I am looking to simulate, as best possible, the Vanguard FTSE Global All Cap Index Fund (VAFTGAG) (TER 0.23%) with existing accumulating ETFs on IE, with low TER.
Have come up with this:
SPDR S&P 500 UCITS ETF – SPXL-(TER 0.3%) - 65%
Vanguard FTSE Developed Europe UCITS ETF – VEUA (TER 0.10%) - 15% (this Europe ETF also includes UK).
Looks like the All-World not Global - missing small-caps, as implied.
Mixing FTSE and MSCI causes overlaps and gaps - eg. doubling up on Korea (MSCI EM and FTSE DM). Missing Canada. Overweight Australia.
Not criticisms - it is hard to exactly replicate an all-world/global with available regional ETFs,
Cheapest FTSE All World FWRG @ 0.15% - not sure 0.08% saving is worth the work. Or consider PRIW @ 0.05% plus EM if you don’t mind reinvesting dividends (note it is Lux though, so pays more US dividend tax, reducing returns).
Subsequent note: ACWI ETF now available, even cheaper than FWRG and with narrower spreads currently (Sep ‘24).
It is a worthy aim (cheapest global), but the risk is performance differentials due to gaps/overlaps/compromises erode the saving anyway. Personally, I pay the little extra for FWRG - to get good alignment with the Market.
Thanks for info on FTSE and MSCI overlap and gaps. This is harder than I thought, could be worthwhile dropping VDPG and staying with EMIM. Does not seem to be much choice on the small caps and the high fees!
I had looked at the FWRG, definitely worth considering.
@nedjohn - curious to see what you think about FWRG vs ACWI (by SPDR). Now SPDR have reduced the fee on ACWI to 0.12%, it seems like a much better option than Invesco FWRG.
Holdings are very similar (2362 for ACWI vs 2646 for FWRG), but ACWI has a lower TER of 0.12%, has much larger AUM (over £2bn for ACWI vs under £0.4BN for FWRG), and has lower trading spreads (indicative spreads of 0.07% for ACWI, vs 0.15% for FWRG).
Really seems like Investengine are missing a trick by not having SPDR ACWI as an option!
I personally to date have gone with 90% VHVG and 10% VFEG, which gives an average TER of 0.13%, and 4236 holdings.
I personally wouldn’t recommend PRIW. Even though it has a notional TER of 0.05%, it is luxembourg domiciled, which I believe means it pays 30% witholding tax on US Dividends. Assuming US is 60% of market cap, and dividends yield is 1.5%, this adds around 27bps to the return of this fund. Typical spreads are also high at around 17bps.
A cheap MSCI world like SWLD has a TER of 0.12%, but is Irish domiciled and so pays only 15% witholding tax, and has spreads of only 3bps.
I think tracking difference of this fund should be superior to PRIW.
You can avoid paying witholding tax by going for a swap-based US tracker like SPXP, though makes it difficult to add countries like Canada into the portfolio.
A valid point on PRIW hidden cost Bicharo (extra US dividend tax). It lags MSCI and beats FSTE DWs, but that’s probably down to portfolio differences.
The theory is logical though…my prior comment updated to align.