One thing that has been bugging me since quite some time, is whether I should invest the bulk of my portfolio in VT or VWRL. I think the forum is split on the matter. Some users want absolutely the lowest cost possible, others don’t want anything to do with USA.
I would like us to debate one more on this issue. It’s an important decision to make and recent events in USA make it valid to discuss again:
- Biden announced a $2 trillion stimulus plan. This could be just the beginning. The money has to come from somewhere.
- A proposal has been made in California, that if you spend there at least 60 days in a year, you will be forced to pay a wealth tax for the following decade. This seems quite absurd to me, but only shows that the imagination of politicians has no limits when it comes to taxation.
To recap, the list of pros of US as domicile:
- reclaim the withholding tax on dividend (15%), in theory cutting cost by 0.2-0.3% per year
- higher trading volume => lower spreads
- lower stock exchange transaction costs
- higher AUM => more robust funds?
- lower TER => is it really directly comparable, though?
- no worries about US estate tax
- holding UCITS ETFs, not domiciled in the US
And to top it off, a poll, just to know what is your current preference.
- USA (e.g. VT, VTI, VOO, VXUS)
- Ireland (e.g. VWRL, VUSA, VEUR, VFEM)
- Other (write below why)