Opinions on my IE based portfolios

Investing / Portfolios
1

Hi all,

This page is really on another level when it comes to investing wisdom and i want to thank you all for being able to learn from the best.

I’m about to start my saving journey and before i get going i want to be sure on my portfolio and setup. I’m looking at a 10-20 year period of savings, most likely 20 years. I will save about 45-50% of my salary monthly going onwards. The portfolio i choose will be entirely IE based and i want to keep it simple with 2-4 funds.
Now, i have two alternatives i’m looking into. Could you be so kind and have a look and let me know what you think?

Portfolio1
75% VWRL
25% EIMI or EIMU
Why?
VWRL gives me Global Large & Mid coverage incl. large coverage of the US market(55% of the etf), it also has coverage of Japan, UK and China. All of which i think will do well in the future decades.
EIMI or EIMU gives me coverage in Emerging markets which i also believe will do well in the coming decades.

Portfolio2
70% VWRL
20% EIMI or EIMU(have not decided which yet)
10% VEUR
Why?
Quite similar to portfolio1 but with a little less in VWRL and EIMI and with the addition of VEUR, and exUS ETF, which means that i’ll get more coverage over European countries.

In portfolio1 I lack larger parts of the rest of the european countries excluding the UK. But i’m not sure this is a con since i believe in my own humble opinion that Europe will experience some tough times during the coming decades. The lack of Small cap coverage is personally of a larger concern then having lower coverage of the european countries in Large/mid cap.

What do you think?

2

I don’t think there is much data supporting EM outperformance. EM are already included in VWRL so there is no need to add it to the portfolio.

The difference in cost between IE and US funds is quite big if you include non-recoverable withholding taxes. You should expect around 0.3%-0.4% less. That adds up quite a bit over the years.

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3

VWRL already covers EM. If you want to fine-tune your exposure to EM, why not pick SWDA instead?

What do you use as broker?

4

Depends on who is your broker, I’d go with either VWRL or a mix of IWDA+EMIM in 85:15% proportions. I don’t think it is optimal to overweight EM as a whole.

If you want to bet on certain assets, sectors, economies, make your bets more directed.

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5

Yes you’re right, thanks for the heads up. In that case, do you mean:
SWDA - 75%
Emerging markets on - 25%

That’s another question i need to figure out as well. It’s either IB or something else like Tradecorner, Degiro. I’m a small player at this game and i heard that IB is more suitable when you deal with large sums of money. But i have not even had time to see which broker i should choose. Maybe you have a good suggestion for this? I want it to be simple, have low fees and that the broker can work from both here in Switzerland and in any other EU country(i will most likely move in a couple of years)

6

So you could actually be satisfied going with only 1 fund: VWRL ?

Thanks for the suggestion of IWDA+EMIM btw, it could surely be a good mix, where i get decent EM exposure.
How is it important who is my broker in this case? I can’t understand that one. I have not chosen my broker yet. Do you have any good suggestion for a small player like me?

7

If you do not have a broker yet, then go with IB and invest in VT (US-Listed). The learning curve may be steep at first but it will help you reduce costs considerably.

If you were to insist on a Swiss broker, I would then recommend to go with 1 fund solution VWRL as you can buy it in CHF (no currency exchange fees) and minimize the number of transactions per year (expensive at any Swiss broker).

Third alternative is an EU-based broker such as Degiro which allows you to buy some ETFs for free once per month and charges 0.1% for currency conversion, so the fees are reasonable also to trade assets in currencies other than CHF. IWDA and EMIM are the most liquid ETFs of their kind in Europe (more liquid than VWRL, but not as liquid as US-listed Vanguard ETFs), which means you will save on spreads.

Still, best to go with IB.

I also do not preach the one fund solution as the one and only way to invest, but it’s best to start and deviate only if you know well what and why you are doing.

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8

I hear you about the US listed funds, but for personal reasons i will stay away from US based funds.
I’m not afraid of the high learning curve of using IB, but in terms of availability in both EU countries and Switzerland, which broker is the best? Since i will stay away from US based funds, is IB still worth it as a broker?

The IWDA+EMIM setup sounds more and more like a good solution instead of VWRL.
I will have to look into these funds in more details.
Yes i want to start simple and easy with a stable setup.

9

Yes IB will still be cheaper for transactions on European exchanges, although for accounts of <100k$ value they will charge you 10$ a month. These 10$ can be redeemed towards currency exchange fees and asset purchases. Worth it.

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10

Be sure that you understand the indices that you’re buying. 25% EM IMI might be a bit much, as @glina also said. Consider that 22% of the index is in the financial sector. That would mean that 5.5% of your total invested assets are in Asian banks.

Where do you want to carry out your transactions? SIX?

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11

So 120 dollars per year. Quite alot. You say that they can be redeemed towards currency exchange fees and asset purchases, is that just a gimmick or do you actually get alot back from a small fish like me who will buy 1 or 2 funds for about 3000 Swiss franc per month?
I will for sure be under the 100K dollar value for the next 2-3 years.

12

It’s not a lot and absolutely worth it. Currency exchange alone at Swiss brokers (typically 0.5%) would add up to 180 CHF with 36000 CHF/year invested. Add transaction fees, custody fees etc …

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13

Yes, i have been reevaluated this now after all the good discussions here. I’m leaning more towards either:
IWDA 85%
EMIM 15%
(after glina’s advice)

or

100% VWRL

But i will read up some more on each fund first.
I was thinking about SIX, but what is best in your opinion?

14

Always the most liquid exchange. That is usually not SIX.

For example, look at IWDA and EMIM on Xetra:

Absolute spread is 0.03% (may change throughout the day). The best you are going to get for VWRL on SIX is 0.1-0.2%.

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