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Vanguard US ETFs no longer available for EU residents

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  • 06-01-2020 5:17pm
    #1
    One More Toy
    Registered Users Posts: 3,764 ✭✭✭


    Due to them not providing a KID for each etf

    This is a major ball ache. The us ETFs are taxed at a more favourable rate.

    Where do I go from here?

    I could just buy the top ten holdings I suppose and hope for the best?

    Any advice appreciated!


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    #2
    Static M.e.
    Registered Users Posts: 3,087 ✭✭✭Static M.e.


    Buy the EU versions? Just google the name plus UCITS and you can quickly figure out which ones are the equivalent. I expect that your problem is going to taxes rather than finding the right Vanguard fund to buy. If you don't know already start looking up posts on here that mention the "Deemed Disposal" rule.

    This post should be interesting for you

    https://anirishinvestorsguide.wordpress.com/2018/10/21/investing-in-etfs-in-ireland/


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    #3
    RedRochey
    Registered Users Posts: 1,298 ✭✭✭RedRochey


    Could you not use Blackrock iShares ETFs instead?


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    #4
    antimatterx
    Registered Users Posts: 2,671 ✭✭✭antimatterx


    Static M.e. wrote: »
    Buy the EU versions? Just google the name plus UCITS and you can quickly figure out which ones are the equivalent. I expect that your problem is going to taxes rather than finding the right Vanguard fund to buy. If you don't know already start looking up posts on here that mention the "Deemed Disposal" rule.

    This post should be interesting for you

    https://anirishinvestorsguide.wordpress.com/2018/10/21/investing-in-etfs-in-ireland/

    What funds can we buy that avoid the deemed disposable rule?


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    #5
    RedRochey
    Registered Users Posts: 1,298 ✭✭✭RedRochey


    antimatterx wrote: »
    What funds can we buy that avoid the deemed disposable rule?

    Investment Trusts and non-EU ETFs I think


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    #6
    Shai
    Registered Users Posts: 226 ✭✭Shai


    1. Open account with Firstrade.com
    2. Buy US ETFs
    3. Profit :)


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    #7
    Static M.e.
    Registered Users Posts: 3,087 ✭✭✭Static M.e.


    Shai wrote: »
    1. Open account with Firstrade.com
    2. Buy US ETFs
    3. Profit :)

    I believe that you can't open an account with Firstrade since October (ish) 2018. There was a thread about it on here at some point.

    Thread


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    #8
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,008 Mod ✭✭✭✭Jim2007


    Shai wrote: »
    1. Open account with Firstrade.com
    2. Buy US ETFs
    3. Profit :)

    And see it frozen when it is discovered that you've failed to comply with the relevant rules and then spend 10+ years trying to get the US authorities to unfreeze it....


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    #9
    Shai
    Registered Users Posts: 226 ✭✭Shai


    Jim2007 wrote: »
    And see it frozen when it is discovered that you've failed to comply with the relevant rules and then spend 10+ years trying to get the US authorities to unfreeze it....

    Not sure I follow. It's not illegal for EU investors to buy through US brokers. Unless you're alluding to some other rules?


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    #10
    One More Toy
    Registered Users Posts: 3,764 ✭✭✭One More Toy


    OK so I'm going to take the top 10 holdings of the fund and emulate it. My question now is what do I do about bonds for this new portfolio as I can't trade BND either?


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    #11
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,008 Mod ✭✭✭✭Jim2007


    One More Toy wrote: »
    OK so I'm going to take the top 10 holdings of the fund and emulate it. My question now is what do I do about bonds for this new portfolio as I can't trade BND either?

    By the time you are finished you’ll have racked up enough in expenses that you won’t need to worry about the taxes.

    Have you back tested your strategy? With the exception of the DJIA most indexes are weighted so simply holding the top 10 positions of an index is unlikely to enable you to replicate the performance of an index. Take any ETF with a good tracking record and you’ll find they are probably holding 70% or more of the underlying benchmark.


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    #12
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,008 Mod ✭✭✭✭Jim2007


    Shai wrote: »
    Not sure I follow. It's not illegal for EU investors to buy through US brokers. Unless you're alluding to some other rules?

    But it is illegal for a US broker to sell you such a fund, so unless you find a broker that does not have a European presence, somewhere in their red tape is an undertaking that you not do this. Generally speaking the US and the EU can’t enforce their laws out side the country but they are big enough to be able to inflict pain on international broker houses.


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    #13
    One More Toy
    Registered Users Posts: 3,764 ✭✭✭One More Toy


    Jim2007 wrote: »
    By the time you are finished you’ll have racked up enough in expenses that you won’t need to worry about the taxes.

    Have you back tested your strategy? With the exception of the DJIA most indexes are weighted so simply holding the top 10 positions of an index is unlikely to enable you to replicate the performance of an index. Take any ETF with a good tracking record and you’ll find they are probably holding 70% or more of the underlying benchmark.

    Back testing is irrelevant, past performance doesn't indicate future performance.

    Indeed you're right the etf i was using had all 500 of the s&p 500 companies

    I'm going to go ahead and buy the top ten holdings in proportion, leave them sit for 30 years and see how it goes. I'll get back to you on how I get on if we're all still here ;)


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    #14
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,008 Mod ✭✭✭✭Jim2007


    One More Toy wrote: »
    Back testing is irrelevant, past performance doesn't indicate future performance.

    And there speaks the voice on inexperience. It would have given you an indication if 10 poisons would actually work, it would have given you an indicating of how often you are likely to need to rebalance and churn.... but ah sure...

    Indeed you're right the etf i was using had all 500 of the s&p 500 companies
    One More Toy wrote: »
    I'm going to go ahead and buy the top ten holdings in proportion, leave them sit for 30 years and see how it goes. I'll get back to you on how I get on if we're all still here ;)

    No you won't for couple of reasons, I most likely will be dead by then and your holdings will have long left the orbit of the index you were tracking.


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    #15
    One More Toy
    Registered Users Posts: 3,764 ✭✭✭One More Toy


    Jim2007 wrote: »
    And there speaks the voice on inexperience. It would have given you an indication if 10 poisons would actually work, it would have given you an indicating of how often you are likely to need to rebalance and churn.... but ah sure...

    Indeed you're right the etf i was using had all 500 of the s&p 500 companies



    No you won't for couple of reasons, I most likely will be dead by then and your holdings will have long left the orbit of the index you were tracking.

    I'll drink to your good health :)


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    #16
    Shai
    Registered Users Posts: 226 ✭✭Shai


    One More Toy wrote: »
    I'll drink to your good health :)

    he's right you know - https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html. Companies drop out of the S&P500 all the time.


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    #17
    Shai
    Registered Users Posts: 226 ✭✭Shai


    Jim2007 wrote: »
    But it is illegal for a US broker to sell you such a fund, so unless you find a broker that does not have a European presence, somewhere in their red tape is an undertaking that you not do this. Generally speaking the US and the EU can’t enforce their laws out side the country but they are big enough to be able to inflict pain on international broker houses.

    ah, I see. Firstrade does not have a EU presence, so I should be good there. All their offices / branches are in New York.


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    #18
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,008 Mod ✭✭✭✭Jim2007


    Shai wrote: »
    he's right you know - https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html. Companies drop out of the S&P500 all the time.

    In a weighted index, the weighting can also change. If you could replicate the performance of an index by holding the top 10 holdings there would be no need for the ETF and if everyone held the top 10, the performance of the index would be invalid! But the OP seems to want to confirm what has already been proven - you can’t implement an index investing strategy by holding individual positions.


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