Vanguard Funds I Have Access To

SNS Bank offers nine different Vanguard funds. I don’t think there are more funds available for the Dutch private investor at this particular moment anyway.  The funds are:

Stocks

Vanguard U.S. Opportunities Fund – mostly U.S. stocks, active management – TER 0.95% – USD
I would never invest in this fund, it’s actively managed which goes against the whole idea of passive investing which I strongly believe in. Plus, it’s too expensive!

Vanguard Japan Stock – MSCI Japan Index, passive – TER 0.5% – USD
Why in the world would I want to put money in the Japan stock index?? Beats me! This one is off the list as well. 

Vanguard US 500 Stock Index – S&P 500, passive – TER 0.38% – USD
Lowest TER for stocks on offer and this fund is promoted by authors of books and articles plus PF bloggers, books whose opinions I take seriously. Also, I think this is the least bumpy ride when it comes to stocks. Correct me if I’m wrong. It’s also a bit more volatile for non-U.S. citizens because our euros are converted into dollars.  

Vanguard Global Stock Index – MSCI World Free Index, passive – TER 0.5% – EUR
You can’t go wrong spreading risk across the globe, now can you? TER is also acceptable. 

Vanguard European Stock Index – MSCI Europe Index, passive – TER 0.5% – EUR
I find this fund a bit tricky. To be honest I have no idea whether it’s a sensible option because I haven’t read about its performance during the past century and I don’t know whether that information is available. The husband felt like investing in this fund. 

Vanguard Emerging Markets Stock Index – MSCI Emerging Markets Index, passive – TER 0.65% – EUR
This fund will surely provide a rollercoaster ride! One year it’ll increase by 35% and the other year you’ll lose 50%. The husband thinks there are more growth possibilities here and he invests in this fund.

My opinion is that the best performing European and Emerging Markets stocks are already in the global fund anyway. Therefore, I decided not to throw money into a European fund and Emerging Market fund separately. 

Bonds

Vanguard Euro Investment Grade Bond Index – Capital Global Aggregate Euro Non—Government Float Adjusted Bond Index, passive – TER 0.4% – EUR
Don’t know enough about this fund to invest in it. 

Vanguard Euro Government Bond Index – Global Aggregate Euro Government Float Adjusted Bond Index, passive – TER 0.3% – EUR
I invest in this fund because it feels like a “safe” bet. TER is also great.

Vanguard U.S. Government Bond Index – Global Aggregate U.S. Government Float Adjusted Bond Index, passive – TER 0.3% – USD
I do not invest in this fund. Should I?

You can invest automatically from €100 per Vanguard fund on a monthly basis. If you’d like to dump more money into a fund in one go the minimum is €500.

My portfolio consists of 80% Vanguard Global Stock Index and 20% Vanguard Euro Government Bond Index. At the end of this month I’ll start adding Vanguard U.S. 500 Stock Index starting with €100 a month so the percentage in my portfolio will slowly increase.

My husband’s portfolio consists of 34% Vanguard Global Stock Index, 33% Vanguard European Stock Index and 33% Emerging Markets Stock Index.

Any thoughts on our portfolio?

Which fund should we invest in if we’d like to invest a couple of thousand euros in one go?

Love,

Mrs EconoWiser

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31 thoughts on “Vanguard Funds I Have Access To

      1. spaarolifantje

        If that’s your reasoning, then why are you going to invest in the US fund, which is ALSO spread over a lot less different companies (namely maximum 500, since it’s the S&P 500), just like the European one?

      2. econowiser Post author

        Because that one has consistently turned out to be a good investment in the past if one doesn’t get scared and sells during crises. I don’t know anything about the European version.

      3. econowiser Post author

        Oh, and because jlcollinsnh recommends to just drop everything in VTSAX while you’re in your wealth building stage. We can’t buy that one here. VTSAX consists of 80% S&P 500 and 20% other American stocks.

