mighty58 wrote: ↑Tue May 07, 2019 10:52 am
Can anybody tell me if currency had anything to do with the differences? Holding in the Japanese wrapper means you're holding in yen, and fluctuations there would easily eat up profits (unless the fund is hedged), no? Or an I missing something?
The japanese wrapper doesn't really do much except make it easy to buy here and the way the whole fund is set up is not very tax efficient(and the high costs on both don't help).
As mentioned above, adding a currency hedge into the fund will just drive down performance. You're reducing risk, but you're also reducing return. This is something to remember: taking risks is rewarded by higher average returns. There are plenty of books on this and retirejapan has a good reading list somewhere, have a look at that.
Vanguard is a great place to invest... if you're an american in america. Most of the investing advice online in english is by Americans in America, same for books. Remember this, because as amazing as Vanguards funds are for americans, you can't really get their full effect here. Instead just follow in their spirit and pick the funds that are doing the same thing at the minimum possible costs(that's including taxes of course)
When you get a japanese investment bank wrapping their fund, that makes it not very tax efficient, and then to add insult to injury, they tag on extra costs for the convenience of providing the service.
I've pretty much always had the same advice, which is why I don't post much anymore(sounds like a broken tape recorder): buy a low cost japanese fund that is not structured as a wrapper on a foreign ETF. eMaxis slim is a great example of this, lately other places have been competing too.
There are only a couple of exceptions:
1) If you're buying only US stock(e.g. an S&P 500 index) you can(and probably should) buy a US ETF with $. The taxation is the same as if you bought a japanese fund(you get taxed in the US and in Japan), and the US ETFs generally have lower costs(but make sure you're not losing your savings on exchange fees). TBH the difference is small enough that personally I have not bothered.
2) If your choices are limited by what is available(e.g. iDeco or tsumitate nisa). The tax benefits are worth it, but still try to minimize costs. You may also consider options like buying the jp part of your allocation there(e.g. rakuten iDeco offers tawara no-load nikkei 225 which is a pretty solid fund). There is a LOT of garbage(basically anything with costs over .3%) on the lists so take care. Honestly it's disappointing to see how exploitative some of the funds they include in their lists are. Target year funds with near 1% costs. Eww
