Forgot to add: it is important to note of course, that both have been following different indices since 2011.
Folks
I was trying to find a better UCITS alternate to VT. VWRL is popular choice but VWRL does not include small caps.
So based on what I could find, here are the options
- VWRL (All world including EM, but excluding Small caps), TER 0.22%
- FWRA (alternate to VWRL), TER 0.15%
- VEVE + VFEM effective TER = 0.13 % (assuming 10% VFEM). Does not include Small cap.
- SSAC (Tracks MSCI ACWI - which is all world for Large and Mid Cap), TER 0.2%
- IMID, tracks MSCI ACWI IMI which includes Small cap. TER 0.17%. Offered by State street and available on SIX as well.
- WEBG (tracks SOLACTIVE GBS Global markets large & mid cap Index), TER 0.07%… very new
- Other options include combinations of small cap ETFs with world ETFs.
So, my conclusion is that if i seek ONE ETF for all world exposre, IMID has the biggest overlap with VT type ETF.
Does anyone hold IMID ? Any opinion about it? I do not really understand why this ETF is still small approx 1.4 Billion USD even though it was launched many years back.
P.S -:I am aware that VT is the best choice for Swiss residents because of domicile in US. However, I am trying to understand its best alternate from UCITS range.
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Maybe you want to consider V3AA / V3AL, which track the ESG Global All Cap index.
So they include small caps, albeit with an ESG filter.
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Thanks for recommendation. I forgot about it. However, i have to say it is more expensive and also I am not really fond of ESG filtering. It is a bit active in my view. But indeed a good option.
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It’s surely because it used to have a TER of 0.4% and only got reduced to 0.17% about a year ago.
I think it’s a great ETF.
According to this page, the fund size drastically increased last year.
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Another problem is that if you retire in a country that taxes capital gains, then you could pay taxes on the dividends of accumulating funds twice: once in Switzerland (which taxes income inside accumulating ETFs) and once in the other country (which will tax the entire capital gain, which includes the income already taxed).
Not sure if any double taxation agreements allow to subtract already taxed income from capital gains.
I also don’t know if capital gains are taken from the moment of change of fiscal residence, or from the purchase time even if it was in another country.
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These are good points. I thought about it as well and following is my opinion.
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Point from @Bojack is very clear. In the consumption phase (i.e once the person is retired), distributing ETFs are better as they don’t require sale of units. But I do not think that if a person sells their stocks to finance living expenses then they will end up paying capital gains tax (because of one of the points under “professional trader” guidelines. This wouldn’t make sense from CH taxation spirit perspective. Just because someone stops working, does not make them professional trader.
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Regarding your point, the double taxation due to change of domicile is also very valid. But this is very dependent on where you relocate. Various scenarios There are some jurisdictions where capital gains are taxed and others where it is not. My working assumption is it’s best to liquidate the portfolio before relocation. Basically what I am saying is that if I don’t have a plan to relocate, then the best thing I can do is to assume current tax laws to be valid.
Unknown to me -: Having said that, what you said is absolutely right and I do not really know how tax (already paid) is considered if domiciles are changed.
Thought -: One idea to avoid this double taxation scenario could be to refresh 10% your portfolio every 5 years (assuming 2% dividend per year). In this way you will rebase your cost basis.
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I also like distributing ETFs. In fact all of my current ETFs are distributing. But for time being, under UCITS, the accumulating ones have lower costs (TER) when comparing like to like. And also overall cost of ownership (dividend reinvestment costs).
For time being, it seems, simplest way of trying to replicate VT is possible with IMID. Once WEBG grows, I might consider WEBG + WSML combination for future investments.
P.S -: I have one more observation. Looking at top 10 world ETFs available on justETF (UCITS), 76% of AUM is associated with accumulating type funds. This most likely means even in Europe accumulating funds are more popular
| Ticker | Provider | Index | Type | Fund size (Million USD) | TER |
|---|---|---|---|---|---|
| SWDA | iShares | MSCI World | Acc | 70657 | 0.20% |
| VWRL | Vanguard | FTSE World | Dist | 13717 | 0.22% |
| SSAC | iShares | MSCI ACWI | Acc | 12506 | 0.20% |
| XDWD | Xtrackers | MSCI World | Acc | 11359 | 0.19% |
| VWCE | Vanguard | FTSE World | Acc | 10921 | 0.22% |
| HMWO | HSBC | MSCI World | Dist | 9147 | 0.15% |
| SUSW | iShares | MSCI World SRI | Acc | 7270 | 0.20% |
| IWRD | iShares | MSCI World | Dist | 6812 | 0.50% |
| LYWLD | Amundi | MSCI World | Dist | 6520 | 0.30% |
| SWRD | State Street | MSCI World | Acc | 5768 | 0.12% |
*does not include hedged versions for example UBS (ACWIJ) which is also accumulating
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In my view, you cannot do better on the UCITS side than investing in VEVE+VFEM. Other ETFs have lots of sampling, you’ll likely get track differences. The combined TER of VEVE+VFEM is very good for the UCITS.
I personally distaste ESG so much that pay some 0,3% more just to avoid it. I would not touch that Vanguard’s fund.