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US ETFs no longer purchasable in Europe

Corky1

Hi,
This week I had the following message from my uk broker

"New regulation being introduced on 1 January 2018 will affect dealing in some of your holdings.The new regulation requires that issuers of certain types of investments (known as ‘Packaged Retail Investment and Insurance Products’or ‘PRIIPs’) must publish a Key Information Document (or KID) if they are available to private investors.Without a KID, private investors will not be able to make any further purchases in that stock, although they can continue to hold the PRIIPs they already own. They can also sell at any stage."

This means all the dollar-denominated Vanguard non-UCITS ETFs will unavailable for purchase in Europe from 1st January 2018 because Vanguard are not providing KIDs for them.

I think nearly all the iShares non-UCITS ETFs likewise will be gone.

DeGiro told me they didn't know what ETFs they would be allowed to market and told me to check the website in January 2018

I haven't seen any specific announcements about this and I wondered what Boards.ie users knew about it, and in particular if they knew of any US ETF issuers who were going to provide KIDs ?

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cdlmarie

Dardania wrote: »

Yes. Works fine

I can't find mine actually.
It says I received them on the 27th of December but I have no idea where it is.
I know some mentioned the cash funds but I already had money in there and I~ can't find how to see its history.

cdlmarie

Should I feel the shares I have IN VTI?Or is there any chance that Vanguard will provide the documentation at some point?

AlmightyCushion

cdlmarie wrote: »

Should I feel the shares I have IN VTI?Or is there any chance that Vanguard will provide the documentation at some point?

You don't need to sell them if you don't want. Even if Vanguard never provide the documentation you can still continue to hold it and sell it whenever you want to.

cdlmarie

AlmightyCushion wrote: »

You don't need to sell them if you don't want. Even if Vanguard never provide the documentation you can still continue to hold it and sell it whenever you want to.

Yes, I could hold for ever and wait and see I the value increases...
I could use the money just about now so I'll see what I'll do.
thanks!

Cute Hoor

Mitchell Short Salesperson wrote: »

Yep VOO was about 3 weeks ago for me.

The VOO dividend was paid in 2017 (29th December) though, before new rules came into effect.

q85dw7osi4lebg

Cute Hoor wrote: »

The VOO dividend was paid in 2017 (29th December) though, before new rules came into effect.

I stand corrected !

TiGeR KiNgS

Is VOO still purchasable on Davy's ?

gavmcg92

TiGeR KiNgS wrote: »

Is VOO still purchasable on Davy's ?

Would doubt it.

TiGeR KiNgS

gavmcg92 wrote: »

Would doubt it.

Thanks.

If its not purchasable in any other stock brokers why is there a hissy fit in the posts above about pulling money out of DeGiro ? A

q85dw7osi4lebg

TiGeR KiNgS wrote: »

Thanks.

If its not purchasable in any other stock brokers why is there a hissy fit in the posts above about pulling money out of DeGiro ? A

Because it's possible to open an account with a US broker and purchase through there instead.

TheSheriff

This might be a silly Q - hoping a Degiro user can help.

If i am trying to sell some of these US EFTs that I have, how do I find them?

For instance, I have a position on US VEU, however, when I go to find it under EFTs in Degiro I can only find the UCITS version.

Am I missing something?

Any help appreciated !

Edit - Nothing to see here, figured this out!

q85dw7osi4lebg

It's approaching the buy time of the month for me. Not really set on opening an account with a US broker for various reasons, despite a few good suggestions from previous posts. Tempted to go UCITS route, feeling queezy.

kokiyou

Mitchell Short Salesperson wrote: »

It's approaching the buy time of the month for me. Not really set on opening an account with a US broker for various reasons, despite a few good suggestions from previous posts. Tempted to go UCITS route, feeling queezy.

What reasons if you don't mind? I was thinking of opening one, are there disadvantages (apart from fees) over DeGiro and other local brokers?

q85dw7osi4lebg

kokiyou wrote: »

What reasons if you don't mind? I was thinking of opening one, are there disadvantages (apart from fees) over DeGiro and other local brokers?

My main reason is usability based on online reviews. I'd also prefer to use only one broker, and would prefer to not be dealing more in USD than needs be. I've a nice portfolio built on DeGiro now and cannot envision myself enjoying the use of two separate brokers / trading systems. I'm trying to streamline my taxes as much as possible too.

UCITS is a nightmare but I'm thinking after currency fluctuations and FX charges that while I'd still be worse off, it may be worthwhile to save on hassle.

I probably sound mad in the head!

kokiyou

Thanks, same feelings. I guess UCITS might be ok if you are only investing in it once or twice a year.

Shai

kokiyou wrote: »

Thanks, same feelings. I guess UCITS might be ok if you are only investing in it once or twice a year.

Don't forget that loss offset for UCITS ETFs works differently than for US ETFs.

darrenmck10

Have you guys looked into UK investment trusts?
Management fees are higher than etfs, but nothing too crazy.
I think they are taxed like regular shares too.

Foreign and Colonial Investment Trust has a globally diversified portfolio of 500 stocks. FRCL is available on Degiro.
https://www.theaic.co.uk/companydata/251

Gear9992

darrenmck10 wrote: »

Have you guys looked into UK investment trusts?
Management fees are higher than etfs, but nothing too crazy.
I think they are taxed like regular shares too.

