What’s the idea behind this?
Trying to stay under the $60k US estate-tax exemption? Then this is the right approach IMO.
Want to get away from US tax issues altogether? Then go for a UCITS version of VTI instead (e.g. an MSCI USA ETF).
Don’t care about the US tax stuff? Then why even target a UCITS version of VXUS?
Tax optimization I guess. US ETF optimal for the US and Irland ETF optimal for the rest.
Currently have just VT but thinking of doing the same but with VOO @ IBKR and AWEX @ Saxo. This to prevent exposure to SpaceX and Anthropic/OpenAI if they ever IPO.
What do you use for exUS?
In my canton, the amount reclaimed is deducted from the total tax owed, as I am not taxed on dividends minus withholding tax, but on the full dividend amount, regardless of whether I reclaim using the DA-1 form.
Not believing the small cap premium? I don’t know. Why are people actively excluding EM (choosing MSCI World over FTSE All-World)?
Used to be because of price but that’s not the case anymore, at least in terms of TER for uncomplex situations that don’t require mixing several funds.
It can be because they want to focus on more mature markets with better investor protections, which is my case with a bonus point that I want to avoid China completely (I’m trying to avoid superpowers altogether for trust reasons) though EM ex-China funds do exist so that wouldn’t be good enough a reason by itself alone.
Edit: for some reason that I can’t fathom, many (most?) people focus on recent returns alone instead of the fundamental underlyings that create those returns in the first place (with a huge variation - the market being like an excited dog on a leash and all that), in which case, recent underperformance might be the reason.
Another problem with EM markets is that they are often highly concentrated sector- and companywise.
Most of these countries have the majority of their economy outside the stock market through “GmbHs” or even informal companies, leaving only big conglomerates or financial institutions accessible through the stock market.
As why their performance is lackluster since 2010.
Taiwan and Korea count as Emerging Market 
I’ve redone independently the same calculations taking the last data from the reports of VT, VTI (the Vanguard US-based ETF for the US market) and VEU (the Vanguard US-based ETF for the ex-US market).
For a marginal tax rate of 25% and full recovery of the 15% WHT in the DA-1, I found tax-wise a 0.08% p.a. tax advantage for VT vs VALL. Exactly the same figure as tony calculated.
To the disadvantage of VT, I have to add that you have a Withholding Tax of 15% in the US from all the dividends during this year (let’s say on average mid year), but you get it credited back after you do the tax declaration the year afterwards. This is a money you cannot reinvest in the stock market during roughly 1 year or slightly more, depending on when you receive the DA-1 credit back from the cantonal tax office. With VT you have then an opportunity cost of 1.56% (last dividend yield figure in VT) *15% (WHT)* 7% (assumed stock market performance) * 1 year = 0.02% vs a UCITS-based ETF.
VT has a TER of 0.06% and VALL a TER of 0.07%. Also cnsidering this opportunity cost, the cost & tax advantage of VT is then of 0.07% vs VALL p.a. if you have full recovery of the DA-1.
The breakeven point between VT und VALL is when you just recover back 10% of the 15% WHT in the DA-1 (so when you recover 65% of the paid WHT): then the yearly taxes and costs are the same. I think this is when your mean tax rate calculated by the tax office is 10%.
If you recover 5% of the 15% with the DA-1, VALL has an advantage of 0.08% vs VT.
If you don’t recover anything with DA-1, VALL has an advantage of 0.15% vs VT.
I’ve redone the calculations for marginal tax rates between 15% and 35%, and these advantages just move by +/- 0.01% p.a
Note:
I’ve used a 10.0% L1WHT for the ex-US market for both VT and VALL.
From the VEU financial report, I’ve calculated the WHT and the dividend they had the last half-year, and I found a L1WHT of 10.0% for the ex-US market, exactly the same assumption that tony made. For the L1WHT of the ex-US based part of VALL I’ve assumed the same 10.0%. I think there is still no UCITS-based ETF covering the whole ex-US market (with the exception of the new Vanguard VXUS which just launched so doesn’t have yet any financial report), so I couldn’t easily calculate the real L1WHT for an IE-based ETF. Most of the countries have a similar L1WHT with IE as with the US, so I think the assumption that both ETFs have a similar L1WHT for the ex-US market should roughly hold.
This leaves you with a higher TER than VT or VALL (0.12%). Not sure if that higher tier compensates for the higher dividends.
Edit: I see that VTI has a TER of 0.03%. That makes 0.03%+0.12% TER vs. 0.06% for VT.
Thanks for the great calculation!
Both ETFs having the same TER of 0.07%
Are you sure? From vanguard’s website I read that VT has a TER of 0.06% and I see the same on IBKR. VALL shows 0.07%.
Great calculation anyway, I think I’ll probably keep my. VT, but get VALL from now on and for a while.
why do you prefer DIS over ACC?
For me id like to have a CHF Version at SIX and ACC. what are the chances for such an ETF getting launched soon?
Later, when I have 2M+ invested, I’lll likely use the cashflow to pay taxes and expenses.
My goal as well. Nevertheless, I started now with VALL and will swith into VALLD one day.
I personally like the option, if I want to reinvest it (manually) or use it for other ad-hoc payments.
Since in Switzerland there is no real advantage in using acc ETFs, other than auto investing the dividends - which I do 1x a month anyway, I’ll just buy VALLD this month and onward. With dividends you never run the risk of getting taxed on more than the received dividends.
Liquidity is not an issue either way, since market makers are a thing - with VWRD I always had to wait about 10’ or so per order, but then it did execute at a fair price.
I wonder why people stick to VT / VALL, when it’s been lagging the S&P 500 since the 2008 financial crisis. And the S&P 500 has been lagging the NASDAQ 100…
Exhibit A: performance of VEA (developed markets excluding USA) vs SPY vs QQQ.
I know, past performance does not predict future outcome, and as an indexer I should not be opinionated and just buy the WHOLE market. But the rest of the World seems to be such a hopeless laggard. The US is anyway the majority of the stock market, and more specifically, tech (QQQ) is “where it’s at”. Do you see any reason for optimism for Europe or other markets? It seems like all Europe can excel at is more regulation and scaring entrepreneurs away.
Thoughts?
And the Nasdaq 100 has been lagging company ABC.
US is just recency bias.
why invest in NASDAQ when you could have gone all in on NVDA?
Or why NVDA when you could have gone all in on bitcoin in 2008?
$1000 invested since 2009 would give you:
