Am I wasting money pay such high fees for Tracker

dewsbury

Hi,

I have €100,00 invested in BOI SMart Fund tracker fund. It is a S&P tracker fund. (Doing nicely!)
I have this for about 7 years.

I think I pay over 1% per annum fees.

From what I can gather, I could invest with the company below and pay substantially lower fees for a virtually identical product. I could save perhaps €1,000 per annum on fees.

https://www.vanguard.co.uk/uk/portal/portal

(I believe that Irish citizens can invest with these guys).

Am I right in what I state above??

Xaniaj

I'm open to correction here but I don't think Irish citizens can invest directly in Vanguard funds

dewsbury

Thanks for response,

I actually spoke to Vanguard and they referred me to my "broker"... I don't really have one.

Let me rephrase the question.

ASSUME that I can invest in a Vanguard tracker, then am I buying the more or less the same product for a much cheaper fee?

robp

dewsbury wrote: »

Thanks for response,

I actually spoke to Vanguard and they referred me to my "broker"... I don't really have one.

Let me rephrase the question.

ASSUME that I can invest in a Vanguard tracker, then am I buying the more or less the same product for a much cheaper fee?

If the fund aims to track the S & P 500 only then yes but taxation might not be the same. It depends on a lot of factors.

Nody

If you pay 1% (looks like it's acvtually 1.5% or higher) for a index fund you're being taken for a ride; index funds are cheap as peanuts to run by comparison (i.e. Vanguard is usually below 0.1%) and can be 99% automated and yes Vanguard ETFs would be a much better choice. DeGiro offers ETFs without charge if memory serves but double check which once you can buy.

topper_harley2

dewsbury wrote: »

Thanks for response,

I actually spoke to Vanguard and they referred me to my "broker"... I don't really have one.

Let me rephrase the question.

ASSUME that I can invest in a Vanguard tracker, then am I buying the more or less the same product for a much cheaper fee?

Yes.
BUT you can't buy vanguard funds directly in Ireland.
Closest you can get are ETFs, which have low fees. Degiro broker fees are cheap and they offer these ETFs

Francie Barrett

That 1% fee you're paying is very expensive for what's essentially an index. If you want something that's low fee and readily trade-able, you should consider NYSE:SPY, annual fee is 0.08% and you can buy and sell it like an ordinary share. It's US domiciled, so no unfavourable tax treatment.

You will need to set up a brokerage account with someone like Deigro to invest though. For someone with €100k though, the effort is worth it.

phantom_lord

topper_harley2 wrote: »

Yes.
BUT you can't buy vanguard funds directly in Ireland.
Closest you can get are ETFs, which have low fees. Degiro broker fees are cheap and they offer these ETFs

You sure? I thought I'd read on threads here before that there were brokers than offered Vanguard.

Cute Hoor

List of commission free ETF's you can buy on DeGiro
https://www.degiro.ie/fees/commission-free-etfs.html

iainBB

No your not getting ripped of I will give it to for .5%. half the price what you pay.

Get out asap open an account with degiro and purchase an etf for your index fund matching. Try eftdb.com if you need to fund a index to follow.

I would be taking profiit at the min the S and P are right for a decline and pull back shortly.

topper_harley2

phantom_lord wrote: »

You sure? I thought I'd read on threads here before that there were brokers than offered Vanguard.

Brokers certainly offer Vanguard ETFs, not the same as US Vanguard funds. Let me know if you find any tangible evidence to the contrary, but AFAIK thats the state of play.

dewsbury

Thanks folks,

Degiro seems to be of interest.

Two questions:

1. Is Degiro as secure as my BOI Smart Funds?


2. I'm wondering if I could pursue BOI for compensation - for overcharging. I know the central bank is very much on the customers side now. ??

Nody

1) You buy an fund from a third party in both cases
2) No because they will claim it as actively managed which will allow them to charge more

Cathbadhian

I'm tracking the S&P - simplest to just go with Degiro, and buy monthly at a fixed date. You get one free transaction per ETF per month. There's a minor annual charge per Exchange you use, and a small FX charge for converting to USD. Something like SPY (SPDR S&P 500 ETF) actually tends to outperform the S&P even and their fee is tiny compared to any managed/passive fund.

Note: SPY is a US domiciled ETF - it's priced in US Dollars. Gains are taxed like normal shares (lower than Fund Tax), but you will have currency risk where if the Euro appreciates, your gains will be eroded. In exchange for lower fees, you will need to do a bit of legwork to watch your risks!