Foreign and Colonial Investment Trust has a globally diversified portfolio of 500 stocks. FRCL is available on Degiro.
https://www.theaic.co.uk/companydata/251

You may be onto something here, it seems like UK Investment Trusts are not UCITS funds and some of them have relatively low fees (some are around 0.5% per annum, so higher than US Vanguard or iShares ETFs). I found a website that screens Investment Funds by sector, fees etc here, so I'll have to do some research over the coming days.

The way I see it, there are 5 ways to deal with the current issues with US ETFs:

1. European-domiciled (UCITS) ETFs:
Pros: Accumulating ETFs, currency hedged ETFs
Cons: 8 year deemed disposal, Income tax instead of capital gains tax, no tax credits for gains, no offsetting gains and loss

2. Manually try to put together a portfolio of stocks that tracks the index you want, e.g. for the S&P500, buying something diverse like Bershire Hathaway (BRK.B) or BAM, or a number of blue cap stocks:
Pros: Low fees (higher if you have to manage a large number of stocks however), low tax
Cons: Difficult to manage, difficult to track an index manually

3. Create account with US broker:
Pros: Can purchase US ETFs again, same as before.
Cons: May be expensive/difficult converting Euros to Dollars and transferring the dollars to your broker account (and vice versa when you sell), and I imagine you have to jump through a few hoops to open a US account.

4. UK Investment Trusts:
Pros: similar to US ETFs in terms of tax, can purchase on Degiro
Cons: Higher fees (broker fees + fund fees), not as diverse as ETFs, not a whole lot of cheap investment trusts out there

5. Wait and pray that the US ETFs are restored soon.

I'm leaning towards the investment trusts at the moment, at least until some US ETF's are (hopefully) brought back.

darrenmck10

Great post Gear, I think that sums up the situation pretty well.

I was going to go with the US broker option, but having a euro trading account on Degiro makes accounting a lot easier.
Cons of holding dollars in your brokerage:https://www.askaboutmoney.com/threads/tax-on-us-dividends-and-currency.206708/

I'm hoping to find proper confirmation that UK investment trusts are taxed as CGT before I jump in.
Can't find anything solid from revenue about them.

q85dw7osi4lebg

Sold off my US ETF's yesterday and bought UCITS this morning. Surprisingly cheap move to make given DeGiro's fees. Going to start a spreadsheet and track them all from the offset to make life easier. Will probably sell all before 8 years is up in order to make a simple tax payment rather than working out the monthly deemed disposal tax come that time.

Shai

Mitchell Short Salesperson wrote: »

Sold off my US ETF's yesterday and bought UCITS this morning. Surprisingly cheap move to make given DeGiro's fees. Going to start a spreadsheet and track them all from the offset to make life easier. Will probably sell all before 8 years is up in order to make a simple tax payment rather than working out the monthly deemed disposal tax come that time.

can I ask why you want to buy UCITS instead of staying with your US ETFs?

q85dw7osi4lebg

Shai wrote: »

can I ask why you want to buy UCITS instead of staying with your US ETFs?

Just didn't fancy having different holdings of essentially the same product under the one account. Different tax situations for each etc.

JungleMartin

Has anyone looked into non-US non-UCITS ETFs and whether accumulating (non-distributing) ones are available?

Dardania

JungleMartin wrote: »

Has anyone looked into non-US non-UCITS ETFs and whether accumulating (non-distributing) ones are available?

Interesting one...no idea if they exist, or where.

wasabi

JungleMartin wrote: »

Has anyone looked into non-US non-UCITS ETFs and whether accumulating (non-distributing) ones are available?

Any non-EU ETF will have the same issue of the KID needing to be available in order to access them via any EU broker, that is not specific to US domiciled ETFs - those just happen to have been the easiest ones to deal with taxwise. And I think all EU domiciled ETFs have to be UCITS.

XWD for instance would be an example of a Canadian domiciled ETF (tracking the MSCI world index). Isn't available on DeGiro anymore.

mugoo

Cute Hoor wrote: »

If DeGiro really have stopped offering the US ETFs to their customers (I'd be surprised if they don't eventually facilitate it) then you can set up an account with one of the US brokers (Firstrade, IB or TDAmeritrade), very little difference in trading cost, just means your account will be in $ and will have to be funded in $.

Is it easy to set up with a U.S Broker? Like can I transfer money from my Irish bank account?
And also is there any tax dealings with Revenue that I need to do? I basically just want to invest in Vanguard EFTs, hold them for years and deal with the capital gains tax once I decide to sell. Any help greatly appreciated

JungleMartin

wasabi wrote: »

Any non-EU ETF will have the same issue of the KID needing to be available in order to access them via any EU broker, that is not specific to US domiciled ETFs - those just happen to have been the easiest ones to deal with taxwise. And I think all EU domiciled ETFs have to be UCITS.

XWD for instance would be an example of a Canadian domiciled ETF (tracking the MSCI world index). Isn't available on DeGiro anymore.

Yes, I would need to use another broker. I'm not with DeGiro anyway as I'm only just getting into this whole area.

q85dw7osi4lebg

4% discount on VUSA this morning.

TripleAce

I wish I read this thread yesterday! I opened an account di De Giro last week as I wanted to purchase some US ETFs and started a money trasfer over the weekend just to find out they no longer sell US ETFs

. No point in keeping the account, will have to transfer them back and open an account with a US Broker.

Stevie777

TripleAce wrote: »

I wish I read this thread yesterday! I opened an account di De Giro last week as I wanted to purchase some US ETFs and started a money trasfer over the weekend just to find out they no longer sell US ETFs . No point in keeping the account, will have to transfer them back and open an account with a US Broker.

Another issue to consider is that investing in US ETFs will create a significant liability to US Estates Tax.