Investment Strategy

ScissorPaperRock

I'm thinking of investing with a long-term horizon given the abysmal savings rates in Ireland at the moment.

I'm thinking of the following ETFs:

• SMEA - iShares MSCI Europe UCITS ETF (Acc) - 0.33% TER
  
• CSPX - iShares Core S&P 500 UCITS ETF (Acc) - 0.07% TER
  
• CBE3 - iShares Euro Government Bond 1-3yr UCITS ETF (Acc) - 0.20% TER

I'm basing this on my own research and am a bit apprehensive about taking the plunge, so it would be great to get others' opinions.

I know Vanguard would be cheaper but, although I'm not living in Ireland at the moment, I'm thinking the tax issues associated with regular dividend payouts would outweigh the increase in TER. For that reason, I was thinking of going for accumulating funds.

The bonds ETF would account for around 30% of the portfolio.

Would be great to hear what you think!

topper_harley2

UCIT ETFs are crap if you're subject to Irish tax law. I know you said you're not currently, but if there is a chance you will move back, then this strategy wouldn't be great. UCIT funds are subject to the right year rule and no loss relief etc (discussed to death already on this forum)

Prezatch

Agree with Topper

Also if you're dead set on UCITS, consider IMEA for Europe

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1459956600000&chddm=671283&chls=IntervalBasedLine&cmpto=LON:IMEA&cmptdms=0&q=LON:SMEA&ntsp=1&ei=87wEV5v3Kcy7sQHwmoCwAQ

ScissorPaperRock

topper_harley2 wrote: »

UCIT ETFs are crap if you're subject to Irish tax law. I know you said you're not currently, but if there is a chance you will move back, then this strategy wouldn't be great. UCIT funds are subject to the right year rule and no loss relief etc (discussed to death already on this forum)

JoeyD wrote: »

Agree with Topper

Also if you're dead set on UCITS, consider IMEA for Europe

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1459956600000&chddm=671283&chls=IntervalBasedLine&cmpto=LON:IMEA&cmptdms=0&q=LON:SMEA&ntsp=1&ei=87wEV5v3Kcy7sQHwmoCwAQ

Thanks for the replies guys.

I understand that US-domiciled ETFs are non-accumulating. Isn't that a significant reason to go for EU-domiciled ETFs? Even from a compounding perspective?

jive

ScissorPaperRock wrote: »

Thanks for the replies guys.

I understand that US-domiciled ETFs are non-accumulating. Isn't that a significant reason to go for EU-domiciled ETFs? Even from a compounding perspective?

No because you are not subject to the 8 year gross roll-up/deemed disposal nonsense.

Prezatch

ScissorPaperRock wrote: »

Thanks for the replies guys.

I understand that US-domiciled ETFs are non-accumulating. Isn't that a significant reason to go for EU-domiciled ETFs? Even from a compounding perspective?

Have a read here - http://www.boards.ie/vbulletin/showthread.php?p=98405860

Not only are UCITS taxed higher, you cannot offset gains and losses on them, unlike US ETFS which are treated like normal shares.

PaulKK

Can someone tell me if there are ongoing costs when buying for example the vanguard s&p 500 etf?

I have some shares at the moment and am planning on buying some more to diversify my holding a little, but the long term appeal of the vanguard etf is attractive.

For example, if twice a year I were to add say 500 to my etf holding, are there maintenance costs associated with this also or just the purchase fees? I am using degiro fwiw.

It seems like a good way to put some money aside with a decent return to fund for example child's college fees in 18 or so years.

topper_harley2

PaulKK wrote: »

Can someone tell me if there are ongoing costs when buying for example the vanguard s&p 500 etf?

I have some shares at the moment and am planning on buying some more to diversify my holding a little, but the long term appeal of the vanguard etf is attractive.

For example, if twice a year I were to add say 500 to my etf holding, are there maintenance costs associated with this also or just the purchase fees? I am using degiro fwiw.

It seems like a good way to put some money aside with a decent return to fund for example child's college fees in 18 or so years.

TER of the fund, usually low with Vanguard eg 0.1%. Degiro doesn't have holding or inactivity fees.

Prezatch

PaulKK wrote: »

Can someone tell me if there are ongoing costs when buying for example the vanguard s&p 500 etf?

