*Official* Shiny Things club - Part 2

[CWL84]

How does StashAway find a way around the issue of U.S. estate tax?

The Singapore robo-advisors that trade U.S. domiciled ETFs, although they claim to be "digital" financial advisors, just ignore U.S. estate tax. They do not mention it anywhere publicly e.g. on their websites or FAQs. They behave like they don't have fiduciary duty to their clients. Personally, I think MAS ought to revoke their licenses for not providing adequate or proper financial advice to their clients regarding the U.S. estate tax issues, especially if they obtained a Financial Advisor license from the MAS to operate in Singapore.

Reply from Stashaway on Estate Taxes upon death

If you invest as an individual, the estate tax regulation applies. However, since you are registered on our ledger as a beneficiary of Asia Wealth Platform (StashAway's legal entity), which is a corporate, you are not subject to this estate and gift tax (unless you're an American citizen). This is also one of the advantages of investing with StashAway.

I agree with your criticism with the lack of crucial information from all the roboinvestors but MAS should be doing a better job with their regulations. If MAS is totally serious and very competent in their responsibilities as a financial regulatory agency, we don't even need to have a conversation to clear up the ambiguity of US estate tax in the first place.

The way I see it, MAS are the ones who are responsible in writing their licencing criteria, issuing their licences and improving their regulatory framework for the finance industry. Since all these roboinvesting companies still haven't been totally forthcoming about the crucial estate tax information from the start until now then obviously there are loopholes in MAS's licencing criteria and regulations.

 

[BBCWatcher]

For what it’s worth, I find Stashaway’s purported position on the U.S. estate tax to be dubious. I’d check with the IRS, but I’d point out that mere brokers and similar financial intermediaries have never been a way to avoid estate tax. Otherwise everyone would do it....

....Or perhaps this is something much worse, that you’re just another unsecured creditor of a startup fintech that just happens to own U.S. domiciled ETFs, maybe, hopefully.

And who cares anyway because they cannot overcome the higher dividend tax for non-U.S. persons. They are not attractive or appropriate in those terms already.

 

[zoneguard]

MBH Investment Grade Bonds ETF has announced dividend rate of 1.99% for 2019 which to me isn't attractive compared to A35's 2.21% as investment grade corporate bonds are higher risk compared to A35's holdings of government bonds.

 

[Han Shot First]

Intriguing. By using this corporate entity "trick" to abet a client (of StashAway) to evade U.S. estate tax, the resulting ownership is:
1. Saxo Capital Markets is the legal owner of the shares of the U.S. domiciled ETFs
2. Asia Wealth Platform Pte Ltd is the beneficial owner of the shares of the U.S. domiciled ETFs
3. In the eyes of the law, a client of StashAway has no rights of ownership of the shares of the U.S. domiciled ETFs

 

[cassowary18]

MBH Investment Grade Bonds ETF has announced dividend rate of 1.99% for 2019 which to me isn't attractive compared to A35's 2.21% as investment grade corporate bonds are higher risk compared to A35's holdings of government bonds.

Interesting...might split my bond allocations between the two in the future then.

 

[s0crates]

You are aware that your ownership of the etfs invested through the platform is less secure than traditional forms of investing right?

The fact that the shares are not in your legal name should be something we are aware of

Intriguing. By using this corporate entity "trick" to abet a client (of StashAway) to evade U.S. estate tax, the resulting ownership is:
1. Saxo Capital Markets is the legal owner of the shares of the U.S. domiciled ETFs
2. Asia Wealth Platform Pte Ltd is the beneficial owner of the shares of the U.S. domiciled ETFs
3. In the eyes of the law, a client of StashAway has no rights of ownership of the shares of the U.S. domiciled ETFs

 

[ChinoGirl]

Is this also the same for FSM and POSB?

You are aware that your ownership of the etfs invested through the platform is less secure than traditional forms of investing right?

The fact that the shares are not in your legal name should be something we are aware of

 

[MichealScott]

MBH Investment Grade Bonds ETF has announced dividend rate of 1.99% for 2019 which to me isn't attractive compared to A35's 2.21% as investment grade corporate bonds are higher risk compared to A35's holdings of government bonds.

Thanks for the info too bad that POSB IS only offers MBH

Edit: IS offers both

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[blue_denim24]

Not true .posb is offers A35 as well

Thanks for the info too bad that POSB IS only offers MBH

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[blue_denim24]

Sorry I am noob in dividends and how they work.if I purchased MBH now in December , will I still get 1.99 percent dividend on those ?

