Hi Everyone!
Recently I got a recommendation for an ETF portfolio from a friend living in the US. The problem is that these ETFs aren't available in Japan.
I'm not really knowledge about investing and mostly following my friend's advice. Can anyone suggest alternatives for the following ETFs which seem to be unavailable in Japan: gval, qval, ival, emgf.
Thanks in advance!
Alternative etfs
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StockBeard
- Veteran
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Re: Alternative etfs
(Big disclaimer: I'm not an expert, nothing in my posts should be considered as financial advice. This is just opinion/observation)
I won't pretend I'm able to navigate the rakuten site to find something similar to those funds, but this brings the question: I understand you're trying to emulate what your friend is recommending, but what are the characteristics of these funds that you are trying to replicate? Since you won't be able to find exactly the same funds here, you need to first explain what you are looking for.
From what I can see at a quick glance,
GVAL is developed/emerging countries fund with some added filter looking for "value"
QVAL is US index filtered for "value" stocks
IVAL is Developed countries (excluding US) filtered for "value" stocks
EMGF is emerging countries with also some filters.
So, I'd say what your friend is recommending here is the typical geographic diversification + stock diversification, which gives you a good mix of US, Developed countries, and emerging market. I'm not entirely sure why GVAL is in the mix as I feel it kind of overlaps with IVAL + EMGF but maybe your friend can explain his intent here.
Also, compared to more "typical" ETFs that we tend to discuss on these forums, these ETFs your friend recommend all have a "spin" on how they try to either mitigate risk or increase return through some "value screening". I can't judge how well this added logic will enhance the returns or reduce the risks, but it certainly increases the fees of these ETFs, which are all around 0.5%. That's not crazy expensive, all of them stay well below 1%, but by comparison the typical broad index ETF in Japan is closer to 0.2% or 0.3% in fees (in the US it's even more like 0.05%, so compared to their "generic" counterparts in the US, these funds are quite expensive).
Bottom line, from an external and absolutely non expert point of view, I think these funds try to capture "only the best" of what broad index ETFs are getting, in order to get more returns and/or less risk. I don't think there is proof that such a strategy "works" FWIW.
A more "typical" way to reduce risk is to add a bond ETF to your portfolio. So, if what you're looking for is diversification + risk mitigation, you might want to go with the typical: a "whole world" equity ETF, coupled with a bond ETF.
I'm reluctant to share any suggested ETF at this point because 1) It's not like I know a lot of them, and 2) I'm not sure what you (or your friend) are trying to achieve with the funds. I would sugest you run it with your friend to try and understand a bit more about the strategy here. In particular: he is paying more for these ETFs than for your typical broad index ETF, he probably has a good reason to have chosen that, and that might be a key difference for your own choices.
Also, I think whether you are a US citzen or not matters a lot moving forward. If you are *not* a US citizen, AFAIK you actually have ways to open a brokerage account with an international company that will let you acquire US ETFs (so that would directly solve your problem as you could acquire those ETFs directly without looking for an alternative).If you are a US citizen, it might complicate things (although conversely it might open options to simply open a brokerage account in the US directly)
I won't pretend I'm able to navigate the rakuten site to find something similar to those funds, but this brings the question: I understand you're trying to emulate what your friend is recommending, but what are the characteristics of these funds that you are trying to replicate? Since you won't be able to find exactly the same funds here, you need to first explain what you are looking for.
From what I can see at a quick glance,
GVAL is developed/emerging countries fund with some added filter looking for "value"
QVAL is US index filtered for "value" stocks
IVAL is Developed countries (excluding US) filtered for "value" stocks
EMGF is emerging countries with also some filters.
So, I'd say what your friend is recommending here is the typical geographic diversification + stock diversification, which gives you a good mix of US, Developed countries, and emerging market. I'm not entirely sure why GVAL is in the mix as I feel it kind of overlaps with IVAL + EMGF but maybe your friend can explain his intent here.
