Mythbusters: VT vs VWRL

You should be able to compare NAV changes, unless I don’t understand something.

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@TeaCup +1 for challenging the established consensus. However, I think any comparison you make will be flawed by two factors already mentioned in this thread:

  • different closing times of the stock exchanges (so you can’t compare the closing price reliably)
  • the inclusion of small caps in VT and its absence in VWRL

When I was making my Excel comparison, I imported the entire closing price history, all dividends, and turned both ETFs into quasi-accumulating ones. Then, to negate the closing time difference, I calculated a rolling return over successive days, like this:

  • Dec 21 2015 - Dec 21 2020
  • Dec 22 2015 - Dec 22 2020
  • etc…

Then I plotted a chart and ideally, if both returns would fluctuate around the same value or slowly diverge from each other, it would be some visual proof.

To negate the apples to oranges problem, I decided to compare VOO vs VUSA (both track the exact same index, S&P 500).

I just remember, I was not satisfied with the end result. I was just unable to arrive at any conclusion.

But what I do know is that I’ve been getting 1’000 CHF payments from the tax office from filing the DA1 and it was not “complicated” at all to file this stuff. I would say there was zero extra effort. That is, when I used to hold VT. I since have sold it all and only hold TSLA when it comes to US-domiciled assets.

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Do you hold Vwrl now or did you decide to concentrate on Tesla instead of buying global indices?

I hold ca. 1m TSLA and ca. 300k VWRL. I’m considering either further investing in VWRL or switching to V3AA. I’m tempted to put more in TSLA, as I believe it is still grossly undervalued, but I want to maintain some diversification in case I’m wrong.

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Wow that is quite a bit of conviction. I admire Elon as well but I am already at the wealth conservation phase – but I totally get that concentration might be ok for your accumulation phase.

I wouldn’t go for the esg screened option given the shortage of oil etc. I am still with millions in vt.

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I know that is a long topic but we probably need atomic reactors, guns for defense, etc. This plus the inherent risk in relying on some filter makes me opt for the regular index.

Lastly on the vwrd vs vt debate. I actually love the fact how crazy deep and liquid vt is… and how cheap I can execute us transactions. This plus the lower ter are still good arguments besides the tax refund.

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Yes, the arbitrary filter of ESG is also something to keep in mind. You just hope there is no bias.

Regarding VT vs VWRL. Yes, the liquidity of US funds is fantastic. The stock exchange is cheap, the brokers are cheap. All three combined can save you hundreds of CHF per year. Still, I think it may prove smart to play safe and hold at least part of your portfolio in a fully Swiss option: EU-domiciled fund, traded on SIX, through a Swiss broker. Just for the black swan case.

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Sorry Bojack, but you have 1 million in a single stock (TSLA) and now are dealing out recommendation to play it safe by diversifying domicile and broker? Sorry I had to laugh :joy: don’t take it personally but it sounded weird as a recommendation from you, although it does make sense generally :wink:

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I don’t see what’s so funny. It’s about risk and reward between the two options.

US vs CH broker + exchange + fund:

  • pro: withholding tax savings, in the amount of ca. 0.3% of your portfolio annually
  • pro: transaction fee savings, in the amount of ca. 0.5% of the transaction volume
  • con: 0.1-1.0% risk over your lifetime that your funds are locked / hacked / seized and you’re dealing with a foreign jurisdiction (actually, who knows how high that risk is)

Investing big in TSLA vs not:

  • pro: I have strong belief that this company can go 10x in the next 10 years
  • con: if something bad happens to the company, I will lose a few years of my savings

So the first decision is between a certain small gain and a tiny chance of a huge loss, and the second one is between a high chance of huge win vs high chance of big loss.

If something bad happens to TSLA, you’ll lose the biggest part of your savings.

If only a smaller part of your savings is in a Vanguard All-World fund, why are you worrying about minuscule differences in costs for that smaller position anyway?

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Because why not . . .

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The important thing is that you get your priorities right.

Having around 30k already in EUR, would you buy VWRL in EUR or convert them in USD (considering that EURUSD is almost at the same level of 2015) and buy VT?

Or as third option keep that cash in EUR and convert CHF in USD (CHFUSD is pretty stable) and buy VT?

If you have a cheap broker like IBKR you lose like <100USD on the whole conversion (probably <50) so I would go with VT, since it has some advantages as Swiss investor. That said: If you want to go for VWRL, just go for it… Nothing wrong with that as well.

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Buy VT for sure, unless you want to diversify and invest your EUR in VWRL / VEVE (or ETF on Europe or emerging markets) with a European broker.

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Currency conversion fee on IBKR is 0.20%%. So if you convert 100’000 USD, you will pay 2 USD.

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Yeah, but the price fluctuates + you lose to bid and ask spreads… It’s not like you could sell the currency at exactly the same price -2 USD, but yeah… It’s incredibly cheap

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Btw. You mean 0.2 bps, so 2 USD for 100K USD
Which would be: 0.00002% - incredible! But IB is THE FX broker - even active traders

The sums on the image make me go crazy… Like you get some rebate after 1B+ USD lol

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Your first argument is not logical. Just think about it for a second: the exchange rate fluctuates also if you never exchange it. The fair price is always the current price. You can either win or lose on a trade over time, but at the point of making the trade, both amounts, bought & sold, are equally valuable.

Regarding the bid-ask spreads, you’re right. From experience with IB, the spread is something like 0.30 - 0.50 bps => $3-$5 on $100’000 exchange. So your total cost on exchanging $100’000 would be max $7 ($2 fee + $5 spread).

Conversely, with Swiss banks/brokers, if you’re lucky to get 1% spread, you’ll cough up $1’000 for the same transaction. Pretty absurd, ain’t it?

Well, no. I mean 0.20 basis points, and a basis point is a percent of a percent, hence %%. You put % and bps together, which is just too much :smiley: . A percent is 1/100 (%), a basis point is 1/10000 (%%), a part per million (ppm) is 1/1000000 (%%%). Put that in google calculator and you will see what it returns.

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