MBH Investment Grade Bonds ETF has announced dividend rate of 1.99% for 2019 which to me isn't attractive compared to A35's 2.21% as investment grade corporate bonds are higher risk compared to A35's holdings of government bonds.

 

[loveboon]

Sorry I am noob in dividends and how they work.if I purchased MBH now in December , will I still get 1.99 percent dividend on those ?

The declared dividend rate is: SGD0.0209.
If you have 100 in your holding, your dividends will be 0.0209 x 100 = SGD2.09.

 

[MichealScott]

Sorry I am noob in dividends and how they work.if I purchased MBH now in December , will I still get 1.99 percent dividend on those ?

Yes you will. Look at the ex. Date. As long as you buy before the date then is fine

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[MichealScott]

Not true .posb is offers A35 as well

Oh is it?? Hmm. I will check it out if it is worth switching over thanks!

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[dullthings]

Dear all, am still slightly unsure how ETFs work, hence I have a few questions.

MBH is distributing dividends in Jan 2020, yield 1.99%, and the NAV will drop after that...
(1) Does it matter if we buy MBH before (eg Dec 2019) or after (eg late Jan 2020)? Especially if it is a lump sum investment?
(2) Realised this has been answered below. (Cancelled) And if we buy on 15/16 Dec 2019 (POSB IS), how much dividen ds do we get? Roughly 1/24 of 1.99%? (/cancelled)

Thanks in advance!

 

[BBCWatcher]

Folks, MBH will reliably generate higher net total returns than A35 over reasonable investment timescales, with high confidence. If you’re focused on one year’s dividend only you’ve completely lost the plot.

 

[mmchaisi]

Maybe the MBH fund managers are the ones who lost the plot if they allow MBH to underperform the safer A35, even one year.

Folks, MBH will reliably generate higher net total returns than A35 over reasonable investment timescales, with high confidence. If you’re focused on one year’s dividend only you’ve completely lost the plot.

 

[BBCWatcher]

Maybe the MBH fund managers are the ones who lost the plot if they allow MBH to underperform the safer A35, even one year.

No, the fund managers are just managing to indices. It's all very mechanical for them.

A35 currently has posted a 7.89% one year return versus MBH's 5.87% as I write this. Both are fantastic, of course. (Seriously, is anybody disappointed with a 5.87% total one year return on that MBH fund? You shouldn't be!) I hope nobody thinks that A35's unusual performance is going to continue over their long-term investment/retirement time horizons. For that sort of result to continue it'd require a financial crisis, or something very close to it anyway.

However, if you ignore my soothing words and decide to trade all your MBH for A35 (and maybe more than that), you're making a swap precisely when A35 has increased in price. Do you really want to buy more of something that's now a higher price? Only if you think the price will continue to increase robustly (and more robustly than alternatives), which would require Singapore sovereign bond yields to fall substantially more. How lucky do you feel?

Chill, people. Good grief.

 

[zoneguard]

No, the fund managers are just managing to indices. It's all very mechanical for them.

From the prospectus of MBH, representative sampling is used instead of full replication.

The Manager may invest in certain securities that are not included in the Index ("non-Index Securities") but have aggregate characteristics (such as yield and duration) similar to those of the Index. The Fund can invest up to 20% of its total net asset value in such non-Index Securities, that should meet at least one of the following criteria: - SGD denominated bonds in which the bond or its issuer are rated as investment grade by S&P, Moody’s or Fitch, and have a minimum issuance size of SGD 100 million; - SGD denominated bonds by prevailing issuers of the Index with a minimum issuance size of SGD 100 million; or - Singapore Government Securities (SGS).

Up to 20% of NAV.

 

[Converged]

Hi Shiny Things and BBCW, I have restricted stock plan listed in NYSE vesting over 5 years with this year already vested.
Based on market price, this year vesting is ~ US$15k.
My current investment portfolio is ~ S$55k with 20% in MBH, 20% in ES3 and 60% in IWDA.
S$20k of my emergency fund is put in StashAway.

My plan is to sell the stock and fund my investment portfolio based on current ratio.
Does this plan make sense for people that receive stock from their companies?

Also, for wire transfer of USD from Etrade, is sending to local bank SGD account the best option? I will then use it to fund my MBH, ES3 and IWDA through DBS Vickers and IB.

Hi, just curious why did u do a 20/20/60 split instead of 20/40/40?

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[decibel.]

Anyone knows if Luxembourg domicile ETF subject to withholding tax 30%? I read some articles in 2018 it's saying it is? So if that's the case, LCWD will not be that lucrative?

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