ETFs Fees edging lower and lower (1655/S&P500-0.077%)

[TokyoBoglehead]

ETFs Fees edging lower and lower (1655/S&P500-0.077%)

https://shintaro-money.com/ishares-sp500etf-cost202211/

Anyone tempted to switch over from Japanese Mutual Funds? The reinvesting dividends and easy purchasing is still a big advantage.

[RetireJapan]

ETFs Fees edging lower and lower (1655/S&P500-0.077%)

https://shintaro-money.com/ishares-sp500etf-cost202211/

Anyone tempted to switch over from Japanese Mutual Funds? The reinvesting dividends and easy purchasing is still a big advantage.

Really unusual that the hedged one has the same low fee.

[mighty58]

Anyone tempted to switch over from Japanese Mutual Funds? The reinvesting dividends and easy purchasing is still a big advantage.

No. It's always good to see fees edging downwards though, as that will usually spur rivals to stay competitive. However, as you rightly point out, keeping dividends internal is huge for long-term compounding. Also, as long-term investors are not day traders, the ability to buy/sell ETFs instantly is moot. In fact, the relative lack of liquidity in mutual funds is probably a good thing for individual investors, as it could serve as a stop-break, allowing people time to take a breath, whereas it's all too easy to succumb to the temptation to hit the sell button in a huff of panic with ETFs.

[captainspoke]

Yep, mutual funds protect people from themselves, and ETFs are one of satan's temptations.

[sutebayashi]

ETFs Fees edging lower and lower (1655/S&P500-0.077%)

https://shintaro-money.com/ishares-sp500etf-cost202211/

Anyone tempted to switch over from Japanese Mutual Funds?

Interesting, but no not quite - going directly into US ETFs for this sort of purpose is what I am “considering” (procrastinating on).
Switching to ETFs is what I want to do with respect to my taxable account holdings, but still waiting for conclusive evidence that I should do so more proactively.

When I was starting out at this about a decade ago, mutual funds were cheaper to get into with a smaller amount of investable funds, but the fees were significantly higher than ETFs. A book I read then advised eventually switching into ETFs, and specifically highly liquid US ETFs for certain parts of a diversified, index based portfolio, due to their lower tracking error and low cost.

Of course since then, eMAXIS Slim etc have come along and fees are way lower, so that fee cost advantage of ETFs seems to have been whittled down. Now we are talking just several basis points difference? And I need to pay brokerage fees to buy those ETFs… that should pay for itself but not as quickly as in the past.

So I see this as mostly an exercise in preventing boredom, than an essential, given how low costs are even for mutual funds now.

But I fear my info is old Tomoya Asakura seems to think ETFs are the way to go, and I am (still) waiting for my reservation on his book’s latest edition at my local library to come in so I can see why he thinks I should buy them now:
https://www.amazon.co.jp/-/en/gp/produc ... bl_vppi_i0

Using mutual funds in tax protected accounts does seem it would make sense though, if reinvesting the proceeds.

What I am most likely to do, is switch into ETFs from my taxable account holdings when I need to do some rebalancing, or I have a fresh lump of cash to invest, just go straight into ETFs. I don’t mind getting dividends paid back to me from there since I am still investing more periodically anyway, and my tax protected accounts are already maxed.

I also like the idea of being able to eventually close these positions with limit or market orders, where selling Toshins always feels a little untransparent to me. So far I have managed to resist the urge to actively buy/sell my index ETFs, but certainly the lack of transparency on price does make one more reluctant to sell mutual funds actively.

[TokyoBoglehead]

Oh, I also forgot to mention points.

With Mutual funds you can earn points for purchasing via credit card, and points for holding, etc. So they still definitely edge out ETFs.

[sutebayashi]

That’s an interesting point, but pardoning the pun, where do these points from holding mutual funds come from? I guess it is just a form of cash back, no? (Yikes I probably shouldn’t ask because these points might be considered taxable income?)

[TokyoBoglehead]

That’s an interesting point, but pardoning the pun, where do these points from holding mutual funds come from? I guess it is just a form of cash back, no? (Yikes I probably shouldn’t ask because these points might be considered taxable income?)

Points have a special tax category. You can earn up to 50man worth without reporting I believe. Which is why some people like to use points investment schemes (ala PayPay and Rakuten) - Points tied to an index, but not denominated in Yen, denominated in points! ) I would love to see someone to a deep dive in English on this topic.

A. The points for investing come from credit card companies and Securities Firms partnering. Like all these schemes they think the small bonus will increase your net consumption.

B. The small point bonus for holding mutual funds yearly, is just a way to attract customers. I think it is pretty cool.

A and B together more than cover fund fees, making the investor a net positive after fees if they use a low-cost fund.

[sutebayashi]

So, my boredom got the better of me recently and for some of my Toshin holdings in my taxable accounts, I have started to switch over to US ETFs with lower fees, imagining that in the long run the lower fees will pay for themselves… It is more an exercise in annual rebalancing with a little bit of a twist to make things interesting. (If I don’t like the ETFs I can always switch back to my eMAXIS toshins in future, again for a cost...)

A couple of things I did learn, which I could probably have learned had I read the entire forum here first, were:

1) ETFs that track the MSCI Kokusai, eg what my eMAXIS slim developed market equities Toshin was tracking, are not such good options in US ETF space.
There is TOK and KOKU but as someone here mentioned, they are not very highly traded ETFs.
I do like that index because it is developed markets excluding Japan, whereas big cheap developed market equities ETFs like VT, VEA do include Japan, and I would prefer to keep Japan out of my developed markets holdings, but ah well. (Similarly, in MONEX’s Monex View which I reference to check my portfolio balance, some part of VEA is counted as emerging markets rather than developed markets - South Korea perhaps, due to difference between MSCI and FTSE indexes perhaps - which is a little different, but whatever. )

2) Time out of the market when switching - one can’t take the exact same proceeds from a Toshin sale in Japan and plonk it into US ETFs on the exact same day. The Toshin sales proceeds are available on the settlement date, some days after the Toshin sale trade date, which could lead to some time out of the market.
To mitigate, to the extent I have free cash lying around, I have used that to have funds ready in my US stocks account, ready to buy my ETFs on the same day that my Toshin sale trades and fixes the price.
But my equities Toshin holdings are bigger than my free cash, so when if I switch those, I will probably just suck up the risk and try not to do it immediately around big market events like the FOMC, so hopefully I don’t get back invested via ETF at too different a level.
I am keen to do this in single shots, so as to minimize my ETF purchase commissions. They max out at 22 USD with Monex, so better to go in one shot per ETF, I figure.

Next year, i’ll experience the pesky dividends reinvestment task too… just thinking about it makes me think sticking with toshin for some asset classes might be a good idea actually!

[TokyoBoglehead]

Next year, i’ll experience the pesky dividends reinvestment task too… just thinking about it makes me think sticking with toshin for some asset classes might be a good idea actually!

Monex has a US DRIP program to make that easier.