Index Fund Portfolio

cherrytaz

Hi all

Having experimented with buying individual stocks for a number of years, I'd now like to invest in a more long-term fund and having studied quite a few books I've decided to go the route of index funds combined with a bond index fund with a split of 30% bonds and 70% index funds (going by my current age of approximately 30!)

I've decided to go with the following portfolio to give me decent exposure to all makets:

Vanguard S&P 500 UCITS ETF VUSA
Vanguard FTSE Developed Europe UCITS VEUR 
Vanguard FTSE All-World UCITS VWRL
iShares Euro Inflation Linked Government Bond UCITS EFT IBCI

I know the tax situation surrounding EFT's is outrageously complicated in Ireland but with the correct recording of all purchases I think I will be able to manage this.

I will be buying the above through the Amsterdam exchange using Degiro and monthly buy/sells to re-balance the portfolio to the following split each month:

VUSA 23%
VEUR  23%
VWRL 23%
IBCI3 30%

Any thoughts?

topper_harley2

cherrytaz wrote: »

Hi all

Having experimented with buying individual stocks for a number of years, I'd now like to invest in a more long-term fund and having studied quite a few books I've decided to go the route of index funds combined with a bond index fund with a split of 30% bonds and 70% index funds (going by my current age of approximately 30!)

I've decided to go with the following portfolio to give me decent exposure to all makets:

Vanguard S&P 500 UCITS ETF VUSA
Vanguard FTSE Developed Europe UCITS VEUR 
Vanguard FTSE All-World UCITS VWRL
iShares Euro Inflation Linked Government Bond UCITS EFT IBCI

I know the tax situation surrounding EFT's is outrageously complicated in Ireland but with the correct recording of all purchases I think I will be able to manage this.

I will be buying the above through the Amsterdam exchange using Degiro and monthly buy/sells to re-balance the portfolio to the following split each month:

VUSA 23%
VEUR  23%
VWRL 23%
IBCI3 30%

Any thoughts?

Tax tax tax. This might be fine in USA but if ain't gonna work here with our tax situation.

You can't offset VUSA against VEUR or anything other UCIT ETF. Hence, in eight years (at deemed disposal) say you had invested 20, 000 in each fund - if VUSA and VEUR are up 50% but VWRL and IBCI3 are down 50%, you are NOT even in eyes of revenue. You still have to pay 41% tax on your 10k profits in VUSA and VEUR. So you have to pay E8200 in tax even though you made no profit overall!

That is not an acceptable scenario which pretty much makes UCIT ETFs pointless.

cherrytaz

Thanks for the reply. How about the same spread but domiciled in the US i.e. bought on the US stock exchange? These would then be treated as shares with losses offset against gains and subject to capital gains at 33%. The currency risk is obviously to be considered with this approach.

So hard to get ahead as an investor in this country given the tax rules

Bateman

Can you offset gains in a UCITS ETF against losses in individual stocks? Or against literally nothing else?

topper_harley2

No offsetting against anything else. Period.

27cyrix

I am using two ETF - VEU and VTI

VEU (0.14% TER) and VT (0.05%)

This is the lowest fee world market combination( compare with VT 0.17%)

27cyrix

I am using two ETF - VEU and VTI

VEU (0.14% TER) and VT (0.05%)

This is the lowest fee world market combination( compare with VT 0.17%)

lcwill

VWRLis 50% US already. Could be easier to have more of that and forget about the S&P500 fund.

VWRL is also about 30% Europe if i remember correctly but VEUR is useful to go a bit overweight in European shares which will reduce the effect of exchange rates on your portfolio.

In my own portfolio which I am just starting I actually decided against VWRL and got the Vanguard S&P 500 ucits etf, VEUR, an iShares eurozone specific ETF to get some pure eurozone exposure, and an iShares emerging markets ETF. All this is missing is Japan and Australia but Japan is going nowhere and Australia is dependent on China which is captured in the emerging markets ETF so shoudnt make a difference. Fees average 0.25% which is the same as VWRL.

I live outside Ireland so tax situation is different and I wanted a mix of distributing and accumulating etfs.

I'm no expert though! Just learning the ropes too.

Bateman

I know we’re a small market with no real advantages of scale for startups, but I still find it strange that there are no robo-advisor offerings in Ireland just recommending low-cost trackers & ETFs to people. They’ve swept the US, are making serious inroads in the UK after the kickback regulations, and are also coming on-stream in Germany and other markets.

A couple of skilled programming graduates could create the backend software for something like this in the space of a few weeks surely. The old fashioned broker cartel is going to be opened up here, just like it has in other markets…

Bateman

I know we’re a small market with no real advantages of scale for startups, but I still find it strange that there are no robo-advisor offerings in Ireland just recommending low-cost trackers & ETFs to people. They’ve swept the US, are making serious inroads in the UK after the kickback regulations, and are also coming on-stream in Germany and other markets.

A couple of skilled programming graduates could create the backend software for something like this in the space of a few weeks surely. The old fashioned broker cartel is going to be opened up here, just like it has in other markets…

robp

Bateman wrote: »

I know we’re a small market with no real advantages of scale for startups, but I still find it strange that there are no robo-advisor offerings in Ireland just recommending low-cost trackers & ETFs to people. They’ve swept the US, are making serious inroads in the UK after the kickback regulations, and are also coming on-stream in Germany and other markets.

A couple of skilled programming graduates could create the backend software for something like this in the space of a few weeks surely. The old fashioned broker cartel is going to be opened up here, just like it has in other markets…

There isn't the same incentives here. In the US buying shares for pension accounts seems to be far less complicated. In Ireland buying securities from the markets seems to be a far less normal thing even though private pensions are pretty widespread. That been said I hope robo investing does take off in Ireland

phantom_lord

Is there any way to get into the likes of Vanguard via a PRSA?

valoren

phantom_lord wrote: »

Is there any way to get into the likes of Vanguard via a PRSA?

Just for ETF's.

With Davy on a PRSA and they have the below Vanguard ETF's

FTSE 100
Allworld
Developed Europe ex UK
Developed Europe
Emerging Markets
S&P 500