That’s true. Like, in the 10 days that I was pondering my costly switch to V3AA its price has gone from $4.92 to $5.26. If we’re talking about 100’000 shares, that’s a loss of $34’000, more than I’ll pay for any kinds of fees in my entire life. But it can go both ways. I don’t know if it’s actually correct to compare these two things.
I was just expressing the pros and cons that I see and waiting for any additional feedback from the crowd. If I do this and it’s a bad decision, I will needlessly spent 1’600 CHF.
Think about what’s important for you. How important are your pros, e.g. simplicity without dividend and ESG? Plus, put the CHF 1’600 into context regarding duration of your investment. How much will it be if you plan to invest for another 10 or 15 years, in terms of percentage.
On a side note: think about how long you have been thinking about switching to V3AA (internally, here in the forum asking questions etc). You are also kinda self-employed, so just calculate those hours vs. your rate.
As a last note: set yourself a due date / time. E.g. “I’m not going to spend more than 2 hours for this topic going forward”. Then you concentrate on the things which are really important, which is taking a decision. Your mind is trying to trick you into overthinking, when in reality you are just scared because of the total amount (which is small compared to the amount you invested)
@FIREstarter Good points. Of course we’re prone to overthink our decisions. I would just like to have a really lean financial setup, make all the planning and tough decisions now and then stick to it. But I made mistakes over the years, and reshuffled my portfolio again and again. First I went with Corner Trader and VUSA + VEUR, then I added IB and VT, then I closed CT and moved to PF, sold VUSA & VEUR and bought VWRL (simplicity was the motivation), finally I sold VT and bought TSLA. And each time the plan was to “stick with it for 20+ years”, but as I learned along the way, and as my preferences changed, I found the need to tweak.
@Patron I know I could do this, I just think I am too much of a perfectionist. It will bug me for years to come that I have 2 ETFs that do the same thing. I’m sick, I know . I can’t even stand that I have another World ETF in my 3rd pillar.
I’m with you on this ! I started with VWRL and then (I think 4 years ago) switched to VTI+VEA+VWO, but kept my VWRL shares to avoid losing some money in transactions… but it still bugs me every time I log into my IB account and see it !
But at the end of the day, the performance can be fairly similar to other relatively close products - there is no need to stick to that one in particular.
Below is a comparison with WDESGC.SW, hedged in Swiss francs, TER 0.18%.
Global EU-based ETFs are rather expensive, but it’s changing. Amundi Prime Global, LU2089238203 has a TER of 0.05%.
Until cheap ESG ones become available in Swiss francs, I stick to a portfolio of a few proven ETFs per region : Cheap, accumulating, listed in Zurich and in Swiss francs, like XSPX.SW, XESC.SW, XMME.SW
@leman
WDESGC.SW is hedged, so not good.
LU2089238203 is not traded on the SIX or in CHF.
XNZW.SW has a TER of 0.19, but is still very very small 18 million AUM. It’s quite frequent that new ETFs have low TER and the provider increases it after. I
My point was that a focus on small variations of TER or characteristics can be misleading. What matters most is the performance. Here, the hedged WDESGC performs as well as the non-hedged V3AA, and even slightly better.
Same if we take an equal-weight tilt, for example with a multi-factor strategy, compared to the classic capital-weighted approach, that is by nature less diversified and concentrated on a handful of stocks.
Long story short: A focus on TER and the Vanguard “brand” is not always the best way to get good returns.
Sure, so we should have bought Bitcoin in 2015. Oh sorry, it is too late.
You compare two different baskets of stocks during one year. This comparison is totally useless. At some point I was comparing Credit Suisse CSIF Index Fund shares of the same index with and without hedging (eg. World ex CH ZB and ZBH), for many years. Hedged classes always sucked. I can try to pull and update these data, or you can also pick up this idea and do a comparison yourself.
There are many ways to earn little interest with low risk. Most people here are not interested in this. There is a certain equilibrium in the financial system, efficient market or not. There are no miracles and no shortcuts.
What you are describing is just a complicated way to earn on cash deposits, and I am sure that after you calculate all costs, you are probably going to lose money.
Again, that is not the point I am trying to make.
The point I am trying to make is that a focus on TER and the Vanguard “brand” is not always a good idea.
I read here that V3AA @ 24 bps is a fair deal. I fail to see why.
The construction of a tracker does matter and influences its long-term performance. For example, XSPX is a synthetic ETF that tracks the S&P500 more reliably and with better returns compared to equivalent funds.
TER and Vanguard brand should not hide long-term underperformance.
On top of a misleading focus on the TER and the Vanguard brand in this forum, I often feel that there is an underestimation of financial engineering of tax optimization in accumulative synthetic funds; and as a consequence, an overestimation of the importance of tax.
I completely agree with you.
I am just saying that there are many parameters and that “just go for the cheapest distributing US Vanguard” might not be the best option for us
Those are not synthetic fund though (they tend to be in Luxembourg), right? I don’t think funds with physical replication can have much advantage compared to US funds, it’s basically the same structure.
Synthetic funds can potentially do a lot more, but it’s not always sustainable (tax authorities may revisit how they handle them and remove any potential tax advantages).
Edit: since it’s actually the exact same underlying fund, in your example the discrepancy is most likely due to a mismatch with the tax year vs. the fund reporting detailed data.
And also, just be aware that synthetic ETFs carry the additional credit risk vs the issuer(s) of the underlying swaps. Yes, they are likely to be collateralized, but when the shit hits the fan (which in this case would usually be a major systemic bank going down) it’s far from guaranteed that collateral covers the full exposure.
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. I can’t even stand that I have another World ETF in my 3rd pillar.
