FSMOne web platform

[Brown24]

Think you made a calculation mistake @ 3. The IWDA dividend withholding tax saving is 2% * 15% = 0.3%.

Ya u r right. Wrong calculation there.

 

[Han Shot First]

Have you considered other US ETFs (in the FSMOne ETF RSP list)? VT portfolio composition has 9.80% Emerging Markets which makes VT more similar to VWRD rather than IWDA.

 

[Okenba]

After much consideration, i hv decided to switch my IWDA (SCB) to VT (FSMOne RSP). I'm fully aware of the witholding tax and estate tax issue with US ETF, but the cost saving is quite significant.

As I am investing S$800/mth for IWDA/VT, this is my comparison.

1) SCB forex spread = 0.4%, FSMOne forex spread = 0.25%
2) SCB brokerage fees = $10.7 * 4 (batch 3 mths), FSM brokerage fees = $1.07 * 12
3) IWDA witholding tax = 15%, VT witholding tax = 30%. Assuming dividend at 2% pa, the saving from IWDA is 0.3%. (corrected)
4) IWDA TER = 0.2%, VT TER = 0.09%
5) FSMOne has dividend handling fees of $2.5 per dividend. So its $10 per year of dividend loss.

Based on the above number, I use the spreadsheet created by another forummer, VT annual fees is S$43 (include dividend handling fees) vs IWDA S$96 (didn't include opportunity cost).
However, this comparison only applicable to my case.

Besides (3), you may also wish to consider that (1)&(2) apply only to your annual purchase, whereas (3),(4),(5) apply to your AUM which increases over time.
Basically, as your investments grow, (1)&(2) will be increasingly insignificant as compared to (3),(4),(5).

 

[Brown24]

Besides (3), you may also wish to consider that (1)&(2) apply only to your annual purchase, whereas (3),(4),(5) apply to your AUM which increases over time.
Basically, as your investments grow, (1)&(2) will be increasingly insignificant as compared to (3),(4),(5).

Yes. If I consider WT and dividend handling fees, in long run SCB is cheaper due to the size of AUM increase.
But I realized that despite IWDA is dividend reinvested, the return is vy close to VT (dividend distributed). Is VT factor in the dividend in their return as well? If VT dividend payout is not inside the return, then is dividend part negligible?
The biggest issue I hv is I want to automate my purchase as much as possible and do it consistently evy mth, instead of manual batching and buy quarterly (a little bit of opportunity cost here).

 

[Brown24]

Have you considered other US ETFs (in the FSMOne ETF RSP list)? VT portfolio composition has 9.80% Emerging Markets which makes VT more similar to VWRD rather than IWDA.

Other ETF available is IVV which only cover US market.
I'm okay with exposure to emerging market since I don't have EIMI in my portfolio. Ya this make VT more like VWRD or IWDA+EIMI.

 

[Okenba]

Yes. If I consider WT and dividend handling fees, in long run SCB is cheaper due to the size of AUM increase.
But I realized that despite IWDA is dividend reinvested, the return is vy close to VT (dividend distributed). Is VT factor in the dividend in their return as well? If VT dividend payout is not inside the return, then is dividend part negligible?
The biggest issue I hv is I want to automate my purchase as much as possible and do it consistently evy mth, instead of manual batching and buy quarterly (a little bit of opportunity cost here).

I understand the wish to automate. I wish I could do that as well.

For me, one possibility is automating through FSM until I reach USD100k and then consider again if I wish to switch to IBKR or stay with FSM.

Then I would work through the costs over the expected number of years (and consider any sales costs) and see if that is a premium I would be willing to pay for automation.

 

[Brown24]

I understand the wish to automate. I wish I could do that as well.

For me, one possibility is automating through FSM until I reach USD100k and then consider again if I wish to switch to IBKR or stay with FSM.

Then I would work through the costs over the expected number of years (and consider any sales costs) and see if that is a premium I would be willing to pay for automation.

IB will come into consideration once AUM increase to certain amount. For now, too little to join them
As the return of ETF with accumulative and distribution not much difference, I'm looking more on brokerage fees and forex spread, and conveniency by RSP.
The return of accumulation dividend and distributed dividend still puzzling me as everyone saying A get compounding effect of the dividend but this is not reflected in the return.

IWDA vs VT (from Bloomberg):
1 year:29.96% / 29.11% (0.85%)
3 year:12.61% / 12.25% (0.36%)
5 year:9.01% / 8.76% (0.25%)

I know these 2 ETF are different and should not b compared side by side. Just want to compare as these are the 2 options that I'm considering.

