Non-US Investing • Re: Is It Worth Mixing MSCI and FTSE Funds to Save 0.14% Annually?

I’d like to get your opinion on a small technical question. I follow a global market-cap benchmark like MSCI ACWI IMI or FTSE All-World All Cap in my portfolio. Part of it is custodied at a large systemic bank with a limited selection of investment vehicles. At the bank, I invest in three Vanguard Institutional Plus funds (MSCI World, MSCI EM, MSCI SC) in market-cap proportions of roughly 81%/9.5%/9.5%. The funds have very reasonable fees for the UCITS landscape; the World fund has a TER of 0.11%.

So far, so good, but for reasons that are unclear to me, Vanguard cannot use the Ireland-US treaty tariff on withholding taxes and pays 30% on US dividends. Given the currently low dividend yield (1.4%), the World fund loses about 0.15% extra DWT compared to ETFs that can take advantage of the treaty.

I am in talks with the bank about adding the VEVE Vanguard fund (FTSE Developed World) to their list of funds. Switching to VEVE would save me 0.14% annually in costs. However, VEVE follows a FTSE index. The differences are relatively minor: Poland and South Korea are classified as developed markets in FTSE World but not in MSCI World. Additionally, FTSE includes more midcaps, cutting off at 90% of market-cap coverage, whereas MSCI cuts off at 85%.

Switching to the FTSE Developed World would introduce some mess into the portfolio.

My question is: Is saving 0.14% per year worth mixing MSCI funds and FTSE funds?

I usually have ballpark threshold that anything below 0.05% is certainly not worth changing, below 0.1% I'll consider, and above 0.1% I'd very likely change.

0.14% is in the very likely change area but some may be inclined to just not care

Statistics: Posted by id_afstand — Thu Jul 04, 2024 4:01 am