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World shares ETFs/funds available in Europe

Unfortunately there is no “holy grail” ETF available to Europeans yet. For people with access to US listed ETFs, Vanguard VT is closest to covering the world at a low expense.

If you cannot access Vanguard VT, or your country has no special tax-treaty avoiding double taxation with the US, alternatives to look at would be VWRL (developed+emerging distributing), VWCE (developed+emerging accumulating), IWDA (developed accumulating), AVIAW (developed distributing ESG with tax advantage for the Dutch).

Let's take a closer look at ACTIAM Responsible Index World Equity Fund (AVIAW). Theoretically, AVIAW should yield ~0.18% extra return to Dutch people than an ETF with Irish domicile because in the Netherlands the US withholding tax can be brought to 0% by the fund via the US treaty and you yourself can reduce the 15% withheld tax by the fund with the the tax authorities can set off.

IWDA on the other hand has outperformed the index by an average of 0.113% over the past 3 years (2016-2018). AVIAW performed an average of 0.425% better over the same period. On average, AVIAW performs 0.313% better than IWDA per year. The difference in TER explains 0.05% of that, so the actual better performance is 0.263%. This can be partly attributed to the dividend benefit, partly to the ESG overlay. For 2017, Actiam indicates in the annual report that a 0.42% dividend benefit has been achieved and that the ESG overlay has cost 0.10% in basis points. The dividend benefit is relative to the index, IWDA also has a dividend benefit so it is difficult to compare. In 2017 AVIAW performed 0.12% better than IWDA. If you take the 0.05% TER off, you get 0.05% better performance. If you add the negative effect of 0.10% due to the ESG overlay, you get a better performance of 0.17% for that year. So the sum seems to add up!

Please note, outside of the ESG exclusions, AVIAW lacks 11 holdings in Israel because that country is not geographically included in their regional sub-funds. Israel is only 0.19% of the MSCI World Index market cap (2018) so that effect can be considered negligible.

VWRL/VWCE include emerging markets, and although there is no tax advantage for Dutch people .. and it is not the cheapest (compared to e.g. IWDA) .. the low cost and wide coverage make it the best choice for us long term. We favor VWCE not to have to deal with US$ dividends (since they are automatically reinvested).

shares.txt · Last modified: 2020/06/14 10:41 by dreas