Sorry if I am sounding stupid, I just recently (beginning of this year) started investing, and only now figured out that US ETFs are available and tax efficient for Swiss residents.
So far I have mainly invested in iShares Core MSCI World UCITS ETF USD (Acc) and also looked at Vanguard FTSE All-World UCITS to reduce US exposure. So naturally I was looking to try and find similar ETFs on the US market.
First of all I found it very difficult to find out about US ETFs at all. I resorted to etfdb.com, but I can barely find any world ETFs. The only proper one is VT. Alternatively one could supplement a US ETF with one of the world EX US ETFs like IEFA, SPDW or VEU.
However when comparing performance (in USD) for the time frames from 2011 peak-today, 5 years ago-today, 1 year ago-today and 2011 peak-COVID low VT performs always significantly worse than either of the Irish domiciled ETFs. Like 40% less increase from 2011-COVID and about 20% less in the last 5 years.
As I understand VT is an all caps ETF, whereas the two Irish domiciled ones are Large cap only. So i tried playing around a bit to reduce the effect of the large cap.
First, I wanted to keep the same low US exposure and calculated 10% SPY+10% SPDW+80% VT.
This did improve the performance for all timepoints significantly (10% past 5 years for example), but still heavily underperformed compared to the Irish once.
I thought, well SPDW didnt really perform well, lets kick it out and see and again very slight improvement, which is not worth it for the higher US reliance, but pretty much same underperformance.
Yes, you pay lower taxes on dividends and you have lower TER, but you cannot have accumulating ETFs, which partially offsets the higher TER due to transaction costs and in the end It seems to me that VT is just worse. It doesnt perform as well in good times, and it isnt even more resilient to a global pandemic.
Did I just heavily misunderstand something, or are there actually much better world ETFs which I simply havent found so far?
Data was taken from the google chart for the US ETFs and from JustETFs in quote UST for the Irish once.
Ah, thanks. That does make a huge difference. Google only has the option to show the Irish ETFs in euros though, is there any other website that excludes dividends, where you can adjust the currency?
Best comparison you can have is VT vs IMID. They are true comparisons. IMID reduced the fee couple of years back , so perhaps the differences also reduced in performance gap in recent years
More the inverse. I was thinking: Can I get a US ETF that is tracking the same or a similar index as my current UCITS ETF. Which I couldnt find and all data I could find was pointing to VT performing worse.
Alright, I know now that this is false and I wasnt comparing equal data.
Thanks, that was really helpful and does show indeed that VT performs better.
I think we can do a theoretical calculation using ICTAX data for dividend taxes. But it might be best to calculate the gross totals first and then reduce the final value with tax paid during that time
This is very good advice (to consult Bogleheadâs section for non-US investors). But be aware that there is a strong bias there against investing in US-domiciled funds. The main reason for this bias is the US estate tax. Only a few countries have an estate treaty with the US, and Switzerland seems to have one. But you create problems for your inheritants to deal with the IRS.
In my view, it is worth at least considering US ETFs, as they are cheaper, more liquid, and generally of a better quality. You may get back DWH, thus saving some 20-30 bps per year. However, it is good to understand the consequences of using US-domiciled assets.
Durch das Lesen und die Teilnahme an diesem Forum bestÀtigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
