Low TER Accumulating ETF on Degiro

I am looking for low TER accumulating ETF’s available on Degiro following either US, European or World Stocks. It’s a plus if they are on Degiro’s free list.)

Any recommendations?

Also I have CHF so advice is welcome for whether I should buy on the Swiss exchange in CHF or convert and buy somewhere else.


French resident, so as far as I understand I should be using accumulating ETF’s for tax purposes.

I also try only to invest in accumulating ETF’s on degiro because with a custody account, they charge something in case of dividend payments.
I invest in VWCE (free), V3AA (ESG) and IWMO
I also have some SPICH for the local part in CHF, unfortunately I did not found a good one for the swiss market with accumulating dividends.

MSCI world:

  • Invesco MSCI World UCITS ETF (MXWO)

It is a swap based etf and it seems to track the gross index. Because of that, there are less losses due to non-reclaimable withholding taxes.

Good options for small cap exposure would be:

  • SPDR MSCI Europe Small Cap Value Weighted UCITS ETF (ZPRX)
  • SPDR MSCI USA Small Cap Value Weighted UCITS ETF (ZPRV)

Note that these are small cap value fund and avoid small cap growth stocks. This tends to increase the performance over long time periods. However they are not accumulating.

Emerging Markets:

  • Xtrackers MSCI Emerging Markets UCITS ETF (XMME)

Thanks @San_Francisco seems to be an equally good option and is on the free list.

Here is an example rebalancing sheet that would also take care of currencies:

Why not IE00BTJRMP35?

0.18% TER, accumulating - and it seems to be on their “free ETF” list?

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So if you had CHF (don’t know whether you do) would you buy on the Swiss exchange in CHF or convert and buy from the free list (which only has EUR)? Also where can I reliably find the TER? Googling for the code you gave I find for example 0.2% on MSCI Emerging Markets Index: 13 ETFs im Vergleich.


Actually I find the TER listed when I search but I guess I am just missing a similar entry once you have clicked on a specific TER.

You’d better look directly at Xtrackers website

So I went and checked that by comparing it to:

They are both accumulating and tracking the same index. Their TER is 19% (MXWO) and 20% (IWDA) as of now. I didn’t find historical TERs, although they would be relevant.

Data

I copied my data from ictax.admin.ch (Swiss government official data for filling your taxes). Everything is in CHF. The market value always refers to the XXXX-12-31. Taxed refers to what you need to declare as earnings.

MXWO
value
IWDA
value
MXWO
taxed
IWDA
taxed
2020 69.22 64.85 N/A 0.9819
2019 65.79 61.10 1.6610 1.1150
2018 51.78 48.49 1.2840 1.0370
2017 56.74 52.89 1.3470 0.8721
2016 48.06 45.09 0.7303 0.8332
2015 44.28 41.70 0.9887 0.7174
2014 44.23 41.44 0.7521 0.4115
2013 37.62 34.89 0.7021 0.5662
2012 30.49 28.34 0.5716 0.4419
2011 27.28 25.21 0.4824 0.2920

I also noticed that there are minor differences to other data sources like justetf.com. But they seem to stay below 1%. Maybe this is simply caused by spread?

Calculations

I compared their performance:

MXWO
performance
IWDA
performance
MXWO
/ IWDA
2020 5.21% 6.14% -0.87%
2019 27.06% 26.01% 0.83%
2018 -8.74% -8.32% -0.46%
2017 18.06% 17.30% 0.65%
2016 8.54% 8.13% 0.38%
2015 0.11% 0.63% -0.51%
2014 17.57% 18.77% -1.01%
2013 23.38% 23.11% 0.22%
2012 11.77% 12.43% -0.59%
geometric
mean
10.90% 11.07% -0.15%

We see that IWDA has stronger performance than MXWO. We could even disregard for example 2014 and still arrive at -0.05%.

There was another interesting finding:

MXWO
taxed/value
IWDA
taxed/value
2020 N/A 1.51%
2019 2.52% 1.82%
2018 2.48% 2.14%
2017 2.37% 1.65%
2016 1.52% 1.85%
2015 2.23% 1.72%
2014 1.70% 0.99%
2013 1.87% 1.62%
2012 1.87% 1.56%
2011 1.77% 1.16%
geometric
mean
2.07% 1.67%

If we assume earning taxes of 25%, the Swiss taxman is getting another 0.1% on top of your already worse performance.

