Hi everyone,
I am a 30-year-old expat moving to Brussels soon for work. I’ve spent the last few months deep-diving into investing (Modern Portfolio Theory, Return Stacking, etc.) and I’m ready to build my long-term portfolio.
The Strategy:
A long-term, aggressive but diversified portfolio inspired by "Return Stacking" and "Efficient Core" concepts. The goal is to leverage diversification to improve risk-adjusted returns.
The Proposed Portfolio:
- 65% NTSG (WisdomTree Global Efficient Core - IE00077IIPQ8) -> Leveraged 90/60 Equity/Bond
- 20% DBMFE (iMGP DBi Managed Futures - LU2951555403) -> Trend following / Uncorrelated
- 5% CRRY (WisdomTree Enhanced Commodity Carry - XS3022291473) -> Commodities (Carry Strategy)
- 5% UEQC (UBS ETF CMCI Composite SF - IE00B53HCB13) -> Commodities (Broad/CMCI Index)
- 5% Liquidity/Cash (Initial emergency fund)
Future considerations: Once (hopefully) my portfolio grows significantly, I might consider reducing the cash drag and reallocating that 5% into IGLN (Gold). Alternatively, my hope is that by that time, we might finally see UCITS-harmonized versions of US strategies like BTAL (Anti-Beta), CAOS (Tail Risk) or TAIL (Tail Risk), which are currently out of reach for us European retail investors.
My Questions for the community:
- Broker & Availability: I tried searching for these tickers/ISINs on a SaxoInvestor Demo account but found zero results. Is this just a limitation of the Demo account or does Saxo Belgium generally restrict these “complex” or newer UCITS ETFs? Could someone using a live Saxo account please let me know if they can find these specific tickers on their platform?
- Saxo vs. IBKR: Given this specific portfolio, should I skip Saxo and go straight to Interactive Brokers (IBKR)? I know Saxo handles the TOB (Transaction Tax) and Reynders Tax automatically, which is convenient. However, is the manual tax administration with IBKR manageable for a newcomer in exchange for better access to these specific funds?
- Tax Efficiency (Reynders Tax): This is my main concern. NTSG holds equity + bond futures. Does anyone know if this structure triggers the Reynders Tax (30% on capital gains) upon selling? Since it technically uses derivatives for the bond exposure, is it treated as a mixed fund or pure equity for tax purposes?
- Cash Management (XEON / CSH2): For the 5% cash component, I’ve read a lot about XEON and CSH2. Are these currently considered safe from the Reynders Tax, or has the interpretation changed recently? Would I be better off just using a regulated Belgian savings account to utilize the tax-free interest exemption (up to ~€1020)?
Thanks in advance for helping a newcomer navigate both the Belgian system and the FIRE journey!
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TOB is very easy to manage, one monthly export + 1 submission through MyMinFin (and of course wiring over the money). Reynderstaks is for your yearly tax bill, you can just look it up, although having to pay it is a "bad smell" for a long term portfolio (as long term portfolios should rarely if ever hold bonds).
XEON definitely has the reyndertaks, CSH2 is unclear. It should not incur reyndertaks since you are holding stocks as collateral, but some brokers incorrectly withheld it in the past. I prefer to keep my small allocation of cash "liquid" in a regulated savings account, which avoids CGT, TOB, and transaction costs. I can always take a loan against my assets by shorting an MMF if I really need more anyway (which would of course then trigger TOB and transaction costs, but that is worth the risk/cost).
For your general portfolio: you seem to be overengineering a solution that will underperform your targeted risk level, have you considered just going for a 133% market exposure using LWLD (eg. 67% SPYI + 33% LWLD)? Less transactions/rebalancing, and none of the tax issues. On top of just having more equity exposure, which long term will outperform the extra bonds and commodities in your portfolio. You can still add in the managed futures or other products if you really think it will help you, and then just reduce the 67% to whatever ratios you prefer.
Thanks for the confirmation on the TOB and the practical advice on the cash part. Using a regulated savings account for the liquidity buffer creates fewer headaches, so I will likely go down that route.
Regarding the portfolio structure: I see your point about "overengineering" but I have fundamentally different goals regarding volatility. A 133% Equity portfolio (LWLD + SPYI) would definitely maximize returns in a bull market, but the drawdowns during a crash would be brutal. The goal of adding NTSG (Bonds), Commodities and Managed Futures isn't to drag down performance, but to leverage diversification. By stacking uncorrelated assets, the idea is to achieve similar returns to a 100% equity portfolio but with significantly lower volatility and shallower drawdowns. Basically I'm prioritizing the Sharpe Ratio and Geometric Mean over raw arithmetic returns.
That said, your point on the Reynders Tax stands. If the tax friction on the entire asset allocation is too high (30%), it might indeed render the whole diversification benefit mathematically useless in Belgium.
I am familiar with the model, it just makes no sense on paper to optimize for lower volatility on a long term portfolio, either you are a short term investor and want no volatility, or you are long term and volatility is the price you pay for higher expected returns. I know there is a lot of research and academic insights gained into return stacking and uncorrelated returns, but on a base level you are always trading something for something else. A long term portfolio, unless constrained by investor behavior, should just maximize long term returns in most circumstances.
