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VUSD or VOO?

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  1. #1

    Join Date
    Aug 2020
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    27

    VUSD or VOO?

    Hello,

    I am going to invest into an index fund and have narrowed it down to the 2 above options. I know that VUSD has WHT of 15% whilst VOO is at 30%, although the VUSD fund is slightly more expensive to buy into. I am not concerned about the estate tax for the US domiciled fund.

    For context, I have UK citizenship and I'm a non US tax resident. I'll be looking to put about 1m HKD into the fund this year then monthly deposits moving forward with an investment horizon of 25/30 years.

    My question is - does the lower WHT of VUSD mean that this would be a better long term option, even considering the ongoing higher fees (considering my investment strategy)? Or would the fees add up and VOO work out better?

    Finally, any merit in investing in both? I guess probably not as I would be losing out on compounding effect?

    Thanks!!


  2. #2

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    Don't mean to confuse you. But have you considered that it might be cheaper to compound in the UK with an accumulating share class over taking distributions and reinvesting, assuming you don't need distributions for expenses?

    Something like this.. buy and forget...

    https://www.ishares.com/uk/individua...ssthrough=true

    (Sorry, not too familiar with the vanguard offerings, they should have a usd sp500 accumulating etf .. hopefully)

    It is a very nit picky thing and I feel investing and staying in the market for a long time is more important.

    Also assuming you are familiar with possible inheritance issues with US listed funds?


  3. #3

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    If you're not a US citizen / tax payer, you should invest in Irish domiciled ETFs (i.e. of the two you mention, VUSD) for tax efficiency.

    Personally with a long investment horizon I would not go all in on the S&P500 (will the US still dominate in 25 years time?), I would look at global diversification. I would also look at accumulating not distributing. So assuming that you are not diversifying globally in other ETFs, as a single equities ETF I would look at VWRA.

    Editing to add, I read Andrew Hallam's book Millionaire Expat, and decided to invest in an all in one ETF for simplicity - Vanguard LifeStrategy. We selected the 80% equities option.

    ndt likes this.

  4. #4

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    Quote Originally Posted by Beanieskis:
    If you're not a US citizen / tax payer, you should invest in Irish domiciled ETFs (i.e. of the two you mention, VUSD) for tax efficiency.

    Personally with a long investment horizon I would not go all in on the S&P500 (will the US still dominate in 25 years time?), I would look at global diversification. I would also look at accumulating not distributing. So assuming that you are not diversifying globally in other ETFs, as a single equities ETF I would look at VWRA.

    Editing to add, I read Andrew Hallam's book Millionaire Expat, and decided to invest in an all in one ETF for simplicity - Vanguard LifeStrategy. We selected the 80% equities option.
    Was that a USD denominated life strategy or one of the hedged ones?

  5. #5

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    Euros. I'm likely to retire in Europe, so minimising currency conversions.

    aw451 likes this.

  6. #6

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    Life Strategy is unfortunately a fund in the UK. Not an etf, or have I been missing something? The close equivalents are AOM, AOA type iShares multi asset global ETFs. But you lose some amount of dividend wht with them being US listed and taxing ex-US dividends at 30%.

    Back to the question.. I personally don't see a diff between US and UK listed Sp500 USD etf.. marginal efficiencies on both sides for a long term investor in the US story - which if you look at the companies are pretty diversified in terms of global exposure.

    ndt likes this.

  7. #7

    Join Date
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    Quote Originally Posted by Beanieskis:
    Personally with a long investment horizon I would not go all in on the S&P500 (will the US still dominate in 25 years time?)
    Yes, highly likely.

  8. #8

    Join Date
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    If you are a fan of some geekery, do some simple math.. VUSD dividend yield * 15% loss on WHT then factor in VUSD - VOO expense ratio and then (since you are planning monthly invest) factor in buy/sell spread on Ireland domiciled ETFs vs US domiciled, yes theoratically it should not affect as long as you are not selling but you never know (we are all long term investors but realistically how many stay put for 25 yrs!! Shit happens and priority changes) plus hard to quantify how much you are loosing even on buying because of higher spread..

    I am not concerned about the estate tax for the US domiciled fund.
    Personally i like to keep it simple, just buy in cheaper fund in US with huge liquidity and tight bid/ask spread, comes handy when shit hits the fan..

    On a separate note, if you believe in global diversification, there is a simple option of VT or to keep things flexible by putiing in X% in VOO and rest in VXUS and tweak it the way you want..
    Last edited by ndt; 22-02-2024 at 10:36 AM.
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  9. #9

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    Quote Originally Posted by Crankshaft:
    Yes, highly likely.
    In which case a globally diversified ETF will still be dominated by the US.
    shri likes this.

  10. #10

    Join Date
    Sep 2015
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    N

    Quote Originally Posted by ndt:
    If you are a fan of some geekery, do some simple math.. VUSD dividend yield * 15% loss on WHT then factor in VUSD - VOO expense ratio and then (since you are planning monthly invest) factor in buy/sell spread on Ireland domiciled ETFs vs US domiciled, yes theoratically it should not affect as long as you are not selling but you never know (we are all long term investors but realistically how many stay put for 25 yrs!! Shit happens and priority changes) plus hard to quantify how much you are loosing even on buying because of higher spread..



    Personally i like to keep it simple, just buy in cheaper fund in US with huge liquidity and tight bid/ask spread, comes handy when shit hits the fan..

    On a separate note, if you believe in global diversification, there is a simple option of VT or to keep things flexible by putiing in X% in VOO and rest in VXUS and tweak it the way you want..
    agree 100% on costs and on VT
    VT - 10000 stocks, 61% USA, 15% Europe, 10% Asia, 6% Japan 3-% Canada