Author Topic: Help with choosing a fund  (Read 212 times)

SteveE182

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Help with choosing a fund
« on: January 11, 2018, 03:55:22 PM »
Hi there

I just wanted to post on here to get some opinions/thoughts on investing. By way of background, I have recently just moved to New Zealand with my partner so we are just beginning our investment journey here. Unfortunately NZ does not have lots of options with regard to index investing. I've narrowed it down to two options though:

http://smartshares.co.nz/types-of-funds/smartlarge/total-world

This invests in the Vanguard total world find ETF with a management charge of 0.56%. The only thing that is causing me to hesitate is that there is no hedging between the NZD and the USD, so I am taking on some currency risk here.

The other option is this one:
http://www.ampcapital.co.nz/investing-with-us/index-funds

Investing in the all country ex tobacco global index. This is relatively new as a fund. It charges 0.38% but then also charges a buy or sell spread of 0.15% (cost essentially becoming 0.53%). For some reason it also only distributes 72% of dividend income (think this might be a tax thing but trying to find out more). The main selling point on this one is that it does employ a hedging strategy.

Could I get some thoughts and opinions on these options please? Neither are perfect (oh for 0.1% Or lower fees!) But we definitely need to do something...


DaveSch

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Re: Help with choosing a fund
« Reply #1 on: January 12, 2018, 01:19:41 PM »
Hello,
If you have a fairly long time horizon to be in those funds and you are adding little by little, and when it is time to sell, do it little by little, I don't think that the currency risk won't be great.

As an example, 1 euro was $1.18 in the beginning. It isn't far from that now. Over the years, I think the movement has been between about $0.90 and $1.40 or so. But if you are adding slowly and then later subtracting slowly, it will work out.

The cost of a currency hedge might be more then you would benefit, assuming you are a long term investor.

Dave

Rob_bob

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Re: Help with choosing a fund
« Reply #2 on: January 12, 2018, 07:16:12 PM »
If you are dollar cost averaging over a long time then the currency risk is probably small.

Do you have to choose over the other, can you not invest in both?

SteveE182

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Re: Help with choosing a fund
« Reply #3 on: January 12, 2018, 09:17:05 PM »
Thanks for your thoughts both. Definitely a long term investor - this is going to be my investments to get me to FIRE.

I could definitely invest in both - and we how it pans out in a given year, including currency changes and the currency hedged option. Would probably be a good experiment.

But good point about dollar cost averaging - should even out in the long run.