We are all aware that the easiest way to build a global equity (passive) portfolio is to use Vanguard All world All Cap ETF (VT). However, US domiciled ETFs come with a nuance of US estate tax jurisdiction. Even though Swiss residents can get away from being subjected to US estate tax given the US-CH treaty & paperwork, this thought itself might be unsettling for some.
So what is the alternate?
Following table shows different options to achieve the global exposure using Ireland domiciled UCITS ETFs. SPYI/ IMID from State Street is direct competition of VT because it covers all markets all caps. But in the table below, we can see different ETFs which can be used individually or in combination to achieve varying degree of exposure to World equities.
For example, if investor only seeks exposure to global markets but is happy with Large and Mid caps, then perhaps an option would be to choose Amundi WEBG or SPDR SPYY.
Table below shows few examples in each category. There could be even more ETFs tracking these indices. There is no intention for this list to be complete or to be considered as recommendation for specific ETF. The intention is to provide a representation to show what is possible with UCITS ETFs. Investors should select an ETF based on their preferences and own research. For example MSCI World index is tracked by SWRD, SWDA, XDWD, HMWO etc. Link for more examples
| ETF | Type | Index | TER | Large/mid caps (DM) | Small Caps (DM) | Large/mid caps (EM) | Small Caps (EM) | |
|---|---|---|---|---|---|---|---|---|
| IMID/SPYI | Acc | MSCI ACWI IMI | 0.17% | X | X | X | X | |
| VWRL | Dist | FTSE ALL WORLD | 0.22% | X | X | |||
| VWCE | Acc | FTSE ALL WORLD | 0.22% | X | X | |||
| FWRA | Acc | FTSE ALL WORLD | 0.15% | X | X | |||
| SSAC | Acc | MSCI ACWI | 0.20% | X | X | |||
| ACWI or SPYY | Acc | MSCI ACWI | 0.12% | X | X | |||
| WEBG | Dist | Solactive GBS Global Markets | 0.07% | X | X | |||
| WEBN | Acc | Solactive GBS Global Markets | 0.07% | X | X | |||
| VEVE | Dist | FTSE DEV WORLD | 0.12% | X | ||||
| VFEM | Dist | FTSE EM | 0.22% | X | ||||
| SWRD | Acc | MSCI World | 0.12% | X | ||||
| IUSN/WSML | Acc | MSCI World Small Cap | 0.35% | X | ||||
| EIMU | Dist | MSCI EM IMI | 0.18% | X | X | |||
| EIMI | Acc | MSCI EM IMI | 0.18% | X | X | |||
| IEMS | Dist | MSCI EM Small Cap | 0.74% | X | ||||
| HESC | Acc | MSCI EM Small Cap ESG | 0.35% | X |
||||||||
|DM = developed markets|||||||
|EM = Emerging markets|||||||
|FTSE All world -: represents 90% of total market|||||||
|MSCI ACWI -: represents 85% of total market|||||||
|MSCI ACWI IMI -: represents 99% of total market|||||||
|Solactive GBS Global -: represents 85% of total market|||||
P.S -: Ireland domicile ETFs have lower tax efficiency versus US domicile ETFs for Swiss investors due to unrecoverable dividend WHT Tax for US stocks. For explanation, let us assume an investor invests 6000 USD in an ETF which have 100% exposure to US stocks (example ticker VUSA). Let us assume this 6000 USD ETF yields 100 USD dividend. Only 85 USD (post 15% Withholding tax) will be credited to investor. Some insights are available in the article here. In big scheme of things, it is not such a huge impact for a world stock portfolio. However it is something to be aware of.
Some examples for Pre-tax returns (dividend reinvested) based on Portfolio visualizer & justetf. Selected some of the largest ETFs in Europe
| SSAC | VWCE | VT | |
|---|---|---|---|
| 1 Jan 2015 - 31 Aug 2024 | 136% | 138% | 141% |
| 1 Jan 2016 - 31 Aug 2024 | 142% | 143% | 146% |
| 1 Jan 2017- 31 Aug 2024 | 126% | 125% | 127% |
| 1 Jan 2018- 31 Aug 2024 | 82.2% | 81.8% | 82.0% |
| 1 Jan 2019 - 31 aug 2024 | 101.4% | 101.1% | 102.0% |
| TER | 0.20% | 0.22% | 0.07% |