Hi everybody, I was happy, I read lots of your posts and Marc’s book. I had a pretty clear vision of the ETFs I would like to buy to keep my portfolio very easy to understand and manage. So I take my old Degiro account and prepare to buy my 2 ETFs chosen after all these readings:
The Vanguard FTSE All-World UCITS ETF
the UBS SPI Mid (CHF).
First big surprise, the only UBS ETF Degiro proposed and based in Luxembourg or in Ireland (but not in CHF).
Concerning The Vanguard one, Degiro proposes some choices, with plenty of words I don’t understand (see below the list).
So I could randomly choose one of these ETFs or ask in this caring community to help me understand what all this stuff means.
In theory, this sounds good to me … sorry, couldn’t resist.
In practice, the same security can be traded at different exchanges in different currencies (and at the same exchange in different currencies). Your broker – Degiro – will decide what exchanges (and probably also what currencies) it offers to you for trading.
E.g. for your Vanguard ETF, you’re looking at the same ETF in different currencies (EUR, USD GBP) traded at different exchanges (XET: Xetra, Germany; TDG: Tradegate, also Germany, LSE: London Stock Exchange, GB; EAM: Euronext Amsterdam, NL; MIL: Milan Stock Exchange, Italy).*
In theory, it doesn’t matter at what exchange and in what currency you trade. In practice I would say it’s best to trade at the exchange that’s most liquid in the currency you want to trade in (or – if you’re currency agnostic like me – at the exchange that’s most liquid. Shouldn’t matter too much between EUR, USD and GBP IMO).**
For your SPI Mid Cap selection I’m not really sure I understand the screenshot correctly (it seems to offer MSCI Siwtzerland 20/30 and then a bunch of others including the S&P 500 ESG Accumulating). I can’t spot the SPI Mid Cap among those … maybe Degiro doesn’t offer it?
At any rate, if it’s offered (ISIN CH0130595124) I would definitely buy it only on SWX (SWX: SIX Swiss Exchange, Switzerland) in CHF.
* The ISIN IE00BK5BQT80 is the same for all these currency/exchange combinations as it denotes the same financial instrument.
There is a unique SEDOL for this ISIN for each of the different exchange/currency pairs it's traded at.
As a non-retail trader you would use the SEDOL to trade to make sure you trade the exchange/currency pair you're interested in.
As a retail investor you can typically only specify the ticker (VWCE, VWRA VWRP) and if there are multiple exchanges for the ticker, the broker will usually choose the exchange where you get execution.
** Reason: spreads are going to be tighter at liquid exchanges and in case of emergency selling (or buying) you’ll just have a liquid market and will get execution (faster).
Concerning the SPI Mid Cap (ISIN CH0130595124), I asked Degiro if they offered it (on SWX in CHF), as I couldn’t find it in any currency or exchange) on their platform, and I’m waiting for their reply.
I understand that it’s good to have one ETF that covers the whole world and is globally exposed (in $) like Vanguard,… a second that is locally exposed (SWX) and in local currency (CHF) like UBS SPI Mid for example. Am I wrong?
I found ACWI and FWRA (CHF) in Degiro, so I’m going to analyze these ETFs.
Can you explain why:
I would not recommend buying a non-CH-domiciled ETF on a Swiss index via Degiro
My account in Degiro is a CH entity but I have not subscribed to Access Six.
Last question I forgot: for a family portfolio (2 unmarried adults + 1 child) what is the best account configuration? (1 account for the adult, 1 for each adult, who take the kid account, etc.)?
Again, thank you to have read my questions and took time to answer .
Céline
I would try to keep it simple. I have a feeling that you have made your decisions based on information you read on this forum and others.But I am not sure if you actually have grasped all the nuances.
Do you know and understand fully why you want UBS SPI MID?
I think you are trying to build the following portfolio
one world ETF (SPDR ACWI, Invesco FWRA are good examples as they trade on SIX in CHF)
One Swiss ETF
However most likely you selected SPI MID because you might have also read somewhere that ETFs tracking SPI Index is very concentrated on three companies. Even though I cannot recommend one over another, it’s important to understand what is beneath these ETFs. So just wanted to be sure you are aware of the actual differences ?
Frankly, Céline, IMHO you are the only one who can answer this.*
If you have to ask the question, perhaps you have not yet built the conviction and experience for handling a portfolio full of risk assets?
To avoid analyis paralysis and to build up both experience and conviction I would recommend starting small (not lump sum invest everything) and then keep allocating regularly if your stomach can handle the volatility.
Stay in cash (or money market equivalents) for the portion you don’t invest yet, keep drawing from that as you invest further.
See if the two instruments you want to start with make sense for you as time passes.
This helps you build experience and hopefully through both positive and negative experiences also conviction.
As you are building up both experience and conviction you can go bigger in the chunks you allocate.** When you reach the point of allocating more when the market dips or even tanks, you’ve reached a good level and you can go all in when it tanks.***
* Please don’t take this in a dismissive way, I’m just stating how I interpret your post.
** But keep in mind one of my favorite sayings …
“Sizing is more important than entry level”
– Harley Bassman (aka The Convexity Maven)
*** I’m at level “go in bigger when it dips or tanks” and aspiring to reach level “go all in when it tanks”.
I’d personally stop thinking now and buy a bit of VWRL (in whichever form it seems reasonable VWRL vwce…). Then you can go on studying everything, but you will already have a bit of something to admire (or hate).
I did that and I still have that VTI that I bought at the beginning. I think the excitement to be “in the game” will help.
Later you can decide if you want to DCA or go all in.
You’re both right, I’m pretty sure I don’t have enough expertise in ETF (or other investment levers) and it’s hard to improve this knowledge just by reading blogs or books. I agree with you, now, only practicing can help me understand the ETF mechanisms. I want to avoid sitting inactive, letting months and years pass. The problem is, even if lots of people want to start slowly and carefully, even at this stage, there are lots of questions and choices! I just want to avoid the main pitfalls (like choosing the wrong currency or exchange market, opening a separating account instead of a “familial” one,…).
As mentioned earlier Degiro should offer most ETFs trading on SIX in CHF.
My recommendation would be to start with one World ETF portfolio and then slowly add another one if you feel like for home bias.
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