  1. marcel

    I would not add the S&P fund. The U.S market is already about 50% of the Global fund. If you want more diversification, add Emerging. I have the same funds available with the Rabo, and my current allocation is 50% Global, 20% Emerging, and 30% European bonds. Probably 60% Global and 10% Emerging is more appropriate, but I expect Emerging to perform better in the next decade, especially their currencies because way less debt there. My little gamble didn’t work out too well the last year though, but with current low valuations it may be a good moment to buy

    Reply
    1. econowiser Post author

      The husband also pouts about the emerging market performance every month we look at our portfolio. But he believes in the same thing as you…he expects better returns there.

      Reply
  2. Zakelijk Bezuiniger

    Aren’t you too much focused on what an American based blogger such as jllcollinsh thinks? He is based in the US and knows a lot about the American market, therefore he suggests to invest in purely American markets which is the the VTSAX. I am not saying it is bad advice, but saying that you invest in a market just because one blogger says it is a good investment is a bit silly don’t you think?

    Now you are only investing in the US market, and that’s it. That is hardly a diversified portfolio if you tell me. If you are American, investing purely in American bases stocks apparently is a diversified portfolio. But it hardly is when you are neglecting Europe, Asia and other emerging countries.

    Reply
    1. econowiser Post author

      I asked him for advice and he sent me a personal email making suggestions.

      If you look at our portfolio (mine and husband’s combined) you can see that we don’t invest in the U.S. market only. We own: global, European, emerging and U.S. So I’d say that’s an extremely diversified portfolio!

      Reply
      1. Zakelijk Bezuiniger

        Yes, if you combine the 2 portfolio’s. But to me it looks like you look at the portfolio’s quite separately (because you both make the decisions yourselve about where to invest in). Therefore I also look at them separately.

        Wwhen the shit hits the fan in the US your portfolio will be damaged heavily, and your husband’s portfolio will be less damaged. Your husband’s portfolio is far more diverse that yours. And to my opinion, that is because you see jllcollinsh as some sort of investment Guru and you follow his advice no matter what (also because of the remark, “because jllcollinsh says…”) .

        You should follow your own instinct instead of that of one person that is located in the US. Not to mention the amount of shit that is happening there currently with the government, the enormous amount of debt and the fact that the dollar had become less and less interesting.

      2. econowiser Post author

        Thanks for your feedback. I am still an investor with a mind of my own and I read books and articles myself and thus create my own opinion. It’s just a shame that there isn’t a Dutch person who is actually financially independent through index funds and blogs about it. So I have to figure things out myself.

        I’ll think about your feedback and our asset allocation.

        I got my 80%-20% from “De schitterende eenvoud van indexbeleggen” by the way.

        My husband just wanted to invest in the three funds he picked and transfers a third to each fund each month. So there’s no reasoning behind that.

        I’m sort of exploring whether I”m on the right path and asking for feedback. I value your opinion. However, calling somebody silly is not very constructive, now is it? I don’t make remarks like that on your blog and I expect you treat me with the same respect. Thanks.

  3. Zakelijk Bezuiniger

    in this context silly means the same as “onverstandig”. It is not meant as a curse-word or something like that. I apologize if you feel my feedback is to blunt (but I still am a male, and Dutch. That should cover for it 😉 ). It just feels that you are making your investments purely because one blogger tells you to do it like that. Why would you say, when someone is asking you why you did certain investments, that “and because jlcollinsnh recommends”. It does not really feel like you are making choiced, but he is making choices for you.

    And although your husband has no reasoning behind his investments, it doesn’t mean it is not diversified. Because it is very diversified.

    Reply
  4. jlcollinsnh

    Hi Mrs. EW…

    Oh boy.
    Well, I’m going to agree with some of your other commentators here. Since you hold the Global fund that is about 50% US, I don’t think you need to add the S&P 500 fund.

    For US based investors, VTSAX (Total US Market) is available at a rock bottom expense ratio of .05%. As you point out, it is heavily weighted to the largest companies. Those in turn are mostly international businesses. This is why/how US investors have the world markets covered as I describe here:
    http://jlcollinsnh.com/2012/09/26/stocks-part-xi-international-funds-2/

    But were I an investor elsewhere in the world and stuck with fairly high ERs anyway (as you are), Global would be my choice. As it is yours. Adding the S&P500 will over weight you in the US while making your portfolio a bit more complex. Of course, if your husband insists on adding the the Euro fund and overweighing there, maybe this is a balance you need. But it would be simpler just to drop both.

