There's no one killer feature, but there were a lot of smaller things together that made me go with the Irish ETFs:fools_gold wrote: ↑Sun Apr 25, 2021 12:07 pmWhat's the advantage with Irish ETFs over Japanese mutual funds? I know that Ireland doesn't levy its own withholding tax on ETF distributions, but the underlying stocks are still subject to each country's withholding tax.rhe wrote: ↑Sat Apr 24, 2021 11:15 pm For international, Vanguard offers Irish-domiciled accumulating ETFs. These are difficult to find by clicking through on the website, but show up if you search on google. For example,
<https://global.vanguard.com/portal/site ... ocId=31799>
My strategy is to claim the 10% tax withholding deduction on my (US domiciled) US investments, and use Irish-domiciled accumulating ETFs for most of the non-US international.
For people below the fee-waiver threshold for interactive brokers, I think I agree with you that they should probably stick with domestic options for non-US international. If you have more, though, I don't think any domestic option is going to be able to beat IB. In some cases (e.g. France), it looks like you can actually get a Luxembourg domiciled accumulating ETF that doesn't seem to have any tax withholding at all.
1. Reported expense ratios were generally (although not always) lower. The link above, for example, has a 0.22% ER, which is substantially lower than most (all?) Japanese "emerging markets" mutual funds.
2. Japanese mutual fund holdings sometimes seemed to rely on holding some other fund, which potentially introduced additional fees or taxes. If I'm remembering correctly, there were "emerging markets" mutual funds that held most of their stock through ADRs in New York. This introduces an unreported ADR fee, sometimes 0.5% or even higher. Some of this is unavoidable, but if you check the annual report (around p.144) at
https://www.vanguardinvestor.co.uk/rs/g ... nts/959/gb
you can see that vanguard is making very limited use of ADRs, and mostly only for China where they may be the best or only way for foreign investors to hold the stock.
3. Position reporting didn't seem to be as good. If you look at the vanguard annual report, you can see exactly what instrument they're holding, and the list goes on for pages and pages. The "statement of operations" table (around p. 163) lists foreign withholding tax, so it's easy to see you're losing about 10% of your dividend to foreign tax. It was very difficult to find this information for Japanese mutual funds, where they seemed to often report only net dividends.
I seem to remember one exception to this was emerging market bonds, where there was a Japanese mutual fund that had substantially lower ER and seemed to actually hold the bonds itself. I had some of that for a while.
In general, the vanguard ETFs have negative tracking difference (emerging markets outperformed the index by 0.20% last year) because they take advantage of tax treaties while the net return index doesn't. Often I would see Japanese funds that matched the index exactly. Where are the savings from the tax treaties going? Unclear, but apparently not to the investors in the fund!