I totally get your point, and honestly, my pragmatic side is currently at war with my mathematical/scientific side. The engineering and the elegance of the Return Stacking model truly fascinate me, and I have this itch to implement it. However, the Belgian tax reality is discouraging, and you are likely right: a simpler, cheaper structure (lower TER, no tax drag) might yield better net results over the very long term simply due to less friction.
Regarding leverage, outside of this specific 'risk-reduction' framework, it’s not a tool I’m eager to use. Perhaps a better alternative for me would be pivoting towards Factor Investing. I noticed that Dimensional (DFA) recently launched their ETFs in Europe (specifically DEGC). That might be a cleaner way to seek higher expected returns without the headache of derivatives and complex tax reporting.
You call buy all of these on bolero, more expensive but it is what it is. Saxo does not have everything (or want to add everything). Note however
I tested with NTSG. Don't go for it, it is a nice etf (90-60 stocks-bonds) but it is heavily taxed. Bolero applied the Reynder's tax to it fully.
don't buy UEQC. buy the euro hedged one. You want it to perform 'bond'-like, getting USD depreciation kinda destroys the purpose.
Wow, you just saved me a lot of headache (and money)! If Bolero is already flagging NTSG for the full Reynders Tax, then this strategy is probably a no-go.
Regarding UEQC, I agree. The goal is to stack returns, not stack currency risks. I'll look for the Euro-hedged ticker to ensure it acts as the diversifier it's supposed to be. Thank you for pointing that out.
Do not forget to capital gains tax that is starting this year.
Honestly, I’d be happy to deal with the CGT! Based on my calculations and assuming a 7% CAGR, the proposed exemption thresholds of 10k would likely allow me to withdraw more then €20k annually in twenty years completely tax-free.
The real problem, it seems, is the Reynders Tax. That is the one that could actually kill this portfolio strategy (specifically NTSG) due to the 30% rate on gains if it's classified as a mixed fund.
If you would still be able to withdraw 20k without cgt, then your strategy seems suboptimal.
With a regular stock investment one can expect to have 15k gains, when one withdraws 20k in 20 years (investment doubling each decade). 5k putchase, 20k sale. 15k gains, 500 euro taxes.
So maybe you should switch your strategy.
I double-checked my math based on the specific inputs, and it holds up. Let's check again together. My model assumes a monthly contribution starting at €1k and increasing by 3% annually (trying to match inflation). Because I am constantly adding 'fresh' capital over the 20 years, the ratio of Principal vs. Capital Gains in the final portfolio is roughly 50/50. Therefore, on a €20k withdrawal, only ~€10k is considered taxable capital gain, which fits perfectly within the €10k annual exemption. Caveat: This holds true only if the new Belgian tax rules apply to the Average Cost Basis of the shares. If they enforce a FIFO rule then you are right: the taxable base would be much higher, and the exemption wouldn't be enough.
Regarding the strategy itself, the objective of this portfolio is to maintain equity-like returns (~7%) but with a higher Sharpe Ratio and significantly reduced drawdowns thanks to the uncorrelated assets. By minimizing volatility drag, this approach improves the Geometric Mean which, in my opinion, is the only return metric that should actually matter to a long-term investor.
Anyway, it’s ironic. I spent weeks figuring out how to hedge market risk and volatility, but it seems there is no swap or future available to hedge against the Reynders Tax interpretation! 🙃
Cgt is fifo.
Again, if after 20 years you only have 10k or less capital gains, you should change your strategy as this is a poor result for a high risk strategy.
XEON holds a bond collateral, CSH2 only stocks so XEON triggers Reynders tax and CSH2 not. As far as I know it only triggers on the bonds parts of a mixed fund, but then there should be a number published that tells the tax guys what the average bond allocation was for a given year. I’m sure you can find more info online about the subject.
Regarding CSH2, I've read that the interpretation has become stricter recently. It's not just about the collateral anymore (stocks vs. bonds). The tax authorities are increasingly looking at the investment objective: since CSH2 tracks the €STR (an interest rate), it effectively functions as a debt claim product, which likely triggers the Reynders Tax regardless of the synthetic equity basket.
And you are spot on about the reporting. That is now my biggest fear with NTSG and DBMFE as well. If they are considered 'mixed funds' because of the futures/cash exposure and do not publish the specific Belgian TIS (Taxable Income per Share) figures daily, the tax office defaults to taxing 30% on the entire capital gain. That would be awful.
Saxo user here => Only found NTSG
Thank you very much for checking! Good news and bad news then: the Demo doesn't list everything, but it seems DBMFE is genuinely missing. I'm surprised, as it trades on Euronext Paris and has a French KID.
Do you think it would be possible to write to Saxo to ask them to add it to their available ETFs?
No problem. Yeah there's a procedure to demand assets that you can't buy with them yet. Then they check if they can add it.
If you're planning to create an account, feel free to send me a DM for a referral link (€100 free transaction fees).