Also, compared to more "typical" ETFs that we tend to discuss on these forums, these ETFs your friend recommend all have a "spin" on how they try to either mitigate risk or increase return through some "value screening". I can't judge how well this added logic will enhance the returns or reduce the risks, but it certainly increases the fees of these ETFs, which are all around 0.5%. That's not crazy expensive, all of them stay well below 1%, but by comparison the typical broad index ETF in Japan is closer to 0.2% or 0.3% in fees (in the US it's even more like 0.05%, so compared to their "generic" counterparts in the US, these funds are quite expensive).
Bottom line, from an external and absolutely non expert point of view, I think these funds try to capture "only the best" of what broad index ETFs are getting, in order to get more returns and/or less risk. I don't think there is proof that such a strategy "works" FWIW.
A more "typical" way to reduce risk is to add a bond ETF to your portfolio. So, if what you're looking for is diversification + risk mitigation, you might want to go with the typical: a "whole world" equity ETF, coupled with a bond ETF.
I'm reluctant to share any suggested ETF at this point because 1) It's not like I know a lot of them, and 2) I'm not sure what you (or your friend) are trying to achieve with the funds. I would sugest you run it with your friend to try and understand a bit more about the strategy here. In particular: he is paying more for these ETFs than for your typical broad index ETF, he probably has a good reason to have chosen that, and that might be a key difference for your own choices.
Also, I think whether you are a US citzen or not matters a lot moving forward. If you are *not* a US citizen, AFAIK you actually have ways to open a brokerage account with an international company that will let you acquire US ETFs (so that would directly solve your problem as you could acquire those ETFs directly without looking for an alternative).If you are a US citizen, it might complicate things (although conversely it might open options to simply open a brokerage account in the US directly)
Re: Alternative etfs
Thank you StockBeard for the detailed reply! I also enjoyed your blog 
I checked with my friend and he said the "value" factor isn't really critical, and I can just buy similar Vanguard etfs instead. Could you perhaps suggest similar ETFs (perhaps with lower fees) available in Japan. Also, there were some good things said about mutual funds in this forum. Do you think I can create a similar portfolio with mutual funds? Is this a good idea? Thanks for your help!
BTW, I'm not a US citizen.
I checked with my friend and he said the "value" factor isn't really critical, and I can just buy similar Vanguard etfs instead. Could you perhaps suggest similar ETFs (perhaps with lower fees) available in Japan. Also, there were some good things said about mutual funds in this forum. Do you think I can create a similar portfolio with mutual funds? Is this a good idea? Thanks for your help!
BTW, I'm not a US citizen.
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RetireJapan
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Re: Alternative etfs
The eMaxis Slim range is popular: very low fees and decent coverage...
https://emaxis.jp/lp/slim/pr1/
The funds are available through most brokers and in many NISA and iDeCo accounts. It is easy to set regular automated purchases, etc.
https://emaxis.jp/lp/slim/pr1/
The funds are available through most brokers and in many NISA and iDeCo accounts. It is easy to set regular automated purchases, etc.
English teacher and writer. RetireJapan founder. Avid reader.
eMaxis Slim Shady
eMaxis Slim Shady
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captainspoke
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Re: Alternative etfs
Living in Japan, non US citizen.captainspoke wrote: ↑Sat Feb 01, 2020 2:30 amGrisha--how about you? Are you US, or not?
(could make a difference regarding what/where you invest)
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captainspoke
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Re: Alternative etfs
Okay, then no problem.
Re: Alternative etfs
Thanks! I'll check it out.RetireJapan wrote: ↑Fri Jan 31, 2020 2:24 pm The eMaxis Slim range is popular: very low fees and decent coverage...
https://emaxis.jp/lp/slim/pr1/
The funds are available through most brokers and in many NISA and iDeCo accounts. It is easy to set regular automated purchases, etc.