What are your thoughts on VWO? - Seedly
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Anonymous

Asked on 04 Jul 2020

What are your thoughts on VWO?

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X_Y
Level 5. Genius
Answered on 05 Jul 2020

VWO US is one of the most popular funds for Emerging markets. However, since it's a US incorporated fund, you will be taxed at a 30% rate on your dividends if you are a Singaporean investor. Additionally, the trend of its historical dividends does not look consistent. Thus, if you opt for a dividend payout option, your income stream will be rather distorted, on top of the tax rate.

it's always good to compare to other funds to seek out your own perspective. You form your own analytical approach to decided what funds to invest in. There are 2 other Emerging Market Funds, XMME LN Equity (X MSCI EMERGING MARKETS) and LEMD LN Equity (LYXOR EMERGING MARKETS) that may be of interests to you. Both are UCITS ETFs.

Understand some of the important questions before deciding which funds to invest in:

  • How has the NAV (price) 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 Unit Trust)

You can find a list of useful charts and checklists of the 3 funds to do your own analysis and answer the above questions via this link: https://dl.orangedox.com/fund-analysis-pdfs

File Names:

VANGUARD FTSE EMERGING MARKE (VWO US Equity)_update_050720

LYXOR EMERGING MARKETS (LEMD LN Equity)_update_050720

X MSCI EMERGING MARKETS (XMME LN Equity)_update_050720​​​

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Answered on 04 Jul 2020

There are also sceptics of the Emerging Markets approach.

They have high gross domestic product growth rates but also a

lot of diverse risks (political, currency/inflaton, etc. ...).

I, for my part, do not invest into emerging markets, besides China, which

in my opinion will be an upcoming co-world leader.

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SW
Shaun WQ Lim
Level 7. Grand Master
Answered on 04 Jul 2020

Look for a UCITS equivalent (15% dividend withholding tax) or a ETF that is domiciled outside of US?

As VWO is a US listed ETF, the dividend withholding tax of 30% applies. Since most of the holdings are outside of US, it is not tax efficient to go via this route to invest in EM.

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Question Poster

04 Jul 2020

What would you suggest?
Frankie Rappaport
Frankie Rappaport

05 Jul 2020

Should be large, cheap & successful: iShares Core MSCI Emerging Markets IMI UCITS ETF (Acc), ISIN: IE00BKM4GZ66 https://api.wsj.net/api/kaavio/charts/big.chart?nosettings=1&symb=UK%3aEMIM&uf=0&type=2&size=4&sid=15554692&style=330&freq=1&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=20&rand=1221709714&compidx=SP500&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=635&width=1045&mocktick=1