Setting up a simple portfolio of index ETF's


(Kim Ditlefsen) #1

Trying to set up a simple portfolio

Was thinking off buying:
45% VEU - Vanguard FTSE All-World ex-US ETF (USD) 0.11% fees
55% VTI -Vanguard Total Stock Market ETF (USD) 0.04% fees

Which will give a nice diverse portfolio and overall fees of 0.0715%, the only problem since the funds are in USD they will have an exchange fee of 0.5%

I could change the VTI with VUSA
55% VUSA - Vanguard S&P 500 UCITS ETF (GBP) 0.07%

Ending up paying a higher annual fee but at least not having to pay the 0.5% currency exchange fee for both the money going into the fund and the money going out of the fund.

Anyone having any thoughts on what would be the smarter move? Not sure how the VUSA works either are there baked in exchange fees even if you are buying it in GBP?


(Vladislav Kozub) #2

Hey Kim,

Looks like a healthy diversification. Don’t you think that going for VTI and holding it for long will negate the 0.5% exchange? After all, it is only paid once you buy and sell, whereas the management fee will be payable every year, and this is where VTI bears VUSA by far.

VTI will pay off if being held longer. And you will be exposed to USD/GBP fluctuations with either of these options - VUSA buys S&P 500 holdings on NYSE and NASDAQ anyway and recharges exchange rate risks to their customers.


(Kim Ditlefsen) #3

I think you are right that exchange fee will be negated after a roughly calculated 15year period, and if VUSA will recharge exchange rate risk in some way it would probably be sooner as well. Now the only problem will be I have to wait to Freetrade release the US Stocks in an x amount of weeks time. Wonder what will happen first getting access to Freetrade or US Stocks coming to Freetrader.


(Vladislav Kozub) #4

Even if prior will happen earlier, you can always start with VUSA, as least it has no 0.5% and then replace with VTI should you still wish to. If VUSA will go down meanwhile, it should have a close to 1 correlation with VTI anyway so should work well.