Pros and cons of emaxis slim vs vanguard etf

[printingmoney]

Hello all,

I discovered this forum on fb recently and I'm so greatful to have found a space where we can get some investing related questions answered by foreigners like myself living in Japan.

I'm a NON-US national living in Japan and have been investing in vanguard's VTI and VXUS etfs via SBI for a few years. Recently I started studying EMAXIS SLIM all country etf and was wondering which one would be better for a foreigner planning to settle in Japan. Am I right in saying that EMAXIS SLIM all country will reinvest the distributions and hence avoid a taxable event?(are there distributions in the first place?). One of the things I didn't realize unless recently is that my VTI and VXUS dividends are not invested automatically which is not ideal. Also I have been settling the transactions in YEN to avoid FX gain tax. However the dividend itself is paid out in USD which I have been exchanging for yen to buy more of VTI/VXUS. Given all this I'm starting to think maybe I will keep my VTI and VXUS as it is and going forward invest in emaxis slim all country.

Would love to hear what you guys think especially on the grounds of taxation, exchange rate and anything you can think of.

Thank you and warm regards!

[zeroshiki]

The eMaxis Slim most people talk about here is the mutual fund (investment trust) version and not the ETF. Its yen-denominated and has no distributions so its more efficient in that sense (no taxation on dividends for example).

Are you already making use of your NISA and iDeCo? Those are tax free vehicles and considering the idiosyncrasies of it, the eMaxis Slim (and similar funds) are considered ideal for them.

[TokyoBoglehead]

The eMaxis Slim most people talk about here is the mutual fund (investment trust) version and not the ETF. Its yen-denominated and has no distributions so its more efficient in that sense (no taxation on dividends for example).

Are you already making use of your NISA and iDeCo? Those are tax free vehicles and considering the idiosyncrasies of it, the eMaxis Slim (and similar funds) are considered ideal for them.

Well said, in addition there are lots of free points to be had with trusts. Along with the benefits of automating purchases easily.

In Japan most mutual funds winout over ETFs.

If you are married to American ETFs Monex has a DRIP program that would make the dividends less painful.

[adamu]

https://retirewiki.jp/wiki/Japanese_global_index_funds

If anything there could be improved, contributions are welcome

[TokyoBoglehead]

https://retirewiki.jp/wiki/Japanese_global_index_funds

If anything there could be improved, contributions are welcome

It is a great summary. Is there a counterargument out there for US etfs?

1. US ETFs kept with Saxo/IBKR can be possibly transferred to a home brokerage IBKR/Saxo account upon you leaving Japan. This is not possible with domestic mutual funds or ETFs.

2. Monex's DRIP program makes handling dividends less cumbersome.

3. Vanguard as a custodian > MUFJ/Rakuten etc.

(Note: I am invested only in 3 Japanese Mutual fund, so I am stretching here).

[printingmoney]

The eMaxis Slim most people talk about here is the mutual fund (investment trust) version and not the ETF. Its yen-denominated and has no distributions so its more efficient in that sense (no taxation on dividends for example).

Are you already making use of your NISA and iDeCo? Those are tax free vehicles and considering the idiosyncrasies of it, the eMaxis Slim (and similar funds) are considered ideal for them.

Ah yes, thanks for pointing out that slim series is a mutual fund. Emaxis slim all country does seems to take care of the following issues: denominated in yen so no FX head ache, dividends reinvested so no taxable event. The only drawback seems to be the fees. For emaxis slim series the fees are 0.3% while that for VTI for example is 0.03%. Will need to take the pros and cons of this calculations before making a call I guess.

And yes I'm maxing my NISA and company sponsored 401k(like ideco) every year too.

[printingmoney]

The eMaxis Slim most people talk about here is the mutual fund (investment trust) version and not the ETF. Its yen-denominated and has no distributions so its more efficient in that sense (no taxation on dividends for example).

Are you already making use of your NISA and iDeCo? Those are tax free vehicles and considering the idiosyncrasies of it, the eMaxis Slim (and similar funds) are considered ideal for them.

