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Hi Brendan,

Do you mean funds such as ETF’s that track S&P 500, as an example? Can these funds be joined directly or does it make more sense to go through a broker?

Thanks,
Ricky
 
The tax treatment of ETFs in Ireland is very unattractive.
Deemed disposal every 8 years, income tax 41% on gains etc.

Edit: corrected tax treatment.
 
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ClubMan said:
The tax treatment of ETFs in Ireland is very unattractive.
Deemed disposal every 8 years, income tax on gains etc.
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Are they not the same as most managed saving and life assurance policies such as those provided by Irish Life and Zurich, etc. e.g. MAPS and Prisma funds, in terms of income tax and deemed disposal every 8 years? I have read before that they are not attractive from a tax treatment point of view but I can’t seem to find anything else that would be, apart from maybe buying and selling shares.
I was interested in Brendan’s point about low cost passive investing. I thought buying into funds that track certain indices would be a way of doing this. I thought the only way of doing this was through ETFs.
 
RickyJ said:
Are they not the same as most managed saving and life assurance policies such as those provided by Irish Life and Zurich, etc. e.g. MAPS and Prisma funds, in terms of income tax and deemed disposal every 8 years?
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Yes. Which is why they are also much less attractive than investing directly in an appropriately assembled and diversified (have to be careful in case Marc is reading! ) basket of shares.
 
ClubMan said:
Yes. Which is why they are also much less attractive than investing directly in an appropriately assembled and diversified (have to be careful in case Marc is reading! ) basket of shares.
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Am I right in saying the only way to invest in such a basket of shares is through a stock broker? If you are someone who wouldn’t have a clue how to choose between one share and another, I would guess this option would be expensive because you would have significant fees for the brokers expertise? Do you think it would still be a better option when you take into consideration paying the broker to bed and breakfast the shares if applicable every year? Apologies if I am asking questions that you may not know all the answers for. Possibly amount to be invested would be €20,000 - €30,000. Alternatively, may also consider investing €1,000 per month to spread the risk, over 5 years.
 
RickyJ said:
I was interested in Brendan’s point about low cost passive investing. I thought buying into funds that track certain indices would be a way of doing this. I thought the only way of doing this was through ETFs.
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There are plenty of passive funds that you can buy as part of a pension etc. in Ireland (or anywhere). The problem is that you then pay an annual fee for someone to administer that fund - I would argue that those fees generally represent terrible value for money as even a novice investor could manage a couple of ETFs themselves and achieve excellent diversification and low risk. Over the long term what may seem like very small fee %s really take a huge chunk out of your savings. Unfortunately in Ireland it's not really practical (although not impossible) to do this yourself with ETFs because the tax treatment is so ill thought-out (or maybe it is exactly as intended?)
 
My parents have an equity portfolio that’s looked-after by one of the wealth managers.

They pay an annual management fee of 0.75%.

I think it represents good value.

I also think it’s a hell of a lot better than trying to do it themselves, i.e. being penny-wise and pound-foolish.
 
What might be interesting to know is how well their portfolio has actually performed against the same amount invested in (for example) a SP500 ETF over the same period. That's the real indication of good value. I hope they beat the market but chances are they did not and particularly when you take the fees into account the chances are that it underperformed.

When you consider that 0.75% fee over the lifetime of a typical investment (decades) it is definitely not a case of being penny-wise - the number of pounds potentially lost can be shockingly massive - it certainly shocked me when I did the sums myself. The point is also that in other countries it really is practical for someone to manage ETF investment themselves, it is not complicated at all, the sad reality of most portfolios is that you are paying fees for worse performance than you might be able to achieve yourself.
 
I’m sorry, but this is utter nonsense.

The S&P500 is US!

I’ll tell you exactly how it did…my understanding is that global stocks did circa 30% last year in Euro terms and their portfolio did 32% net of fees.
 
Another option might be to consider investing in the likes of Berkshire Hathaway. Granted, its US$ exposure, but you can invest directly, hold as long as you wish, get a reasonable amount of diversification, while apart benefiting from professional expertise etc.

While I think that I understand the point that bankrupt is trying to make, I'm inclined to agree with Gordon. When push comes to shove, professionals tend to do a better job than amateurs, hence they exist and get paid.

The age old arguement about most active investment managers not being able to match, not alone beat the S&P500, is important to note, but I don't think that's what we're talking about here.
 
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Gordon Gekko said:
I’m sorry, but this is utter nonsense.

The S&P500 is US!

I’ll tell you exactly how it did…my understanding is that global stocks did circa 30% last year in Euro terms and their portfolio did 32% net of fees.
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Gordon, that's really interesting. And a great result. Thanks for sharing. Would you be willing to detail a bit what their portfolio is invested in? And if there are any / many changes in what it was invested in?

