European World ex-US ETFs

Investing / Portfolios
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The launch of this ETF is a really good news. It will allow more combinations and a reduction of the US withholding tax for the non-US stocks.

An exemple of combination to replicate the MSCI ACWI with a US based ETF:
VTI + EXUS + H410

An exemple of combination to replicate the MSCI ACWI without a US based ETF:
SPY5+ EXUS + H410
TER: 0.08

https://www.etfstream.com/articles/dws-launches-europe-s-first-world-ex-us-etf
https://etf.dws.com/en-gb/IE0006WW1TQ4-msci-world-ex-usa-ucits-etf-1c/

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For those looking to adress the us high valuations at msci world level with European ETFs: xtrackers recently launched a msci world ex usa etf. Looks like an interesting option, although AuM are still small.

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Wow this is big! Thanks for the heads up


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That is an excellent news at it has a potential to simplify many portfolios.

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You can also now implement straightforward slightly leveraged ucits portfolios, without taking on margin.

With the CL2 (Amundi 2x leveraged msci USA) when you would normally do 60/40 USA/ex-USA (or potentially less, as in discussion ongoing in this thread)

You could do something like 40% CL2 60% EXUS.

That‘s like 58/42 US/ex-US leveraged 1.4 x

Or do 30% CL2 40% EXUS and then add 30% in Bonds.

For 70/30 global stocks/bonds leveraged 1.3x

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2 new funds with the same index have been launched:

  • Amundi on the 3 september 2024:
    Amundi MSCI World Ex USA UCITS ETF Acc (IE00085PWS28) with a TER of 0.15%, accumulating

  • iShares on the 24 january 2025:
    iSharesMSCI World ex-USA UCITS ETF (IE000R4ZNTN3) with a TER of 0.15%, accumulating

The liquidity and AUM on these two funds are really small.

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And UBS MSCI World ex USA Index Fund UCITS ETF (LU2807512947) got listed at SIX just last week with a TER of 0.14%, accumulating. I can’t even find it on the UBS website yet, though.

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Is ireland a better domicile than the US in terms of withholding taxes for a swiss investor?

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For ex-US, I don’t think it’s worse. With low tax rate or many deductions (e.g. mortgage), it’s better since recovery through DA-1 only makes sense if effective stock income tax rate is above 15%.

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For ex-US stocks, Ireland is certainly a much better fund domicile than the US as it completely avoids US WHT. Switzerland loses 15% of the dividends if you invest in ex-US via a US-domiciled fund.

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Is somebody able to quantify this?

If ireland is indeed superior, VT and chill may not be the most optimal solution any longer.

I can give it a try to calculate using those rates : Withholding tax (WHT) rates

Can somebody confirm they are accurate or has a better source?

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Depends on the rates between source country and US.
Also you loose level 1 WHT from source country to the irish fund.

Question is, who has the better treaties. US or ireland or LUX

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There are certainly some treaty differences but they are fairly small, as far as I can tell e.g. from Nonresident alien investors and Ireland domiciled ETFs - Bogleheads (the numbers are fairly old, though).

The 15% of dividends that is permanently lost to the US is definitely a much larger amount than the treaty differences. You may be able to get a Swiss tax credit of at least part of the US WHT but I’d rather avoid donating 15% of my dividends to the US for no reason.

I would never invest in US-domiciled funds of ex-US stocks where there is a reasonable UCITS alternative.

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Did that many many years ago, you can check similar funds (same index) annual report see how much they declare in taxes.

When I checked for non-US stocks, the difference between IE and US domicile was negligible.

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Iirc ex-us developed has lower L1 WHT for EU stocks in Irish funds, but lower L1 WHT for Japanese stocks in US funds. This mostly cancels out once you account for weight and dividend yields.

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One could buy a JP ETF on Japanese indexes.

  • US treaty rate: 10%
  • IE treaty rate: 15%
  • Non-treaty withholding: ~15%
  • CH treaty rate: 10%

Option 1:

  • Buy Japanese Stocks with US ETF
  • -10% JP WHT → -15% US WHT → max +15% DA-1 Tax credit
  • Total: 10% to 23.5% leakage
  • Comment: 15% goes to the USA instead of your community

Option 2:

  • Buy Japanese Stocks with IE ETF
  • -15% JP WHT
  • Total: 15% leakage

Option 3:

  • Buy Japanese Stocks with JP ETF
  • -15% JP WHT → max +10% DA-1 Tax credit
  • Total: 5% to 15% leakage

Option 4:

  • Buy Japanese Stocks with JP ETF & make claims in JP for CH treaty rate
  • -10% JP WHT → max +10% DA-1 Tax credit
  • Total: 0% to 10% leakage
  • Comment: Zero support for claims at IBKR
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Yeah I looked at this, but splitting into Europe, Japan, Canada and Asia Pacific without Japan, was too much work and opportunity for tinkering for me.

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That’s quite interesting! Do you use the JP ETF option? Any specific broad market JP ETF you‘d recommend?

As you seem to know the topic very well, do you also know about Europe ETFs (not split further by country)? Is there a difference between LU and IE?

Thanks!

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This is off-topic, but:

I was interested, but it doesn’t work well with special things like factor investing (and I hope Finpension’s new suggestions are going to work, soonish). So, I’m not. But I tested buying, receiving dividends, selling on IBKR.

You can directly look at all the ETF traded on JPX’s website. Probably can’t go too wrong with iShares. TOPIX is a reasonable index (400 stocks, market-cap weighted, free-float corrected). Compare funds following that index on Tradingview.

There are also a lot of dividend funds (under “Japanese Equity (Theme)”), but that is not exactly a scientific factor.

I think, regarding treaties, it’s nearly the same. If you go to justetf.com and filter “MSCI Europe” with LU or IE domicile, the funds seem to perform about the same.

CH funds will win, since there is no CH WHT in the fund (and Switzerland has a massive 15% weight within MSCI Europe).

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Are there any Swiss funds that are not just Switzerland, but ex-US or Europe though?