Well said, in addition there are lots of free points to be had with trusts. Along with the benefits of automating purchases easily.

In Japan most mutual funds winout over ETFs.

If you are married to American ETFs Monex has a DRIP program that would make the dividends less painful.

Fair point. How about the fees though? Emaxis slim all-country fees are about 0.3% versus 0.03% for VTi. Only this particular factor makes me think

[TokyoBoglehead]

The eMaxis Slim most people talk about here is the mutual fund (investment trust) version and not the ETF. Its yen-denominated and has no distributions so its more efficient in that sense (no taxation on dividends for example).

Are you already making use of your NISA and iDeCo? Those are tax free vehicles and considering the idiosyncrasies of it, the eMaxis Slim (and similar funds) are considered ideal for them.

Well said, in addition there are lots of free points to be had with trusts. Along with the benefits of automating purchases easily.

In Japan most mutual funds winout over ETFs.

If you are married to American ETFs Monex has a DRIP program that would make the dividends less painful.

Fair point. How about the fees though? Emaxis slim all-country fees are about 0.3% versus 0.03% for VTi. Only this particular factor makes me think

Where are you getting that figure? The fee is 0.1144%.
https://www.rakuten-sec.co.jp/web/fund/ ... 90C000H1T1

Also apples and orange. You would need to compare to VT not VTI.

There is an Emaxis Slim S&P500 you could compare to VOO directly.

[sutebayashi]

Yeah the traditional advice I read was that once you have a higher notional amount invested, multiplying that amount by the annual fee overhead leads to ETFs being lower cost, even after considering broker fees. Fees have come down since I read that advice in a decade old book but it seems to still hold.

The forex exchanges is a good point, and when I converted some yen to USD the other day with Monex I was a bit disgusted at the rate I got. Seemingly one can send them USD directly, but on this occasion I was lazy and just took the poor rate. I closed my SMBC TB account recently after not using it for years but for the purpose of saving on forex transactions it seems like I should have kept it open…

But when I think about forex and mutual funds… wouldn’t mutual fund purchases in yen suffer from bad forex rates too, if those mutual are investing in global assets? I would presume they take our yen, and it gets invested in overseas assets, but I imagine the mutual fund operation involves hidden forex transactions under the covers. And I would be very inclined to believe the mutual fund forex transactions are with a hopeless rate too. (It would explain how mutual funds can put on airs of being “no load” and pretty low fees, but hopefully I am wrong?)

[TokyoBoglehead]

Yeah the traditional advice I read was that once you have a higher notional amount invested, multiplying that amount by the annual fee overhead leads to ETFs being lower cost, even after considering broker fees. Fees have come down since I read that advice in a decade old book but it seems to still hold.

The forex exchanges is a good point, and when I converted some yen to USD the other day with Monex I was a bit disgusted at the rate I got. Seemingly one can send them USD directly, but on this occasion I was lazy and just took the poor rate. I closed my SMBC TB account recently after not using it for years but for the purpose of saving on forex transactions it seems like I should have kept it open…

But when I think about forex and mutual funds… wouldn’t mutual fund purchases in yen suffer from bad forex rates too, if those mutual are investing in global assets? I would presume they take our yen, and it gets invested in overseas assets, but I imagine the mutual fund operation involves hidden forex transactions under the covers. And I would be very inclined to believe the mutual fund forex transactions are with a hopeless rate too. (It would explain how mutual funds can put on airs of being “no load” and pretty low fees, but hopefully I am wrong?)

No, I think your are wrong here. The trades are made at the institutional level, and MUFJ itself is a bank with access to the best possible rates. A retail trader cannot match them as they trade at high volumes at the end of the the trading day.

When you factor in the credit card purchase benefits .5-2% the advantage to mutual funds is huge.

When you focus on the other factors it depends.

Global funds -> Japanese MF> ETFs
US Market - > Japanese MF = ETFs, (before CC points)

ShintaroMoney has covered this in detail a few times -> https://shintaro-money.com/