New to investment, choosing between VUAA (S&P 500) or VWRA (FTSE AW)? - Seedly
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Anonymous

Asked 2w ago

New to investment, choosing between VUAA (S&P 500) or VWRA (FTSE AW)?

Recently got my finances in check, thanks to Seedly's Framework and 50/30/20 budget guide.

As I want to invest internationally, I opened an IBKR account, sourced for Ireland-domiciled ETF to minimize costs, and narrowed down to VUAA (S&P 500) or VWRA (FTSE AW).

In comparison, VWRA (FTSE AW) provides more diversification than VUAA (S&P 500) but has higher TER (VWRA @ 0.22% vs. VUAA @ 0.07%).

Plan to DCA monthly with limited funds, not sure which factor is more important.

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Updated 1w ago

Hi, You did already a very good job (cheap broker with IE domiciled fund unverse, planned asset allocation).

Since the better diversified MSCI ACWI ETFs have relatively high fees,

You could still consider instead MSCI World ETFs (accumulating) with each 0.12% TER:

Lyxor Core MSCI World (DR) UCITS ETF - Acc ISIN LU1781541179

SPDR MSCI World UCITS ETF ISIN IE00BFY0GT14

or distributing the cheapest (0.15% TER) being

SPDR MSCI World UCITS ETF ISIN IE00BFY0GT14​​​

2 comments

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Question Poster

1w ago

Thank you veyr much for providing MSCI World as alternatives. However, because of the slightly lower diversification, which is a double-edge sword depending on the financial situation, it would still require some portfolio rebalancing to "weather all storm" in a sense. For now, I am slightly leaning towards swallowing the higher TER but more whole rounded VWRA to avoid the whole "put all your eggs in one basket" situation.
Frankie Rappaport
Frankie Rappaport

6d ago

Yes, diversification is broader then, which is o.k. but there are also critics to emerging markets investing. the EM allocation minus China seems anyway rather low. Also many advisors would recommend to extend the asset allocation also to bonds/fixed income and commodities. I would disagree, particularly with an ultra longterm investing horizon.
X
X_Y
Level 5. Genius
Updated 2w ago

Don't worry about the diversification aspect of VWRA. It's not as 'diversified' as you think. The United States GDP is 24.26% of the world economy (source: TheGlobalEconomy), with big MNCs around the world. Getting into the S&P 500 provides you with enough diversification. Just look at the correlation of VWRA LN vs VUAA LN. It's 0.9770.

You can get more charts of these 2 funds via the following link and make comparisons to decide which one you want to commit capital into.

Link: https://dl.orangedox.com/fund-analysis-pdfs

File Names:

VANG FTSE AW USDA (VWRA LN Equity)_updated_020820

VANG S&P500 USDA (VUAA LN Equity)_updated_020820

Via the link, I tackle the following questions:

  • How has the NAV been trending since inception?

  • How has the fund been performing quarter on quarter since inception?

  • How has the dividend been trending since inception?

  • How has the fund size been growing?

  • What are your probabilities to make/lose money?

  • What are your average (+) and (-) returns?

  • Is your fund outperforming or underperforming the benchmark? (For Actively Managed Funds)​​​

2 comments

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Question Poster

1w ago

Thank you very much for the detailed breakdown, that is so useful and easy to understand. Based on that, it seems like both VWRA and VUAA are rather similar in prospect, with the only difference currently being that VUAA is trending upwards, which is understandable due to the current global situation. So, while I am tempted to join in the ride, I am also unsure if it maintain the pace over the long-term that I have in mind.
X_Y

1w ago

You are welcome. I acknowledge your concern, no one has a crystal ball of the future. Investment is all about having a systematic investment framework to calculate probabilities. That's why from the link, you can see that I use the full historical data of the funds to understand what the past have told me, so that I can have a glimpse of the future. There is no reward without risk.

Hi there,

If you do take a look of the top holdings for VUAA and VWRA, they are slight similar in nature. The current holdings of VRWA, is heavily invested in the US still, with some exposure to other markets.

You can take a look at VAPU or VFEA as they are diversified outside of the US market. If you are only looking at ETFs in your portfolio, you will need to look at defensive ETFs to hedge against market decline.

Hope i was able to shed some insight!

*This does not consitute as investment advice, please do your own due dilligence before executing any trade.

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1 more comments

Duane Cheng
Duane Cheng

2w ago

You should always diversify if possible, and DCA in. As long as you have a set budget to DCA it would be okay. I suggest not worry too much with the expense ratio, as the two funds mentioned have different AUMs. 0.2% TER, is still considered acceptable for most, after all if you're tracking long term, this 0.2% will be managable.
Question Poster

1w ago

Thank you very much for the tiebreaker advice. As I am planning for it to be long-term, I hope that the TER will not affect the growth too severely.
N
ngsngn
Level 2. Rookie
Answered 1w ago

Hi, I just started investing recently 2 weeks back. I'm allocating as follow:

CSPX (40%) SP500 LSE

IWDA (40%)

EIMI (20%)

I chose IWDA + EIMI combo over VWRA partly because can control the % of the developing market.

As for CSPX, because I want it to be accumulating and LSE is 15% witholding tax instead of 30% from US market.

1 comment

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Frankie Rappaport
Frankie Rappaport

1w ago

Maybe you could consider MCHI as a substitute for total emerging market ETFs
Brandon Lim
Brandon Lim
Level 5. Genius
Answered 2w ago

S&P 500 is not bad.

1 comment

👍 0
Question Poster

2w ago

Yes, their historical returns is much higher, as well as having a lower TER in comparison. I am actually more swayed to it but I am being heldback by the diversication of the other, as well as not required to do so much balancing in the future.