there are so many S&P500 ETF domiciled in Ireland.

Why TS chose that one specifically?

cheapest?

More concise answer - decision would be depending on:
i. How much one would periodically like to invest (CapTrader vs TradeStation Global decision)
ii. If one readily holds EUR/GBP/USD currency and can transfer over (EUR/GBP/USD denominated fund decision)
iii. If one believes S&P500 will continue to outperform others like Nikkei and Euro indexes (just throwing a curveball)

Wrong thread

This post has been edited by Drian: Nov 5 2019, 02:23 PM

say, for simplicity sake,
1. monthly USD 1k.

2. holds readily USD and EUR. For now, I avoid GBP. Really don't know what's gonna happen after Brexit.

3. I think I'll choose S&P500 and Euronext 100. Ratio 9:1.

Ramjade bro can guide u... In other tered ya... Later mod lock this topic we gg

Oops wrong thread.. will remove my post dunno why I thought this was an ETF thread.

1. monthly USD 1k.
TradeStation Global (https://www.tradestation-international.com/pricing/):
USD denominated: 0.12% or minimum USD1.91-1.95 (GBP1.5 equivalent) ~USD1,590 before 0.12% exceeds GBP1.5 equivalent
EUR denominated: 0.12% or minimum EUR1.71 ~EUR1425 before 0.12% exceeds EUR1.71

CapTrader (https://www.captrader.com/en/account/commissions/)
0.1% or EUR2 - 4 depending on exchange. No mention of USD denominated listed on London Stock Exchange

2. holds readily USD and EUR. For now, I avoid GBP. Really don't know what's gonna happen after Brexit.
Both can accept USD (Citibank NY) or EUR (Citibank Germany).

Doesn't matter if you have a USD S&P500 fund mixed with EUR S&P500 fund. Once you've paid for units of a fund you're holding the value the underlying companies instead of denomination currency.

If you're OCD enough you can spend USD2 (TradeStation) to convert and buy only 1 denomination fund. CapTrader conversion fee depends on which currency you're selling (https://www.captrader.com/en/account/commissions)

3. I think I'll choose S&P500 and Euronext 100. Ratio 9:1.
Won't comment on allocation, everyone has a preference/region specific bet.

You can go crazy with the ETF screener here:
https://www.justetf.com/en/find-etf.html?groupField=index

From there you can copy the ISIN code and look it up in https://www.investing.com and check out the cross listing on other exchanges + other info like denomination and volume

If it's domiciled in Ireland + physical replication + issued by iShares/Vanguard/SPDR it's safe enough. I have personal preference of accumulating funds

Euronext 100 should be all in EUR...

...and If super OCD... then need to consider hedging currency drop also... assuming wanna repat funds lah...

Thanks for the info!

Btw, have we established that 15% WHT for Irish domiciled S&P500 ETF is better than the US ETF for us non-US residents??



I am sadly quite OCD about the currency of the ETF.

See here.
https://forum.lowyat.net/index.php?showtopic=4856464&hl=

Don't need those calculations lah...

15% is better than 30%...

hehe....good ma.... appreciate his work also..

yes 15% terbest for malaysian. syukurlah donald trump only collect 15% and allow us to hoot intel facebook berkshire apple netflix mcd microsoft all combined in a simple sp500

Ya...he was very productive that few days...

But tbh I no clue his results... I only know what he's trying to do... I eventually downloaded all the fx, price and dividend data, and did an NPV assessment on real terms and money of the day... just didn't post it... lol

Lol wrong link. Should be this one:
ETF: Irish domiciled ETF vs US, WHT benefit vs expense ratio bid spread

The first link is studying the return of S&P 500 vs NASDAQ 100.

The other link is studying whether you have an advantage buying a fund that will give you 15% WHT (non-US domiciled, higher expense, huge spread) instead of buying the 30% WHT (US domiciled, lower expense, narrow spread) equivalent.

Anyways, it depends on who you listen to. My findings based on the sample shows that US domiciled ETF is still better. My conclusion tends to support Stashaway. This is why they rather buy the US domiciled ETF rather than elsewhere to save 15% WHT.

To be clear, the difference is is around 0.12% in the super long run. You are unlikely to lose out. What's more important is when you convert back.