 

[Okenba]

IB will come into consideration once AUM increase to certain amount. For now, too little to join them
As the return of ETF with accumulative and distribution not much difference, I'm looking more on brokerage fees and forex spread, and conveniency by RSP.
The return of accumulation dividend and distributed dividend still puzzling me as everyone saying A get compounding effect of the dividend but this is not reflected in the return.

IWDA vs VT (from Bloomberg):
1 year:29.96% / 29.11% (0.85%)
3 year:12.61% / 12.25% (0.36%)
5 year:9.01% / 8.76% (0.25%)

I know these 2 ETF are different and should not b compared side by side. Just want to compare as these are the 2 options that I'm considering.

Generally, returns for accumulating ETFs are calculated with the assumption that dividends are fully reinvested. If you look at VWRA and VWRD for example, there should not be any difference between their returns as they are simply accumulating and distributing versions of the same fund.

There will be an outperformance for now between IWDA and VT mainly because the region that is driving the markets over the past 10 years is mainly the US. In fact, there should be more outperformance if you look at S&P500 compared to IWDA.

However, past performance is no indication of future performance and the thinking behind most index investing is about 'buying the whole market'. In that sense, passive index investing is more about not losing out rather than about getting the highest performance.

 

[SBC]

Can also create an USD account SCB to save on exchange loss.

 

[Brown24]

Generally, returns for accumulating ETFs are calculated with the assumption that dividends are fully reinvested. If you look at VWRA and VWRD for example, there should not be any difference between their returns as they are simply accumulating and distributing versions of the same fund.

There will be an outperformance for now between IWDA and VT mainly because the region that is driving the markets over the past 10 years is mainly the US. In fact, there should be more outperformance if you look at S&P500 compared to IWDA.

However, past performance is no indication of future performance and the thinking behind most index investing is about 'buying the whole market'. In that sense, passive index investing is more about not losing out rather than about getting the highest performance.

Taking example of VWRA and VWRD: If their performance is the same, isn't it VWRD is better as I will receive dividend payout quarterly plus getting same capital gain? Or i missed out something?

 

[Okenba]

Taking example of VWRA and VWRD: If their performance is the same, isn't it VWRD is better as I will receive dividend payout quarterly plus getting same capital gain? Or i missed out something?

Returns are made out of dividend and capital gain.

VWRA automatically reinvests the dividends. (Note: VWRA has dividends. They are just not distributed. They are automatically reinvested. So VWRA is also subject to dividend tax, same as VWRD.)

For VWRD, the dividends are distributed to you. If you do not reinvest them immediately, you will not be able to match the returns for VWRA.

 

[Brown24]

Returns are made out of dividend and capital gain.

VWRA automatically reinvests the dividends. (Note: VWRA has dividends. They are just not distributed. They are automatically reinvested. So VWRA is also subject to dividend tax, same as VWRD.)

For VWRD, the dividends are distributed to you. If you do not reinvest them immediately, you will not be able to match the returns for VWRA.

oh, u mean the return quoted (yahoo, bloomberg, etc..) is made of capital gain + dividend?

 

[Okenba]

oh, u mean the return quoted (yahoo, bloomberg, etc..) is made of capital gain + dividend?

Yup. Otherwise everyone will just buy accumulating funds because of better performance.

However, the 'danger' now with distributing funds is that if you do not reinvest your dividends, you will not get the type of performance that the accumulating funds will get. There is no free lunch.

 

[kurtgoh]

anymore views on buying IWDA through FSMone?

i'm considering too..

 

[revhappy]

FSM promo, all sgx ETFs for flat $10 fee until Mar 2020!

Good to buy MBH, ES3 in bulk.

 

[Brown24]

anymore views on buying IWDA through FSMone?

i'm considering too..

FSMOne don't hv IWDA. Only hv VT or IVV

 

[_dXter]

FSM promo, all sgx ETFs for flat $10 fee until Mar 2020!

Good to buy MBH, ES3 in bulk.

Wah FSM read this thread ah
https://forums.hardwarezone.com.sg/stocks-shares-indices-92/brokerage-$10-commission-6176712.html

 

[Han Shot First]

Based on the above number, I use the spreadsheet created by another forummer, VT annual fees is S$43 (include dividend handling fees) vs IWDA S$96 (didn't include opportunity cost).
However, this comparison only applicable to my case.

Please could you make your version of the spreadsheet available (for ETF RSP of VT)?

How did you determine the FSMOne forex spread of 0.25%?

 

[Han Shot First]

Can also create an USD account SCB to save on exchange loss.

Please could you elaborate?

 

[Han Shot First]

Why does IWDA have a 5-star Morningstar rating while VT has a 3-star Morningstar rating?