I have some shares at the moment and am planning on buying some more to diversify my holding a little, but the long term appeal of the vanguard etf is attractive.

For example, if twice a year I were to add say 500 to my etf holding, are there maintenance costs associated with this also or just the purchase fees? I am using degiro fwiw.

It seems like a good way to put some money aside with a decent return to fund for example child's college fees in 18 or so years.

You will be exposed to currency risk - EUR/USD but that's just something you'll have to live with. Degiro's fees/margins for converting your EUR cash into USD in order to make the purchases and vice versa when making the sales are however very reasonable.

ScissorPaperRock

jive wrote: »

No because you are not subject to the 8 year gross roll-up/deemed disposal nonsense.

JoeyD wrote: »

Have a read here - http://www.boards.ie/vbulletin/showthread.php?p=98405860

Not only are UCITS taxed higher, you cannot offset gains and losses on them, unlike US ETFS which are treated like normal shares.

Thanks for the inputs guys. Thinking again now about UCITs.

If I were to go for US-domiciled ETF, how would the following look?

VGK - Vanguard FTSE Europe ETF - 0.12%
VOO - Vanguard S&P 500 ETF (US) - 0.05%
VGSH - Vanguard Short-Term Government Bond ETF - 0.1%

PaulKK

topper_harley2 wrote: »

TER of the fund, usually low with Vanguard eg 0.1%. Degiro doesn't have holding or inactivity fees.

Thanks, would you know how is this charged? Should I have available funds in degiro to cover this potential cost?

As Joey mentioned there is the currency risk but I think it is better than facing the 8 year rule or paying PAYE tax rates on it.

Sabre Man

PaulKK wrote: »

Thanks, would you know how is this charged? Should I have available funds in degiro to cover this potential cost?

I think it's reflected in the share price. I've held an ETF for 6 months with DeGiro and haven't noticed any charges for ETFs.

Prezatch

ScissorPaperRock wrote: »

Thanks for the inputs guys. Thinking again now about UCITs.

If I were to go for US-domiciled ETF, how would the following look?

VGK - Vanguard FTSE Europe ETF - 0.12%
VOO - Vanguard S&P 500 ETF (US) - 0.05%
VGSH - Vanguard Short-Term Government Bond ETF - 0.1%

I'm no expert, but from a well diversified, tax efficient and low cost point of view it looks good. Best of luck to you

Sabre Man

Considering interest rates are very low at the moment but possibly on the rise (at least in the US), how would that affect bond ETFs?

newacc2015

ScissorPaperRock wrote: »

Thanks for the inputs guys. Thinking again now about UCITs.

If I were to go for US-domiciled ETF, how would the following look?

VGK - Vanguard FTSE Europe ETF - 0.12%
VOO - Vanguard S&P 500 ETF (US) - 0.05%
VGSH - Vanguard Short-Term Government Bond ETF - 0.1%

I personally wouldnt bother with the Government bond ones. The yield on US T-Bills is shocking. You would be better off with your money in a CU, if you take the currency risk into consideration.

I think the other 2 are a good choice. I would buy more of the S&P, than FTSE. As the S&P tends to have a better yield and is more diversified.

PaulKK

Just bumping this again.

I had a non custody account with degiro and opened a custody one now also and I plan to begin etf investment for a long term with regular contributions.

As far as I can see the only additional expense of the custody account is the small fee on dividends. This to me is a small price to pay for them not being able to loan out your shares!

I also noticed that degiro now allow one free etf trade per month to each exchange, and subsequent free trades if over 1k.

Seems a no brainer to use degiro for regular monthly etf topups now?

Oh and has anyone got an opinion on the VTI total stock market vs the VOO s&p etf?

Is there any point in spreading across the growth/value s&p 500 etfs?

StyleKillah

This is so interesting. If an American broker and an ETF like VOO performs much better and is more tax efficient, why are UCITS even offered?

topper_harley2

StyleKillah wrote: »

This is so interesting. If an American broker and an ETF like VOO performs much better and is more tax efficient, why are UCITS even offered?

Because not every country has Ireland stupid tax laws on UCIT funds.... so they're perfect for everyone else