Conclusion

This seems to be bleeding money somewhere but I don’t know where…

Frankly, I wouldn’t worry about it too much. It doesn’t make much of a difference long-term.

Generally speaking, so without having done the math, the lower the amount you can invest, the more favourable to do it in EUR (if you have to convert). For higher investable amount, you’re probably better of with staying in CHF and just swallowing the trading costs.

Again, I wouldn’t worry about minuscule differences in TER.

If anything, compare “real” post-tax performance (though keep in mind that you have to do this over a couple of years).

Justetf probably uses the NAV while ICTAX uses the last transaction. Additionally, most physical MSCI world etfs use optimized sampling, so they don’t replicate the index perfectly.

This makes it extremely hard to compare the performance accurately between them.

Vanguard FTSE All-World UCITS ETF (USD) Accumulating:

The easy part is comparing the higher trading cost on SIX vs trading cost + currency conversion on Amsterdam (or one of the Euro markets). The thing that is harder to estimate is the difference due to spread/trading volume. People often advice to use the exchange with the higher trading volume since there is a smaller spread.

Also where do I see the domicile of the ETF (it should be the same whether bought on SIX or somewhere else right)?

So you find it worth the conversion loss to use your CHF to invest in USD? When you compare are you using the 0.1% rate or are you assuming huge conversions at the 10CHF +0.01 rate. It is better than finding a local ETF?

For for long-term investors, it will be negligibly small. If it were a big difference, professional traders would flock to this opportunity and quickly arbitrage it away. Also, it’s not like you’re ordering without price limits, are you?

I just looked it up for IE00BKM4GZ66 and IE00BTJRMP35 on Swiss Exchange, and the spreads were about 0.06% and 0.12%.

Even if you were able to save and invest 100’000 Swiss Francs each year, a 0.1% difference in purchase price due to higher spreads would amount to a 100 Francs. In a whole year.

Rather than worrying about that, you’d better spend your on coming up with five good arguments to ask your boss for a pay raise. Or or other career advancement or development of your personal business.

Then again, people often do spend more time on the purchase decision for their next microwave or telly - than on the 3a insurance product they’re about to sign up to.

Also volume is correlated with spread, but what actually matters is the presence of market makers (which you can usually tell by looking at the book/spread).

(and I suspect the ETF provider might have contracts with market makers / APs to ensure reasonable spread)

I am not an expert.
But i would say for buying an ETF, it is important to have a low TER. Because those costs are recurring.
In my opinion, the one time costs of 0.1% are nothing to think about. Because they are so small.

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You are probably right. Indeed a one time 0.06% difference as you are saying would not worry me that much. I’m more worried that as a starting investor I don’t recognize that the price I am buying at is somehow unfair by a much bigger percentage. I of course believe that the market is somewhat efficient but I also believe that occasionally some low hanging fruit is not immediately picked up because in practice there can be some barriers (First you have to spend time to recognize the opportunity, then there can currency conversion costs even if you do recognize the opportunity. Or there could be tax reasons why big money is not looking at your local market etc. I would in general trust US markets more to be efficient than a Swiss one.)

I am also influenced by the fact that many people on this site seem to prefer the US market despite the currency conversion cost. So apparently the advantages are worth it. (They might be using IB and lower currency conversion fees though.)

But here is what actually worries me. I would not know how to tell by looking at the book/spread. What would I look at?

How wide is the spread during trading hours would be a good indicator.

Right, I am that much of a beginner that I don’t know where to look nor what numbers would be reasonable. I understand that the spread is about the difference between the current buying and selling bids but that is about it.

How do I interpret the data for this EFT at two different stock exchanges for example? Where do I find the spread? It seems weird that one of the two is missing data on the bid and ask. Is it because the basic account only has that live data for your home stock exchange? Or will it get added once I add the stockexchange (as can be done for a small yearly fee I believe).

(Also to be sure I am investing at a time that the market is “efficient” should I invest when both European and US markets are open?)


This is actually not a bad idea. I am trying to buy between 16.00 and 17.00, half an hour after US exchanges have been opened and half an hour before European exchanges are closed. An a priori assumption is if they are both open, there are more arbitrage opportunities, so there is more liquidity. But I didn’t really checked it.

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