I think it would be interesting as it's own thread! - sample wealth manager portfolio. Even more interesting if we know what the brief to the wealth manager was for the portfolio.
 
Marc said:
Wow I’d forgotten about this. Interesting to see Rory Gillen defending the now disgraced Neil Woodford
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I think that's overstating his position here? The points I took from rereading his post from 11 years ago:

He acknowledged that it's proven that fund manager skill doesn't exist.

He asserts a passive value-tilt premium exists (existed?). Although he didn't mention small value!

I think we agree these are facts.

He did indicate he thinks rare fund manager skill exists (partial fact e.g. Buffet).

He implied Woodford had it, and he said he liked a particular investment philosophy and was invested with him as he was executing that.

I didn't know about the scandal. Skimming a summary, most investors got 80p.c back. The fund imploded due to investors stampeding out if it and not having enough liquidity to pay them. He may have had more than was allowed invested in unquoted firms? maybe his plays would have worked out if rug wasn't pulled out?
 
Gordon Gekko said:
I’m sorry, but this is utter nonsense.

The S&P500 is US!

I’ll tell you exactly how it did…my understanding is that global stocks did circa 30% last year in Euro terms and their portfolio did 32% net of fees.
Click to expand...
That's a strange answer. I used the SP500 as an example as it's so commonly considered a benchmark and often held as an ETF (VOO for example) but using ETFs you can track essentially any index worldwide (and plenty of other asset classes including property, gold etc). As an investor I do not care exactly where the underlying assets are although I may prefer to avoid currency risk and take Euro-denominated ETFs only for example. Are you saying that an Irish investor should seek to exclude US assets from their portfolio for some reason?

You also mention only 1 year term - this is not what most people should consider who will rather think in terms of decades of investment, this is the real key. If you can find a fund that beats the market consistently over decades then great, go with it but that's not the reality for the vast majority and there is a simple alternative. The last year has been extraordinary for gains, maybe the next few will not be so kind to us, then we will see whether Buffet's old saw about naked swimmers holds true perhaps.
 
I think the point that’s being missed, and one that’s often made by Sarenco, is that the regular punter can’t buy a US ETF that’s subject to CGT without going through a fund manager.

Yes, most active managers underperform, but the equity portfolio I referenced is bound to outperform my own half-baked ideas.

Hire professionals and leave them at it.

In terms of what’s in the portfolio, I think there are about 30 or 40 holdings, mostly direct equities with a couple of cheap ETFs (S&P500 maybe and US financials possibly), think there’s an Emerging Markets Investment Trust in there, Scottish Mortgage Trust is in there as well). In terms of the individual equities, the FAANGs you’d expect to see, I think ING is in there, Ryanair is the only Irish stock (I think), Heineken is there, LVMH, from memory Berkshire…stuff like that.
 
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Gordon Gekko said:
I think the point that’s being missed, and one that’s often made by Sarenco, is that the regular punter can’t buy a US ETF that’s subject to CGT without going through a fund manager.
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This is true and I've made the same point elsewhere myself on AAM - the tax situation for ETFs in Ireland at the moment works contrary to the best interests of investors (to put it mildly). I hope that will change. I think my general point is valid however, as an individual investor I would still seek out the lowest-cost, tax-efficient passive investing options available and do my best to bypass professional portfolio managers. In future when it is practical for an ordinary investor to hold ETFs directly it really will be possible to do all of this yourself (perhaps there will be the equivalent of the UK ISA for example?). I have no opposition to paying for expertise but the sad reality is that time and again the experts lose to simple passive fund investing and that is something we should be all easily able to handle ourselves (and a reasonable tax scheme should encourage this in my opinion).
 
Thanks for details Gordon. I wondered was it closet passive investing. But it doesn't sound like it from your list.
 
I don't know either of those.
I favor Terry Smith and his Fundsmith fund.
The fund itself is only around Since 2014 if I remember correctly but Terry Smith himself has a long and esteemed pedigree in fund management including Tuttle Prebon ( spelling?) and Barclays bank.

He has a fairly simple principle for selection and is based g on holding long or " do nothing" as he describes it.

The fund component turnover is very low.
The returns to date have been excellent in my observation.

Links to follow...
 
hmm couldn't post a link it may be against forum rules. Anyway just Google Terry Smith.

I have no affiliation other than being satisfied investor.
 
I presume it's this? Just in case anybody searches and gets a scam site..

Fundsmith | Home

Fundsmith is a London-based investment management company, founded in 2010 by Terry Smith. Fundsmith is focused on delivering superior investment performance at a reasonable cost.
www.fundsmith.co.uk
 
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