) to US dollars. Not a problem if you have accumulated capital and want to make a one-off, reasonably large transaction. But if you're planning on making a regular monthly modest investment, fx costs and money transmission charges could mount up, so you'd want to keep a eye on that.

Easiest way, I suspect, is to open an account with a US-based online broker, and buy the ETF stock through them. I dare say your can arrange to have your dividend payments credited to your account with your US broker and, once they mount up to a reasonable sum, use them to buy more shares in the ETF.

And one other issue; you'll be implementing this investment strategy from Ireland, but you won't be investing in Ireland or, necessarily, in the eurozone. Vanguard offer a range of ETFs focussing on different geographical markets and different market sectors, but most of them have either a US focus or a global focus, so most of your investments will be outside the Eurozone, which obviously exposes you to an exchange risk. Which you may be quite happy about; I don't know.

topper_harley2

There are plenty of other ETFs outside of Vanguard that automatically re-invest dividends e.g. ISHares world ETF, ticker IWDA

Peregrinus

topper_harley2 wrote: »

There are plenty of other ETFs outside of Vanguard that automatically re-invest dividends e.g. ISHares world ETF, ticker IWDA

Yes, but they may not offer the same low-cost index-tracking investment strategy as Vanguard, which is what the OP is after.

candlegrease

Peregrinus wrote: »

I'd say arranging the reinvestment of the dividends is not in itself a problem. A bit more paperwork, a bit of a nuisance, but not a problem.

The main issue, I think, is that the Vanguard ETFs are listed securities, quoted on the New York Stock Exchange and traded in US dollars. So to buy them, you'll have to first convert your cash (presumably in euros) to US dollars. Not a problem if you have accumulated capital and want to make a one-off, reasonably large transaction. But if you're planning on making a regular monthly modest investment, fx costs and money transmission charges could mount up, so you'd want to keep a eye on that.

Easiest way, I suspect, is to open an account with a US-based online broker, and buy the ETF stock through them. I dare say your can arrange to have your dividend payments credited to your account with your US broker and, once they mount up to a reasonable sum, use them to buy more shares in the ETF.

And one other issue; you'll be implementing this investment strategy from Ireland, but you won't be investing in Ireland or, necessarily, in the eurozone. Vanguard offer a range of ETFs focussing on different geographical markets and different market sectors, but most of them have either a US focus or a global focus, so most of your investments will be outside the Eurozone, which obviously exposes you to an exchange risk. Which you may be quite happy about; I don't know.

Thanks peregrinus.

I have a lump sum and wouldn't be making monthly contributions so that takes the edge off the fx costs.

I was thinking about a three fund portfolio with total international, total stock and total bond market. Is the best way to go about that to register with a US broker as you say?

Peregrinus

candlegrease wrote: »

Thanks peregrinus.

I have a lump sum and wouldn't be making monthly contributions so that takes the edge off the fx costs.

I was thinking about a three fund portfolio with total international, total stock and total bond market. Is the best way to go about that to register with a US broker as you say?

I'd think so, yes. Go for a low-cost, no-frills online broker. You know what you want, and you are not interested in stock picking, investment advice or any of the other frills that full-service brokers offer, so why pay for them?

Note that the names of the Vanguard funds can be a bit misleading. The "Total Stock Market Fund" actually tracks the a US market index; likewise the Total Bond Market Fund. So if you invested equally in the three funds you mention, two-thirds of your portfolio would be in US securities. (Which is fine, if that's what you want. But not so fine if in fact you're looking for balanced global exposure.)

lcwill

Peregrinus wrote: »

Yes, but they may not offer the same low-cost index-tracking investment strategy as Vanguard, which is what the OP is after.

IWDA offers almost the same approach as the distributing Vanguard equivalent (VWRL) but the index it tracks excludes emerging markets - these are only a small part of VWRL though so the difference is small, though I think IWDA has lower expenses too (0.2% for IWDA vs 0.25% for VWRL).

OfflerCrocGod

Not sure I'd invest a lump sum into US equities right now. They aren't exactly great value...consider drip feeding in your lump sum if you can.

slystallone

Can Anyone tell me the difference between these Vanguard ETFs?

Layne

Hi slystallone,

Firstly, all four buy you pretty much the same stock spread of the S+P500.

€VUSA, £USA and $VUSD are distributing ETFs, that is you get paid a dividend. The only difference between these is the currency they are traded in as they are sold on different stock exchanges in different countries. Many investors buy in their own currency to avoid the costs of currency exchange rates etc.

€VUAA is an accumulating ETF, that is the dividend is not paid directly to you but is reinvested into the ETF on your behalf. This is often more straightforward as you do not have to worry about your tax obligations each year.

That is my basic answer to your question. More knowledgeable Boardsies on here I'm sure will have more to add.