Friday, November 13, 2015

International Index ETF

I have come to a cross-road. In my allocation of International Equities Index, my initial plan was to mix Vanguard All-World ETF(VWRD) and iShares World ETF (IWDA), but I realise it was a bad idea.

Main difference between the two ETF:
- Pay out dividends quarterly
- Includes Emerging Market
- Slightly higher TER (Total Expense Ratio)

- Reinvest dividends
- Only include developed world market
- If want to include emerging market, can buy EMIM (iShares Core Emerging Market)

Not that I hate dividend, but to be taxed on dividend (as the ETF is Irish-domiciled) seems like marginal loss. Accumulating dividend and later reinvest yourself also requires transactional cost. Anyway it might be better when you live off your dividend when you retired, instead of trying to sell some capital on your own.

To own international index, we usually wish to be as diversified as possible, in this case, VWRD seems like a more straightforward option as it includes EM. But how much does this affect your portfolio performance? I am not technically sure. But if you go for IWDA + EMIM, you definitely need to make your own allocation.

At the moment, I have a little of VWRD, more of IWDA, and a little of EMIM. It sounds exactly all over the place like 'rojak'. I still can't make up my mind. Obviously, both hv their pros and cons and I feel that their differences are negligible. It is down to personal choice now.

Maybe I will leave what I have already own, and pump in VWRD?

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