Dear all, a very noob question, how do I know the currency of the ETF i'm looking at in IBKR? Thanks a lot

Checking your investments too often can be a good way to end up out of pocket.

This wisdom, gained from behavioural finance experiments showing that too much information leads to “myopic loss aversion”, could lead investors to believe they should just “set it and forget it”. However, experts insist you should know what you own, and even if you want to retain the same exposure, you should check to see if there is now a cheaper way of doing so.

In the fast-evolving investment fund industry, this can often be the case. First, exchange traded funds usually offer much lower fees than their mutual fund counterparts, and this partly explains why they continue to grab market share. But even within the ETF market, price competition has been fierce, so it is worth checking whether a lower-fee version of the ETF you already own has been launched.

Then, after looking at fees, the decisions become increasingly complex, experts warn, and there are additional considerations if you are an overseas investor of a US equity fund.

First, you should consider the cost of moving to another fund with the same exposure.

There will be trading fees to consider. If your original investment has appreciated significantly in price, there could be a parallel significant capital gains tax to pay.

Investors should also think carefully and seek advice on choosing their desired fund.

“When investors are thinking about funds, they should think about several factors after they have worked out their desired exposure. These include currency, fees, trading spreads and tax considerations,” said Brett Pybus, head of iShares Emea investment and product strategy.

He points out that it can be a complex task to balance all of these costs and there is no one-size-fits-all advice to give an investor because it depends on their individual circumstances.

However, Pybus said that tax was something investors frequently overlooked.

“The behaviour we observed in the past is that people tended to look for the largest and most liquid product and tended to ignore tax complications, but clients we speak to today understand why we have developed different ETFs with the same exposure,” Pybus said.

For investors intent on gaining exposure to US equities, an important factor to look out for is withholding tax on dividends.

When a US company pays a dividend to a non-US citizen, a 30 per cent tax rate applies, although many overseas jurisdictions have a treaty that halves this to 15 per cent, Roger Wise, tax partner at law firm Willkie Farr & Gallagher, explained. The tax applies to distributions by US ETFs and mutual funds.

The dividend tax burden helps to explain why there are far more Ireland-domiciled Ucits ETFs — Ireland benefits from the tax treaty — than Luxembourg-domiciled Ucits ETFs, which have to pay the full amount.

“A US ETF or mutual fund is not necessarily tax-efficient for a non-US investor,” Wise said.

Nonetheless, investors who have genuinely taken the set-it-and-forget-it advice might still own the US-domiciled versions of US equity ETFs, which predate their overseas-domiciled counterparts. This ownership is another thing to think carefully about. While you could save by moving to an Ireland-domiciled Ucits ETF, for example, you would still face capital gains tax when you sell your original holding.

Also, while an investor might end up better off tax-wise by investing in a non-US-domiciled fund, they might lose out in terms of liquidity and fees.

A fund with higher liquidity might have narrower spreads, lowering the cost of trades, Wise pointed out. But it depends on how much you intend to trade — for most self-directed retail investors, who are trading in relatively smaller amounts, liquidity might be a relatively insignificant factor.

When balancing tax considerations, there are further complexities relating to your intermediary, for example if you have US equity exposure through a pension scheme or insurer.

Pension plans and other institutions such as sovereign wealth funds will rely on their own tax status and might be able to avoid paying US withholding tax, but not all institutions have this status.

“Not all institutions and countries are tax exempt. All pension funds might not have agreements and many private banks, for example, can certainly be liable to withholding tax,” said Keshava Shastry, global head of capital markets for DWS, an asset manager.

For investors based in the US and Europe, there are well-established locally listed ETFs that offer investors the ability to invest across the globe. For investors in some markets in Asia and Latin America, it might be that holding a Ucits ETF is tax-efficient for some exposures, such as US equities, away from their home markets.

“We always say investors should know what they own. And for ETF investors, that also means looking at the domicile of the ETF they hold,” Pybus said.

A Tale of Two Index Funds: Full Replication vs. Representative Sampling

http://wp.lancs.ac.uk/fofi2022/files/2022/...-Nick-Guest.pdf

Interesting paper, published in July this year.

