Distribution Index Funds

There’s been quite a bit of a debate going on here at EconoWiser’s about index funds. Let’s have a close look at the distribution of different index funds (stocks only) we find interesting.

World-Wide (or Global) TER 0.5% (now including dividend tax break of 0.4% to 0.5% creating TER of about 0.1%!)

Aandelen_wereldwijd

European TER 0.5%

Aandelen_Europa

Emerging Markets TER 0.65%

Aandelen_emerging_markets

The conclusion is that there aren’t any Emerging Markets stocks in our World-Wide fund. Apparently, this differs from the American Total Stock funds. I’ve already told you about the dividend tax return that now makes the World-Wide fund with Meesman extremely interesting.

The husband now wants to increase his monthly investments with €100 as well. He’s now thinking of distribution his euros into 2/3 World-Wide and 1/3 Emerging Markets and just let the European stocks he already owns sit there without adding extra euros in that department. Again, he expects a lot more growth in ER.

I’m thinking of going from 80% World-Wide and 20% Eurobonds to 80%, 10% Emerging Markets and 10% Eurobonds. Or some other divsion? Argh!

I think I’ll retract my monthly order with SNS Bank because the World-Wide Fund including tax break sounds like a much better deal.

Decisions, decisions!

Love,

Mrs EconoWiser

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14 thoughts on “Distribution Index Funds

  1. Iseut

    Hi there,

    I find your topics on index funds very interesting. I have a SNS Fundaccount, mainly because the only costs with them relate to TER (no acquisition costs or admin fee). Meesman on the other hand charges 0,5% acquisition fee and 25 euro admin fee for keeping a broker account. It seems to me that SNS might be more cost efficient if you invest monthly a small amount despite the fact that Meesman has sealed the dividend leak. How do you feel about that?

    Cheers!
    Iseut

    Reply
    1. econowiser Post author

      Hi there,

      TER is exactly the same with both parties for all funds. Indeed, we’re paying €25 a year admin fee.

      SNS doesn’t charge admin fee indeed. So, do I understand correctly that SNS doesn’t charge anything for buying or selling? Is that what you mean with acquisition fee? The damn website is down again, so I can’t check.

      Cheers!

      Reply
      1. Iseut

        Mmm, that’s strange. Acquisition costs (aan- en verkoopkosten) are 0 according to the information on costs for each Vanguard fund on the SNS website. Elsewhere on the site (costs for Fund Rekening) SNS states that there are costst for Vanguard funds. I have asked for an explanation on the SNS forum and will get back on this asap.

      2. econowiser Post author

        Thanks! I just tried to get into my personal account again…and failed. I can’t find an overview of all the fees elsewhere on the website. It has been down on and off since Sunday. Very annoying!

      3. econowiser Post author

        I managed to log in and…darn it! You’re right! I can’t believe they won’t charge entry nor exit charges.

        Oh dear, I thought I had it all figured out…I’ll talk to the husband about it tonight.

        Thanks!!!

      4. econowiser Post author

        Is it serendipity or coincidence? I just received an email from SNS about the costs. Because of the fact that there’s a ban on provisions as of the 1st of January 2014 an investor will pay charges directly to the broker. The charges for Vanguard funds are unknown at this point in time.
        http://www.snsbank.nl/particulier/beleggen/andere-kostenberekening-bij-beleggen-in-fondsen.html

        I guess I’ll wait for both SNS and Meesman to publish their new cost structure. At this point, I just can’t tell which one’s cheaper…

      5. econowiser Post author

        Oh, and I already asked Meesman this question in April this year. This was their reply:
        Geachte EconoWiser (changed my name here for obvious reasons),

        Ik ga er vanuit dat u met de nieuwe regulering het provisieverbod bedoelt.
        Deze nieuwe wet- en regelgeving heeft geen gevolgen voor Meesman of voor de kosten voor onze beleggers.
        Meesman ontvangt en betaalt geen (retour)provisies / distributievergoedingen / kickbacks. Het provisieverbod raakt ons dus geheel niet.
        Aan het kostenplaatje van Meesman Index Investments gaat dan ook niets veranderen.

        Mocht u meer willen weten of nog vragen hebben, dan kunt u ons altijd bellen of een e-mail sturen.

        Met vriendelijke groet,
        Hendrik Meesman

        So it all depends on what SNS will charge. Meesman will stick to 0.5% acquisition costs and TERs that we already know. Now I’ll stop spamming my own post, haha!

  2. Iseut

    Hold your horses Mrs E.! One of the forum dudes of SNS just replied that the 0 entry/exit costs for Vanguard funds is a mistake due to the transition from Fundcoach to SNS. In fact it is 0,5% just as it is with Meesman. Sorry about this, but I think SNS messed up big time with this transition.
    Have a nice (index fund free) weekend!
    Iseut

    Reply
  3. marcel

    Hi,

    As you can imagine, I like the addition of the EM fund. I do not really like the suggested 10% bonds. I think 10% is too low to give you some protection during a market meltdown. From Bogleheads,org:
    “Bonds are a key part of any portfolio. For instance, Graham’s timeless advice was to never hold less than 25% of your portfolio in bonds (or more than 75%). Bogle recommends “your age in bonds”; for instance, if you are 45, 45% of your portfolio should be in high-quality bonds.”

    Other often used guidelines are age-10 or age-20 in bonds.

    However, IMO the size of your portfolio should also be considered. In my portfolio of low six figures, I do include bonds. But I don’t see a need to add bonds to the small portfolios I created for my kids. They may do that later themselves when the portfolios are of reasonable size πŸ˜‰

    Marcel

    Reply
    1. econowiser Post author

      Dear Marcel,

      Thank you very much for your elaborate answer.

      I am very much in doubt about the percentage of bonds in our portfolios as well. I thought 80-20 was a good start after reading Wintermans. However, I also read about the own your age in bonds theory. But then, we’re also in the wealth building stage. So our idea was to start adding bonds in ten to fifteen years or so…when we need things to become more stable. We’re now in the low five figures range when it comes to our portfolio…so maybe that makes us not too risk averse. It’ll become a different matter when we hit the six figures, I guess.

      I’ll definitely consider your advice. Thanks!

      Reply
  4. Pingback: Stocks β€” Part XVII: What if you can’t buy VTSAX? Or even Vanguard?

  5. Amber Tree

    Hi,
    A problem I recognize….It is called a world tracker and it only covers a part of it…developped markets and large caps…
    I am solving this by adding an EU small cap to the mix and later on an emerging markets tracker as well. (I plan to detail this later in a post)

    A difference that I make:
    I go for accumulating etfs, this is due to Belgium tax rules and convenience.
    I dont do bonds for now. I just started investing again, and I find the prices too high (or interest too low). Also, I hold some specific other investment products that I see as a bond substitute. My investment is for the long run… Another ruleof thumb says that if your horizoon is long enough, you almost need no bonds.

    Greetz

    Amber Tree

    Reply
    1. Ronnie

      Amber’s comment regarding accumulation ETFs is very interesting and represents a weakness in the Vanguard products. What are the candidates here ?

      Ronnie

      Reply

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