Firstly, you need to clarify what you meant by currency here. Got 2 scenarios:

1) Buying S&P 500 in Euro vs USD - aka buying the same asset using 2 different currencies.

ETF currency does not matter because it is the NAV of the asset which matters.
However, it does matter if the ETF managers hold cash. Almost all hold a small % of cash depending on the currency.

Furthermore, you should be more concerned about the exchange rate when you decide to liquidate, not when you buy.
As you average down, the currency fluctuations will cause you to buy more units when it depreciates and buy less when it appreciates.
In the long run, you will return to the 'average' exchange rate and it only matters when you sell.

When you sell, the exchange will decide whether you earn more or less. This is very important because it will decide whether your compounded return is higher or lower.
Because of exchange rate, you may make a gain 3% gain in USD terms but a 2% loss in MYR terms.

E.g. 1 USD : 4 MYR, you convert RM1000 into $250 to invest. (Just once, no dollar cost average)
1 year later, your $250 grew by 6% p.a. for 2 years to $280.90 [250 x 1.06^2]

You decide to liquidate, MYR appreciated against USD. 1 USD : 3.5 MYR.
You get back RM983.15 [$280.90 x 3.5]. You made a loss.

Why loss? You put in RM1000 and get back RM983.15.
Your return p.a. is -0.84% [(983.15/1000)^(1/2)-1].

Usually by a few % so it's best to liquidate when MYR is weak not when it is strong. Technically, you should buy more S&P 500 when MYR is strong not weak.

If on the other hand, MYR depreciates when you liquidate and convert back:

Say, 1 USD : 4.5 MYR. Your investment after 2 years is still $280.90 remember? But when you convert back, you get RM1264.05 [$280.90 x 4.5]
Your return p.a. is 12.4% [(1264.05/1000)^(1/2)-1].

See now currency is more important when you liquidate?

2) Comparing investing in an EU ETF vs US ETF when they both give 6% return p.a.

Yes. This matters because the NAV of the fund is affected.
Imagine a US company with share price has a RM1,000,000 land in Malaysia at 1 USD : 4 MYR.
Then, MYR depreciate to 1 USD : 4.5 MYR.
The company records the asset value has fallen from $250,000 to $222,222.
This is called 'translation loss'. Each company that has operations overseas will include these in their balance sheet.

BUT, you should only be concerned if your ETF list of companies does not have operations in multiple locations.
ETFs like S&P 500 is safer because they do businesses in almost every country and is 'currency diversified'.

Imagine a buying a, EU company with land in multiple countries vs an EU company with land only in EU.
Same concept.

This post has been edited by Yggdrasil: Nov 5 2019, 08:53 PM

If you're talking about hedged class of a fund, in my opinion is I wouldn't bother - it's still a 50/50 gamble and you might end up hedging for lower returns in the end. Plus the currency forward contracts adds up to the total expense ratio. Unless you know something about that currency pair and really you should be trading currency futures instead of accumulating index funds.

You really shouldn't be. If you go to the airport and buy a box of chocolate and it costs GBP1 / USD1.3 / EUR1.15 it doesn't matter which currency you pay for it - in the end you end up with a box of chocolates, not GBP or USD or EUR.

What you might be worried about is the spread and volume of the particular denominated fund, theoretically market makers will swoop in and arbitrage premiums/discounts and this brings it back to fair price. I believe a fund that tracks the ever popular S&P 500 index by iShares/Vanguard/SPDR would have multiple active market makers

This post has been edited by roarus: Nov 5 2019, 08:53 PM

Ya talking about hedging currency...futures/cfd/options are some methods

It's relevant when you invest substantial sum overseas... say usdmyr 4.2 drop to 3.1... its big % and big $

Should always keep an eye on it

This post has been edited by dwRK: Nov 5 2019, 09:05 PM

Can help me understand this expense/spread thingy...

I know lower expense is good... lower bid/ask spread is good...

For an individual say diy buying one-time market (ask price) and selling market (bid price) 5-10 yrs later... why would spread become so important? Also at peak hours spread should be quite small

For myself I'll just keep it simple - rebase everything back to MYR (retirement currency) and rebalance twice a year

I'd say it's negligible for popular index funds. I've never had problem getting orders filled by bidding +1 cent for IWDA (typically has 3 cents wide spread)

This post has been edited by roarus: Nov 5 2019, 09:33 PM