Hello everyone,
Due to ethical concerns, I will switch my VT Investments to a world etf without USA.
I found VEU that seems to be adequate but I’m eager to hear your recommendations !
Thank you in advance for your help !
Cheers
My recommendation would be to check UCITS ETFs rather than US domiciled ETF like VEU
Reason being that by using US domiciled ETF, you expose yourself to US estate tax
For example -: EXUS + EIMI
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I second the recommendation of avoiding US-domiciled ETFs that don’t hold (m)any US stocks. Besides potential tax issues with US situs assets, the US will also collect 15% of all dividends for no good reason (as non-refundable US WHT).
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If you are truly set on this:
I’d suggest having a signifcant home bias with that as well (swiss etf like SLICHA) + EXUS + EMIMI (maybe another etf than EMIMI, because iShare/Blackrock is an US company so some money goes over the pond, I’ll edit my recommendation in later)
SLICHA https://www.justetf.com/ch/etf-profile.html?isin=CH0032912732
EXUS https://www.justetf.com/ch/etf-profile.html?isin=IE0006WW1TQ4
EMMUSC https://www.justetf.com/ch/etf-profile.html?isin=LU0950674175#uebersicht
Theoretically (very theoretically) your expected longterm returns should not be that much lower than with US stocks here.
I would still not recommend it, rather underweight it, if need be. But I can respect teh ethical decision, if you acknowledge that it’s not optimal.
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But this part can be claimed via DA1 in general. Right?
I think he was referring to ex-US stocks held in a US ETF.
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Could you specify the ethical concerns? Is this about domicile of the ETF or the companies included?
A world etf without US isn’t really a world etf, given it’s the biggest and most liquid market, including the highest valued companies.
But there are many options for, as example, Swiss, European or emerging markets
Let’s take example of VXUS ETF. It’s domiciled in USA
But 15% WHT deducted in US can be claimed back via DA 1 for VXUS.
You can credit it, not claim. And only if your average tax-rate is over 15% you get back everything.
Plus the US still collects that tax, no matter what.
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Yeah that is clear
I thought for a moment there is some other tax which I didn’t know and is lost
Practically speaking VTI, VXUS , VT have same tax treatment from DA 1 perspective
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Yes, there is no difference from the DA-1 perspective. But while for VTI it can overall be considered reasonable, for VXUS it’s a bad scheme, in my opinion. For VT it’s still semi-reasonable.
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Agreed
It was true for 42 years until whatever happened in 2011. let’s see what happens in next 20 years
I think EU debt crisis might have been the culprit here and then EU never really recovered.
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EU debt crisis… or FAANG?
I’ve substantially reduced my balance away from US stocks to Europe (and Asian) in the months leading up to Trump’s election and am fortunate that I did. With the prospect of a further weakening dollar, I doubt I’ll change that for the next 3-4 years.
It seems it’s a mix of both Mag7 & Euro crisis
Perfect cocktail 
Mean reversion in the years ahead is what I’m hoping for