Low cost index funds (why are they expensive in Ireland)

monkstownman

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I see that Quinns Freeway US fund which tracks the S&P500 has an annual charge of 1.2%.
I would have thought that this is a low cost index fund.
On US websites, these funds have an expense ratio of .25%
Is it the fact, we live in Ireland and can't get such a good rate.
Does any one know what the costs of TDWaterhouse.ie are for an equivalent low cost index funds is (assuming you have more that 5000€ in the fund).
Basically, what is the cheapest way of tracking the S&P500 from Ireland?
Can you do it from within Ireland or do you have to have a US brokerage account?
 
I see that Quinns Freeway US fund which tracks the S&P500 has an annual charge of 1.2%.
I would have thought that this is a low cost index fund.
On US websites, these funds have an expense ratio of .25%
Is it the fact, we live in Ireland and can't get such a good rate.
Does any one know what the costs of TDWaterhouse.ie are for an equivalent low cost index funds is (assuming you have more that 5000€ in the fund).
Basically, what is the cheapest way of tracking the S&P500 from Ireland?
Can you do it from within Ireland or do you have to have a US brokerage account?

Have alook at www.ishares.co.uk

I think they do an ETF that covers the S&P500.
Try this link http://uk.ishares.com/en/rc/funds/IUSA

The TER is about 0.4% but you have to buy it through a stock broker - not suitable if you only want to invest a small amount.
 
The simple fact is that Irish unit-linked funds that are tracker products just cannot compete with exchange traded funds that can be bought and sold on the stock exchanges. The previous comment by Bogle has given you the best alternative, the iShare Exchange Traded Fund that tracks the S&P 500 Index at minimal annual cost.

Rory Gillen
 
Hi, I agree that if you only look at cost that ETFs are cheapest however for an Irish investor it can often be advantageous to buy funds through a life policy. AXA have entered the medium net worth investment fund market with AXA Financial. They provide a range of funds from c. 20 global fund groups, on a funds platform (true online switching), that have been screened and approved by their independent research team. They are available through different tax wrappers to individuals, SSAPS and ARFs.
It is an active and passive range and the passive are Barclays index funds at 0.5%p.a. They are all within the umbrella life wrap for individuals which allows encashments and switching across funds with no tax hit.
They work through a select group of intermediaries and have a €50k minimum investment. Might be worth looking at...
 
The point Spinner makes is valid and AXA are offering something new. But only in comparison to the very high cost unit-linked fund offerings that exists in Ireland. ETFs allow you to by-pass the middleman where most of the costs lie. A well balanced and diversified portfolio of ETFs bought through a traditional or low-cost stockbroker is hard to match cost-wise locally in Ireland. DIY investing (as oppsed to trading or speculating) requires some learning and effort but not much. If you are investing rather than speculating, then the tax advantage of the umbrella structure is not a major deal, although I do acknowledge that it is an advantage that needs to be considered, as Spinner has alluded to.

Rory Gillen
 
This is great advice. I would like to be a little more specific. I have a lump sum then I would like to save regularly into the EFF or life policy as suggested above. I have a Ameritrade US brokerage account from the time I was working there but not a UK one. What are the advantages of going through iShares in the UK.
If I invest in a ETF in the US what are the tax implications. Do I have to make returns every year or only in the years I take money out?
 
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