Of course, if you can be active (even just a weekly check), you'd be better off not blindly tracking the index. I'd suggest researching a simple buy/sell model based on what are called "simple moving averages". Sounds complex - but it's very very simple, and any free online graphing site can help. Yahoo Finance...Stockcharts... Here's one for S&P (not SPY ETF directly): stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p28010701152

Idea is to be disciplined and keep it simple - Buy when S&P is above the longer term average (red/green lines), sell when it falls below this. No hesitation - just sell. Return to buying thereafter when it gets above the shorter average (blue line). Idea is to basically skip the very worst declines to limit your losses, and get back in with your capital before prices get back to par. Will come in handy if 2008 repeats itself... And - remember to reinvest any dividends received less income tax. Degiro won't automatically reinvest. US ETFs are also barred from accumulating divs and must pay them out.

The signal based on that model is: buy. Index is above it's long term average. Will the S&P decline in September? Maybe. I don't know. You know who does? Nobody. Don't even bother guessing. Active managers like guessing. 90-95% of those under-perform the index they claim to track because their guesses are wrong and they charge high fees which eat any remaining outperformance.

Don't forget your currency risk if you touch US ETFs. I love them for CGT reasons (Irish/EU options are taxed differently), but if the Euro ever appreciates in future years...

Cathbadhian

Nody wrote: »

1) You buy an fund from a third party in both cases
2) No because they will claim it as actively managed which will allow them to charge more

Degiro state that client funds are ringfenced, so should be secure in the event they go bust.

phantom_lord

What's your basis for that investing model?


People over estimate currency risk here imo.

Firstly having everything in euro is a currency risk, investing in foreign currency actually reduces this. Secondly the S&P is inversely collaborated with the strength of the dollar. And also so much of the income of the companies is from foreign sources that you're a lot less exposed to the value of eurodollar than you think.

I've 90% of my pension in US equities. I expect the historical outperformance by US equities vs other countries to continue. And I like having a hedge considering my income and everything else is tied to the Euro economy.

muck_master

Xaniaj wrote: »

I'm open to correction here but I don't think Irish citizens can invest directly in Vanguard funds

they can own the vanguard etf VOO ( which tracks the S+P ) through any broker , the cost is 0.05% per anum

muck_master

Nody wrote: »

If you pay 1% (looks like it's acvtually 1.5% or higher) for a index fund you're being taken for a ride; index funds are cheap as peanuts to run by comparison (i.e. Vanguard is usually below 0.1%) and can be 99% automated and yes Vanguard ETFs would be a much better choice. DeGiro offers ETFs without charge if memory serves but double check which once you can buy.

bank of ireland only re package the product , they themselves are paying 0.05% to vanguard , bank of ireland hardly has any funds which are entirely their own

Cathbadhian

phantom_lord wrote: »

What's your basis for that investing model?

It's a simple buy/sell trend model intended to eliminate personal guesswork and avoid crashes (by not following the herd into oblivion). Also it backtests almost perfectly back to the 1920s and outdoes the S&P nicely. If you google for Maber and sector rotation, it's also partnered with various momentum approaches to good effect. You can find the data, graphing and backtest results since it's fairly well documented since the mid 2000s.

In other words, if you're investing in an index but you're not actively trading every day or week, it's a simple easy to implement approach for index tracking. Something like Zignals or another "stock alert" service can give warning of crossovers on precise days even.

In an age where active managers WILL follow indices down to the absolute bottom, and where 90%+ of those can't even outperform the index as they claim in their objectives, passive simple approaches have value if you can put in some minimal legwork.

Of course, people are free to go simpler (and literally buy/hold an ETF for 30 years and never look at it until they're hitting 50 or later), or more complex and spread out into stocks, other models, maybe toss some spare cash into good bets (oh, to be in Gold stocks last December...).

phantom_lord wrote: »

People over estimate currency risk here imo.

Firstly having everything in euro is a currency risk, investing in foreign currency actually reduces this. Secondly the S&P is inversely collaborated with the strength of the dollar. And also so much of the income of the companies is from foreign sources that you're a lot less exposed to the value of eurodollar than you think.

Key word is "everything". Having a high exposure to USD can work for or against returns based on how it moves, and based on when you start, and your intended horizon. It's been a positive for years now - Euro has fallen, and the USD tends to rise at times of stress. Eventually, that may swing the other way and it will be time to hedge against the currency risk of all those dollars in your portfolio losing strength. (If nothing else, that means more dollars to plough back into your US investments if the hedge was warranted - in the right direction - and performs).

phantom_lord wrote: »

I've 90% of my pension in US equities. I expect the historical outperformance by US equities vs other countries to continue. And I like having a hedge considering my income and everything else is tied to the Euro economy.

I'm of the same opinion on US equities, even more so by squeezing out underperforming sectors. Of course, and I'm sure you know this, once you reach 55-60, your risk tolerance may quickly fade. Stock market crashes at retirement age, or sudden 20% swings because of FX changes, or central bank policies creating asset bubbles - they can have severe impacts on retirement. So currency risk has a reason to be overstated lest we become complacent seeing the USD appreciate year after year recently.

Now, personally, I'm thinking I'll end up not buying an annuity if something doesn't change, so it's also possible such late term risks don't matter quite as much to you .