TL;DR version - buy full replication ETFs XD
right? i just jumped to the conclusion and whys

Later this month, the US ETF industry turns 30 years old. The first US-listed ETF, the SPDR S&P 500 ETF (SPY), launched on January 22nd, 1993. The ETF that started it all never looked back and currently sits atop the ETF throne with $353 billion in assets. The next two largest ETFs also happen to track the S&P 500. The iShares Core S&P 500 ETF (IVV) holds $288 billion in assets and the Vanguard S&P 500 ETF (VOO) has $279 billion. My first prediction is that one of these ETFs (my money is on VOO) captures SPY’s ETF crown by the end of the year.

. . . My prediction is that money will continue flowing out of expensive, underperforming active mutual funds and find its way into the cheapest, core beta exposure out there. That means IVV and VOO, not SPY. I’ll feel even more confident in this prediction if markets have another tough year, where further drawdowns will unlock opportunities for investors with taxable accounts to switch out of suboptimal investment vehicles and move into ETFs. Vanguard, in particular, usually cleans-up in these environments.

SPY will always be the granddaddy of ETFs, but even a respected king has to pass the crown eventually.

Hi , is there somewhere a newbie can start learning or investing in what you mentioned S&P500 etf?

I will reply you here.
1. Open CIMB Sg account.
https://ringgitfreedom.com/banking/opening-...for-malaysians/
2. Open interactive broker account one you are able to login to CIMB SG account.
https://www.interactivebrokers.com/en/home.php
3. Enable trading permission for UK market
4. Open up Sunway money account
https://sunwaymoney.com/
5. Use Sunway money to transfer RM to SGD into your CIMB Sg bank account
6. Use FAST transfer to send money to IBKR SGD bank account using CIMB sg.
7. Convert into the currency you want Interactive broker
8. Buy Ireland based S&P500 ETF off London Stock Exchange.
Why Ireland etf and not US  based etf?
Go for Ireland based etf cause you save 15% on dividend tax vs 30% if you buy US based ETF directly.
If you want to go for options down the road, go with US based ETF namely SPY.
More info kindly read this post and the ringgit freedom blog.

Avoid lifebalance steps or recommendation for ETF. Not cost effective and lousy. Use the above steps. Anything you can ask here or ask in
Interactive broker thread
Or
https://t.me/sgIBKRcommunity

Unlike him who don't want you to talk about ETF investing, I am all ears if you want to ask about EFF investing

Is Sunway money better than Instarem?

I will reply you here.
1. Open CIMB Sg account.
https://ringgitfreedom.com/banking/opening-...for-malaysians/
2. Open interactive broker account one you are able to login to CIMB SG account.
https://www.interactivebrokers.com/en/home.php
3. Enable trading permission for UK market
4. Open up Sunway money account
https://sunwaymoney.com/
5. Use Sunway money to transfer RM to SGD into your CIMB Sg bank account
6. Use FAST transfer to send money to IBKR SGD bank account using CIMB sg.
7. Convert into the currency you want Interactive broker
8. Buy Ireland based S&P500 ETF off London Stock Exchange.
Why Ireland etf and not US  based etf?
Go for Ireland based etf cause you save 15% on dividend tax vs 30% if you buy US based ETF directly.
If you want to go for options down the road, go with US based ETF namely SPY.
More info kindly read this post and the ringgit freedom blog.

Avoid lifebalance steps or recommendation for ETF. Not cost effective and lousy. Use the above steps. Anything you can ask here or ask in
Interactive broker thread
Or
https://t.me/sgIBKRcommunity

Unlike him who don't want you to talk about ETF investing, I am all ears if you want to ask about EFF investing

Just wondering what his recommendation for ETFs?

You may read up on https://www.imoney.my/articles/invest-exchange-traded-funds/

https://www.bursamalaysia.com/trade/our_pro...ge_traded_funds

However, please keep investment topic out of this thread unless its fund related to the insurance companies

This.

I laughed when I read the reply. So much for being a independent financial advisor/planner.

And yes he reported me for pointing out what he posted. That guy damn fast kecik hati. Can't even take simple criticism.