    The Global fund also gives you 9-10% emerging market, which in my view is plenty and a nice bit of spice I don’t get in VTSAX.

    Very nicely done recap of each fund, BTW.

    Cheers!

    Reply
    1. econowiser Post author

      Hi J!

      Thanks again for your elaborate answer. I started doubting my asset allocation, that’s why I posted our options and portfolios. And you’re right, everything I need is in the global fund anyway. I really like not having to think and worry too much about my asset allocation. 9-10% emerging market is quite enough for me.

      I’m going to think about changing my monthly investment with SNS Bank from S&P 500 to global. My first investment isn’t due until the 28th of this month anyway.

      I’ll also talk to my husband about why he wants to overweigh in European. I still think he’ll hold on to Emerging the way he does because he thinks there’s more growth to be expected there during the next couple of decades. We’ll see.

      Thanks for your feedback!

      Reply
      1. marcel

        Please note that the Vanguard Global Stock Index Fund does not include emerging markets at all! The Vanguard Total International Stock Index ETF does but is not easily available in the Netherlands.

      2. econowiser Post author

        Hi Marcel. Thanks! I had a look at its composition yesterday as well and noticed the lack of emerging markets in it. There’s Australia and Japan, but not China and the like. Where can I buy Vanguard Total International Stock Index? It’s a shame Rabobank investing isn’t accesible for non-customers just like SNS Bank. You invest with Rabobank, right?

  5. marcel

    Yes, but I don’t think Vanguard Total International Stock Index is available with Rabobank. You can buy it with Interactive Brokers, Binck,etc. But I don’t recommend opening yet another account. If I were you, I would stick with SNS and use something like 70% Global, 10% Emerging, and 20% European Government bonds.

    Reply
    1. econowiser Post author

      Yeah, I checked those out but you can’t invest automatically on a monthly basis with them. They charge too much and so that’s only interesting if you want to invest a couple of thousand in one go.
      I’ll stick with SNS and Meesman. I’ll think about adding a bit of Emerging. Your suggestion almost reflects the portfolio I already own. The husband is going to think about rebalancing as well.
      Mind you, the global fund with Meesman is now more interesting for the Dutch because of the tax return (teruggave dividendbelasting) of about 0.4% to 0.5% which will even out the cost and will make it almost free of TER. The only downside is that the money isn’t invested with Vanguard anymore but with Northern Trust.

      Reply
    2. econowiser Post author

      The thing with SNS is that I have to add at least €100 in each fund each month. Since I have €300 to invest each month I can’t apply that division. I can create that division with Meesman. You have to invest at least €100 with them each month, but you can divide that amount between diffent funds. Plus, the Global version with Meesman will give me a tax break.

      Reply
  6. berend

    Hmm. Why do you do say that?
    As far as I know, these are just ETFs, that can be bought via a broker like Binck bank.
    They are available at Euronext Amsterdam. So, I see no reason why they should not be available for private Dutch investors.

    Can you please enlighten me?

    Reply
  7. berend

    Please also note that the FTSE All-World ETF, also includes emerging, whereas as their MSCI World Fund does not. It is a truly global fund.

    I would really like to know why you believe one cannot/or should not invest in this ETFs. I am quite new to ETFs, so maybe you know something that I don’t.

    Reply
    1. econowiser Post author

      I would love to invest in them, but not at those high costs. At Meesman or SNS Fundcoach you can invest €100 a month and pay only 50 cent transaction fee. At Binck you’d pay €6.50 per transaction plus 0.10% with a minimum of €10 and a maximum of €150. If I were to invest €100 with them every month it would cost €10 (€6.60 would not fit their minimum) in transaction fee!!! With Meesman I’m paying €0.50 for in transaction fee for the exact same purchase! So it’s only interesting for investors with thousands to invest in one go. It’s not for the index investor who just wants to buy index fund on a monthly basis.
      You’re right, all world includes emerging…which I would love to invest in. Now, we’re creating our own mix through asset allocation. See, that’s another advantage of investing with Meesman. You can invest €60 in world, €20 in emerging and €20 European a month for example which will only cost you a couple of cents in transaction fee. It’s very accessible for the private investor.

