Author Topic: Msci world index fund or ftse all world etf?  (Read 514 times)

PrinsKheldar

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Msci world index fund or ftse all world etf?
« on: May 06, 2020, 04:35:44 AM »
Hi,
 I have a dilemma.
Living outside the USA i can not buy Vanguard funds or regular ETFs but are limited to the Ireland ones.

I am currently trying to descide to go with the Vanguard FTSE all world ETF (wider index) or buy a MSCI world index fund (narrower index?).
The Vanguard ETF must be bought manually at a 0,15-0,25% comission and an additional currency exchange cost (about 0,25% also).

Most FIRE forums etc recommend to go with Vanguard for many various reasons and buying the Ireland based ETFs are my only option to do so.

But

My broker offers a MSCI world index fund with a ER at about 0,11%. This is not an ETF and therefore can be bought automatically each month.

The reason for my preference to go with Vanguard might be biased by all FIRE blogs and forums I’ve read. Please help me  convincing myself that going with the narrower (but cheaper and more convineance) index fund is the right choice.

Andy R

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Re: Msci world index fund or ftse all world etf?
« Reply #1 on: May 06, 2020, 05:42:59 AM »
Vanguard US was setup by a great man, Jack Bogle, who setup the US arm of Vanguard to distribute profits back to their customers (the people investing in their funds).

Vangaurd outside the US is not the same. Vanguard Canada, UK, Australia, etc are all for-profit organisations and the profits go back to the US arm of Vanguard.

Not only that, Jack Bogle himself pointed out that provided low tracking error, decent spreads and liquidity, index funds are a commodity like toilet paper and you should be choosing the lowest fee ones.

---

Why do you need to pay so much other fees? I'm outside the US and I use IB which has rock bottum trading costs and the currency exchange are absurdly low. You would then have access to all the usual ETFs such as
VWRA/VWRD 0.22 ER
or
SWRD + EIMI  for 0.14 ER

The only problem with IB is that while you have under100k USD with them, there is a 10 USD monthly inactivity fee but you also get up to that value of trades for free.

MustacheAndaHalf

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Re: Msci world index fund or ftse all world etf?
« Reply #2 on: May 06, 2020, 08:54:53 AM »
Interactive Brokers may be worth a look, as the earlier poster mentioned.  The $10/month "where's our commissions" fee is waived for the first 3 months, I believe.  They charge $0/trade for ETFs, but you wind up paying to buy stock (I think it's 250 shares for $1?  Something like that).

If you stick with your current broker, I'd go strictly on annual costs.  The "MSCI World Index" is a well known and respected index.  If the fees are lower in your country for a non-Vanguard fund, go for it.  Even in the U.S., iShares and Schwab ETFs often tie Vanguard on expense ratios.

PrinsKheldar

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Re: Msci world index fund or ftse all world etf?
« Reply #3 on: May 07, 2020, 05:37:41 AM »
Thnx for the replies!

Unfortunately the IB is not a easy-handled (if at all possible?!) option in my country.
I will use them later if any changes makes it possible though.

As for now i think the low-cost fund solution with the slightly narrower index will be my best option. It also leta me set it all up on autopilot. If it just had been a Vanguard fund, all had been great!
I can’t really let go of the feeling that I’m ”missing out” and that something will bite me later down the path (for not using the well ”approved” Vanguard funds or ETFs).

I guess (read: hopes)  that the next best ( avaliable) option is better than nothing..huh?

MustacheAndaHalf

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Re: Msci world index fund or ftse all world etf?
« Reply #4 on: May 07, 2020, 07:45:40 AM »
As for now i think the low-cost fund solution with the slightly narrower index will be my best option.
Vanguard Total World (VT) holds about 10% emerging markets with a 0.08% expense ratio.  Getting both emerging and developed markets ("all world") for a really low annual costs is great.  What are you seeing for annual costs for the "all world" versus "world" funds/ETFs?

Another option is to split the investments up.  For example:
Vanguard Total World (VT) charges 0.08% and is about 55% U.S. stocks / 45% rest of the world
Vanguard Total Stock (VTI) charges 0.03% and is 100% U.S. stocks
Vanguard Total International (VXUS) charges 0.08% and is 100% international stocks.

So roughly speaking, I can buy half VTI and half VXUS, and pay 0.055% per year... instead of buying VT and paying 0.08% per year on the whole thing.  You could further split international into developed markets (VEA) and emerging markets (VWO), if you have those funds where you live.  I don't mind the added complexity of 3 funds versus 1, so I might go with VTI / VEA / VWO ... splitting up U.S. , developed , and emerging markets.

But starting is more important than saving 0.10% in expense ratio.  You can always sell the investment later and switch to something more efficient.  But you can't go back in time and start investing earlier.

bthewalls

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Re: Msci world index fund or ftse all world etf?
« Reply #5 on: May 10, 2020, 04:49:02 PM »
If your thinking of buying etfs and your from Ireland be Careful...there’s a whole range of punishing taxes imposed on profits from etfs

Get uk/Northern Ireland address and open a tax free isa for investing