Irish Life Funds vs ETF investing

Joey101 said:
It's all here, see the pdf for 'Consensus'
It's passively managed

(you'll need to format the link properly - I can't post links):

irishlife.ie/investments/fund-prices-and-performance
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Joey, the entire investment is based on the opinions of various fund managers and you are being charged for the privilege of that advice. In the industry we call that actively managed!!!
 
Joey101 said:
IA basket of ETFs vs a diversified fund.
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But you are not! You are comparing it to an actively managed account where you have no idea of that the costs are! For a start to do you know what the retro payments are and how they impact your account???
 
Joey101 said:
I fully understand this and to be honest, ETFs are what I would love to invest in. The only real thing putting me off are the requirements for taxation and the lack of transparency from the Revenue on the matter
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How does total lack of transparency from Irish Life trump the partial transparency of the Revenue???

Here is another gem form Irish Life: Their index is composite of activities of the fund managers they are holding in your active account, so it is not wonder the tracking error is so small. It is a bit like the rule in gambling: the house always wins...

If you go down this road I would say you will be very luck to come out with capital in tact in 10 or 15 years time. Because between churning, retros, fees and under performance it will just get eaten away!
 
monagt said:
If Yes, what is the alternative available to the small investor (€10k-50k)??
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Well I have been critical of Brendan in the past for this... but as I get to understand the lack of options available to the Irish investor, I think his suggesting of holding say 5 to 10 individual stocks might have merit if you are not interested in ETFs for whatever reason.

I suggest considering large cap, high dividend yield companies. So for instance take the DOW and the STOXX 30 dividend indexes and pick the five highest dividend yielding stocks from each after eliminating any sector over lap. You should get a good dividend return on those and given that such stock are usually undervalued you should also get a good capital bounce out of them in the long term. You should also have achieved reasonable diversification if you have eliminated and sector over laps.
 

Even at 1% it is still taking at least 4 or 5 times as much in charges every year compared to an index ETF from Vanguard or Ishares. Re TAX, someone posted here recently that UCITS ETF's which are recognised by IFSRA are taxed under the "Gross Roll Up" regime where a deemed disposal takes place every 8 years and you pay tax at that time. This tax payment is then offset against the tax liability upon actual full disposal. Apparently no annual tax is due if the ETF accumulates and they do not qualify for loss offsetting. The poster was told by revenue that if you receive a payment from the ETF you must submit a FORM 11. All the more reason to buy an accumulating ETF. I cannot vouch for the accuracy of this information, just trying to help. DYOR.
 

Yep I've read that thread. I'm coming back around to my original ETF plan, which will probably just involve 3 or so accumulating global ETFs, declare the purchase in a form 11 and sit on them for a few years, hoping that exit tax rates come down , adding to the investment once a year with savings and using this to rebalance.

Does anyone have the bottom line on whether Irish domicled ETFs are taxed more/less than non Irish domicled ETFs? (assuming both are 'good' UCITS ETF's)

As tempting as Brendan's suggestion is, I don't think I'd have the patience, knowledge or nerve to invest in individual companies and build a portfolio that way.

Thanks for all of the input on this thread
 

A far more sensible approach. I much prefer to have the tax problem rather than fore go the gain!
 
it is the case that many assets — almost all the major types of assets on earth, in fact — are at the high end of their historical valuations.

http://www.nytimes.com/2014/10/30/upshot/quantitative-easing-is-about-to-end-heres-what-it-did-in-seven-charts.html?partner=rss&emc=rss&smid=tw-nytimes&abt=0002&abg=1

almost all the major types of assets on earth,
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http://www.nytimes.com/2014/07/08/upshot/welcome-to-the-everything-boom-or-maybe-the-everything-bubble.html?abt=0002&abg=1

If this is the case, what does an investor do?
Put cash/savings into "assets" hoping all will go higher and can sell on the asset at a profit (greater fool theory)?
 
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monagt said:
If this is the case, what does an investor do?
Put cash/savings into "assets" hoping all will go higher and can sell on the asset at a profit (greater fool theory)?
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Unless you are a trader, you do not try to time the market. Instead you Dollar Cost Average, so that in times when prices are high you end up with fewer shares and in times when prices are low you buy more.

And on top of that you stop listening to talking heads!
 
monagt said:
http://t.co/pdk9kpCLo8

Why can we not get access to these low cost funds in Ireland?
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That's a question I have been asking a lot recently. There is effectively no cheap, accessable entry point for small investors in this country. Everywhere you turn there is exorbitant fees, charges and loads. If you do want to invest in an index fund then the insurance companies lob on an AMC of upto 1.65% or so for "managing" an index fund which eats away at your capital year after year. We can only dream about the plethora of low cost entry points open to small investors in the U.S. It is quite unfair and frustrating.
 
Brendan Burgess said:
  • 0% CGT if you still own the shares when you die - compared with 41% on the unit-linked funds. Older people should only invest directly in shares because of this huge advantage.
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What if the fund was passed on to a surviving spouse and not a son or daughter? Would it then be exempt from CGT?
 
monagt said:
Why can we not get access to these low cost funds in Ireland?
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Your link requires a subscription, howover if the funds are not available in Ireland it is because the provider chooses not to do so. While all the legal mechanisms are in place to allow it, a provider can not by forced to do business in Ireland.
 
Legal & General's FTSE World ex-UK index all-in cost is 0.14 per cent.
Fidelity tracking funds to 0.07-0.0 per cent, if funds were held on its own platform.
Hargreaves, the two UK funds and the US fund will now cost 0.06 per cent a year, while the world fund will cost 0.09 per cent.

So why do the providers here charge so much as compared to charges on same/similiar funds in Belfast?
 
Just for clarity, the very low fees quoted above are the "wholesale" prices. Retail investors will also pay a platform fee of 0.35%+ on top of them, so the total charges will be in the 0.4-0.6% range ... still better than Ireland, but not as outrageously so as the above comments suggest. Also the platforms (Fidelity, Hargreaves etc) may have minimum investments that are outside the scope of the really small investor.

I can't post a link but google an FT article of 30 October by Jonathan Eley.
 
ETFs are by a stretch the better option. Less costs, better transparency, no salesman (insurance broker) and therefore no early redemption fees. As for automatic rebalancing, that is routine in Asset Allocation ETFs if you look for one. The following link is just one example among many of an ETF from Global X (The Permanent Portfolio) that invests equally across the asset classes in a non-subjective manner and rebalances.



As for taxation of ETFs, my understanding is that UCITS regulated products (which includes EU domiciled ETFs) are taxed disproportionately, just as life company unit-linked funds are - but it is most likely that non EU-domiciled ETFs are taxable as shares. That's the current 'tax expert' view as I hear in the market place. Hence, the vast majority of ETFs listed on markets outside the EU most likely attract CGT with loss relief available (against gains elsewhere). Same most likely applies to investment trusts; most likely they, too, are subject to CGT and loss relief should be available. These issues are not dealt with in Irish Revenue law, so they'd have a hard time suggesting otherwise, in my view.

Rory Gillen
Founder
GillenMarkets
 
I fully agree with Rory here and I might add (with due caution!, and respect) look at your timeline, ensure you're not trying to 'beat the market', and please, please please 1) Ensure, within comparable ETF's the rebalancing strategy does not bring with them excessive trading costs (and at the wrong times i.e. typical end of month/quarter when everyone's in the game) and 2) Be aware of good offshore funds and bad offshore funds (ETFs UCITS etc) for tax. It's an OECD thing as far as Revenue are concerned. (Also distributing and non distributing). Just keep an eye on that.
 
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