09 May 2020
Aside from being able to use CPF funds for investment, is there any additional benefit of buying the VANUIVI over the VUSA? Understand that every time I buy into an ETF, there are charges. How does this compare with regular contributions to the Endowus Lion Global Infinity?
Going by that line of thought, Warren Buffett has commented that he would like the cash he leaves to his wife be invested into the Vanguard 500 Index Fund Admiral Shares (VFIAX) - why would this be better than VOO (an ETF)?
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Shengshi Chiam, CFA
04 May 2020
Personal Finance Lead at Endowus
VUSA versus VANUIVI
Total Assets AUM (million USD) 20881 versus 6285
Total Expense Ratio (TER % p.a.): 0.07 versus 0.10
5 year annual performance (% p.a.) 6.32 versus 5.84
Minimal initial investment 100000 with VANUIVI
as to Warren Buffett's (who is probably overvalued) strategy:
You have Berkshire H.'s holdings here:
Recently he is invested into VOO and SPY on a small scale.
With the ETF fees so low currently, it doesn't matter so much, which cheap SP500 ETFs
or index funds You consider. VOO, the cheapest currently, charges only 0.03% per year (IVV 0.04%, SPY 0.09%).
European Ireland domiciled VUSA, however, is maybe still more interesting because of absolute returns for Singapore investors because of the withholding tax for U.S. based ETFs.
When You invest 100000 USD into VOO, after 1 year calculated after dividend and taxes You have 101342 USD.
When You invest 100000 USD into VUSA at the London stock exchange, after 1 year calculated after dividend and taxes You have 101885 USD, taking into account the data of the current ETF factsheet, being a difference of: 543 USD.
As to WB's short term U.S. government bond exposure, this could be done for 0.05% TER annually with VGSH (Vanguard Short-Term Treasury Index ETF).
I would however rather buy 10 % physical gold as a substitute for bonds.
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You cannot directly buy into the Vanguard U.S. 500 Stock Index Fund, which is a unit trust domiciled in UK, as a Singapore based investor.
Americans have very very different considerations from Singaporeans. Unit trusts or mutual funds are in fact more popular than ETFs in US because US ETFs have to give out dividends (for dividend withholding tax purposes), whereas mutual funds are allowed to reinvest dividends from the fund manager.