      If I had a large sum to invest in one go I would consider doing business with a party like Binck (they are the cheapest in their category…however, there’s a huge case of fraud in that company right now…) but for now they’re just way too expensive.

      Reply
  8. berend

    Thanks for your elaborate answer. You are right: if one wants to invest on a monthly basis, one should not buy ETFs when transaction-costs are at 10 euro.

    However, I think that monthly investing is convenient, but not strictly necessary for sound investing. When you save up for a few months, and invest in one go, ETFs might be worthwhile, and even cheaper than using Meesman…

    Consider the following example: Suppose a person has 20.000 euros invested, and adds 3000 per year (that is, 250 euro per months).

    Costs at Meesman on a yearly basis would be:
    TER x average balance: 21,500 x 0.5% = 107,50
    transaction-costs: 3000 x 0.5 = 15
    account cost: 25
    Total: 147.50 euro

    Using ETFs with a TER of 0.25%, and instead of investing 12 times 250 euros, investing 3 times 1000 euros (if needed, each time in a different fund, choosing a desired allocation), the costs on a yearly basis would be:
    TER x average balance: 21,500 x 0.25% = 57.75
    transaction-costs: 3 x 10 = 30
    accounts cost: 0
    missed opportunity costs because you save up money longer before investing it:
    375 x (say) 6% = 22.5
    Total: 106.25 euros

    So, in that case investing use ETFs is cheaper. The advantage for ETFs becomes bigger when the numbers are larger.

    Admittedly, it is less convenient than using Meesman: one has to do all transactions by hand, while with Meesman one can simply fill in a form and forget about it for the rest of year.
    Things become even more complicated when using ETFs that distribute dividends instead of re-investing them (like the Vanguard ETFs). In that case, more paper-work is needed for taxes, and the dividends need to be re-invested manually as well, preferably by including them in a regular transaction.

    So, as far as I can see, ETFs are not out of reach of the private investor. And, if you know what you are doing, seem to be quite cost-efficient.

    However, as said before, I am still quite new to ETFs, and I am not yet investing in them. So, I would really like to hear other people’s opinion.

    Reply
    1. econowiser Post author

      Thanks for your wonderful example!
      The other advantage for monthly investments is that you never have to think about buying high or low…you’re paying the average price in the end.

      I agree, for bigger transactions you’d need a broker like BinckBank. But you’re also right about the whole dividend, reinvesting and taxes hassle.

      So for now, I’m sticking with my easy-peasy solution: monthly investments with Meesman.

      Oh, and don’t forget their world fund offers a great tax advantage for the Dutch! https://econowiser.wordpress.com/2013/10/06/from-vanguard-to-northern-trust/

      Reply
  9. Tim

    That was a great article thanks!

    Was doing a bit of digging around this morning, had been wondering why it is that there are so many pension funds for third tier dutch private pensions that don’t give you an option for trackers, and came across Brand New Day. Seems they have options for the Vanguard Euro Government Bond Index Fund and Vanguard Global Stock Index Fund, which can be hedged. With ‘fiscaal vordeel’.

    Heard about this at all? Going to do some more reading on other sites and forums to see if it is worthwhile.

    Reply
    1. econowiser Post author

      Yeah, BND is a great option if you don’t want to teach yourself anything about investing. They have this life cycle investing option. However, I find it too steep at 0.59%. However, you sound like somebody who does want to teach himself about index investing…and there are other (better?) ways to invest your money!

      Reply
  10. Phil

    Hi EW, great blog you have here, with excellent info. Do you know of any investors that you trust who have something similar in France? I’m planning to invest in a diversified portfolio, of index funds (stocks and Real estate), bonds, and gold, but having trouble finding information in France that’s relevant, and includes any possible tax breaks etc.

    Reply

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