I will reply you here.
1. Open CIMB Sg account.
https://ringgitfreedom.com/banking/opening-...for-malaysians/
2. Open interactive broker account one you are able to login to CIMB SG account.
https://www.interactivebrokers.com/en/home.php
3. Enable trading permission for UK market
4. Open up Sunway money account
https://sunwaymoney.com/
5. Use Sunway money to transfer RM to SGD into your CIMB Sg bank account
6. Use FAST transfer to send money to IBKR SGD bank account using CIMB sg.
7. Convert into the currency you want Interactive broker
8. Buy Ireland based S&P500 ETF off London Stock Exchange.
Why Ireland etf and not US  based etf?
Go for Ireland based etf cause you save 15% on dividend tax vs 30% if you buy US based ETF directly.
If you want to go for options down the road, go with US based ETF namely SPY.
More info kindly read this post and the ringgit freedom blog.

Avoid lifebalance steps or recommendation for ETF. Not cost effective and lousy. Use the above steps. Anything you can ask here or ask in
Interactive broker thread
Or
https://t.me/sgIBKRcommunity

Unlike him who don't want you to talk about ETF investing, I am all ears if you want to ask about EFF investing

Btw, he reported my post in the insurance part for pointing out that he's wrong and his steps are expensive and inefficient.

U are talking out of your ass too.

Thwre are some decent bursa etfs. I do invest in them. I also buy SG, HK and US etfs.

U are talking out of your ass too.

Thwre are some decent bursa etfs. I do invest in them. I also buy SG, HK and US etfs.

BlackRock has joined forces with the neobroker Bux to offer low-cost savings plans that use exchange traded funds in a push by the world’s largest asset manager to encourage more retail investors across Europe to adopt ETFs.

Investors will be able to build investment portfolios of up to 10 BlackRock iShares ETFs in a so-called savings plan that will cost a flat fee of just €1 per month on the Bux platform. Investors will be able to make portfolio trades that can adjust the allocations across all of the ETFs they hold for a €1 commission fee and the minimum required investment has been set at just €10 per month to appeal to younger savers.

The Bux ETF savings plan will be launched in eight countries — the Netherlands, Belgium, Germany, Italy, France, Spain, Austria and Ireland — on January 31.

The initiative shows how the cut-throat price war over ETF fees is spreading into other areas of financial services, such as savings plans and transaction costs for fund trading.

Thirty providers of ETF savings plans in Europe use BlackRock’s iShares with a growing number of banks and online brokers seeing a significant acceleration in ETF adoption by retail investors on digital investment platforms. About 3.1mn savings plans that use iShares ETFs have already been established and BlackRock is predicting that 10mn new investors across Europe will starting buying ETFs via digital investing channels over the next five years, creating a new pool of assets that could be worth €500bn by the end of 2026.

Yorick Naeff, chief executive of Bux, said that the new ETF savings plans would appeal to younger or less confident investors that might feel daunted by their lack of experience or knowledge of financial markets.

“By joining forces with BlackRock, we have created a good solution for clients that are overwhelmed by the choice of products and don’t know how and when to start investing,” said Naeff.

Christian Bimueller, BlackRock’s head of digital distribution in continental Europe, said that the new partnership with Bux would “create an efficient way for investors across Europe to reap the benefits of ETFs and invest in global markets in a simple, accessible and cost-efficient way”.

Germany, which already has about 5mn ETF savings plans, according to BlackRock, has emerged as one of the key battlegrounds for new investors’ money. DWS, the asset management arm of Deutsche Bank, and Vanguard, the world’s second largest asset manager, have also signed up distribution partners to entice interest from retail investors.

Trade Republic, the German online broker and another of BlackRock’s distribution partners, expanded into 11 new European countries in October, showing how the model of using ETF investment plans to appeal to retail investors is spreading rapidly across Europe.

Until now, investment flows and trading activity in Europe’s $1.4tn ETF industry have been almost entirely dominated by large institutional players, unlike the US which has attracted far higher levels of participation by retail investors.

But some top European regulators believe that encouraging more retail investors to use ETFs instead of actively managed mutual funds could lead to better returns for consumers.

Mairead McGuinness, the EU’s financial services chief, has expressed support for a ban on inducements that are paid to financial advisers by asset managers for recommending a product to a client. ETF providers do not pay these inducements, which are also known as retrocessions, to financial advisers. The absence of any financial incentive for an adviser to recommend an ETF to a client is widely seen as one of the key reasons for the relatively slow rate of adoption among European retail investors.

“Low-cost products like exchange traded funds are hardly ever recommended and this impacts the net returns that consumers can expect,” said McGuinness, at a meeting last week of the European parliament’s economic and monetary affairs committee.