I am trying to get cap weighed exposition worldwide.
I cannot get US-domiciled ETFs due to estate tax reasons.
If I had to pick a single Irish ETF that comes closest to doing the job, I believe that would be VWRA, which tracks the FTSE All-World index.
But FTSE All-World does not include small caps, and I would like to correct for that.
After some research, I found that 88% VWRA and 12% WSML would come very close to VT. It would still miss small caps from emerging markets, but I'm fine with that. I even wrote about this here in response to a post by a British investor.
For some sanity check, I would like to get a second opinion on this solution.
Thanks in advance!
Just buy this instead: https://www.ssga.com/uk/en_gb/intermediary/etfs/spdr-msci-all-country-world-investable-market-ucits-etf-acc-spyi-gy
Thank you!
This would be IMID in dollars and SPYI in euros, right?
Unfortunately some small brokers do not offer either of these.
Also, some investors may be already invested in VWRA and looking for a way to correct the exposure.
For those, would 88% VWRA and 12% WSML be close to optimal?
Yes but higher TER and you’re still missing emerging small caps (which is admittedly only like 1-1.5% of VT).
IMO a better option if you don’t have access to SPYI/IMID is IWDA+EMIM+WSML, that gets you VT essentially and those are some of the largest most liquid UCITS ETFs there are
Or just get VWRA and forget about it. The difference is likely to be small.
The 88/12 split is mathematically sound, as small caps currently oscillate between 10% and 12% of the global investable market. While your combo effectively patches the developed world, you’re still ignoring the ~15% of the small-cap universe that lives in emerging markets.
If you want to stop playing part-time fund manager, look at IMID (SPDR MSCI ACWI IMI); it’s the closest UCITS "one-and-done" equivalent to VT, covering large, mid, and small caps across the board for a lean 0.17% expense ratio. Rebalancing two funds to save a few basis points is a lot of effort just to prove you can use a calculator.
Thank you!
I do value the aesthetics of having one single fund do exactly what I want, but unfortunately my broker is quite limited and does not offer IMID (and other brokers wouldn't offer me a TOD account), and selling the VRWA would have tax implications anyway.
To achieve an almost "neutral" exposition I would just need to direct new contributions to WSML for the time being. That's simple enough for my standards.
Your 88/12 mix is essentially adding a turbocharger to a minivan; it won't win any drag races, but you'll certainly feel more sophisticated while driving to the grocery store. Since EM small caps are often less liquid than a frozen lake in January, ignoring them is less of a "missing piece" and more of a strategic refusal to buy a lottery ticket printed in a language you don't speak.
May your returns be high and your tax forms be short.
I enjoyed your metaphors but I'm not sure I understand what they refer to. Is the turbocharger referring to the EM small caps or all small caps? Do you mean I should just VWRA and chill? I'm still building a position, there would be no tax loss or other costs involved in adding WSML.