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Re: IDeco - An Annoyance
Posted: Sun Apr 23, 2023 5:25 am
by TBS
adamu wrote: ↑Sun Apr 23, 2023 4:37 am
Another one is I still don't know how big the triple tax issue really is, as as far as I know there is no info about it from the providers and no decent comparison between funds subject to triple taxation and equivalent funds that aren't (at least, I've not seen one but I've not looked very hard recently).
The way to tell is to look at the divergence of the fund's performance from the benchmark index.
Shintaro money does this:
eMaxis Slim All Country,
Tawara All Country,
Tawara Developed Markets ex Japan,
Rakuten's VT wrap. Shintaro further refines by showing the benchmark minus the fund fee minus the fund operating costs declared in the annual reports (these last two are the "実質コスト"). Then the difference between the dashed line and the actual fund performance is due to the tax inefficiencies, among other things.
TLDR Rakuten's VT has a large divergence from the dashed line. eMaxis Slim & Tawara do not.
Re: IDeco - An Annoyance
Posted: Sun Apr 23, 2023 5:46 am
by TBS
adamu wrote: ↑Sun Apr 23, 2023 4:37 am
An argument against would be that the Tawara fund is orders of magnitude smaller. I don't know if that's a relevant point or not, but considering we're buying the market, the popularity of the fund might have something to say about confidence in its fundamentals.
Tawara's
developed markets fund, the one available in Rakuten's iDeco, isn't so bad: it's been around since late 2015 and has 3000 oku assets, which is only slightly less than the 4000 oku in
eMaxis's equivalent. It's
Tawara's All Country fund that is much smaller, just 53 oku assets compared to
eMaxis slim all country (10000 oku).
Just speculating, but economies of scale might explain why the Tawara fund 実質コスト's are higher than the eMaxis slim equivalents despite the funds fees being almost the same.
Re: IDeco - An Annoyance
Posted: Sun Apr 23, 2023 5:55 am
by TBS
SOT wrote: ↑Sun Apr 23, 2023 3:20 am
Just wondered if there were any arguments for not doing so... Doesn't seem like it
One of the main risks is the market moving against you during the week while your switch goes through. But looking again at the huge divergence of Rakuten VT from the benchmark
, it would not be many years before you make that back in all except the worst scenarios.
The other argument against that's been discussed is you may feel the need to re-balance your portfolio by buying Japan / emerging markets in other accounts, and re-balancing is a hassle. Though you don't have to do this of course.
Re: IDeco - An Annoyance
Posted: Sun Apr 23, 2023 7:45 am
by adamu
TBS wrote: ↑Sun Apr 23, 2023 5:25 am
adamu wrote: ↑Sun Apr 23, 2023 4:37 am
Another one is I still don't know how big the triple tax issue really is, as as far as I know there is no info about it from the providers and no decent comparison between funds subject to triple taxation and equivalent funds that aren't (at least, I've not seen one but I've not looked very hard recently).
The way to tell is to look at the divergence of the fund's performance from the benchmark index.
Shintaro money does this:
eMaxis Slim All Country,
Tawara All Country,
Tawara Developed Markets ex Japan,
Rakuten's VT wrap. Shintaro further refines by showing the benchmark minus the fund fee minus the fund operating costs declared in the annual reports (these last two are the "実質コスト"). Then the difference between the dashed line and the actual fund performance is due to the tax inefficiencies, among other things.
TLDR Rakuten's VT has a large divergence from the dashed line. eMaxis Slim & Tawara do not.
If you're up for it, that information would be useful on the
https://retirewiki.jp/wiki/Japanese_global_index_funds page. Otherwise I'll try to get round to digesting it myself.
Re: IDeco - An Annoyance
Posted: Sun Apr 23, 2023 12:53 pm
by SOT
Thanks to you all for the information.
Definitely lots to take a look at!
Re: IDeco - An Annoyance
Posted: Wed Nov 01, 2023 9:47 am
by ToushiTime
TBS wrote: ↑Sun Apr 23, 2023 5:25 am
adamu wrote: ↑Sun Apr 23, 2023 4:37 am
Another one is I still don't know how big the triple tax issue really is, as as far as I know there is no info about it from the providers and no decent comparison between funds subject to triple taxation and equivalent funds that aren't (at least, I've not seen one but I've not looked very hard recently).
The way to tell is to look at the divergence of the fund's performance from the benchmark index.
Shintaro money does this:
eMaxis Slim All Country,
Tawara All Country,
Tawara Developed Markets ex Japan,
Rakuten's VT wrap. Shintaro further refines by showing the benchmark minus the fund fee minus the fund operating costs declared in the annual reports (these last two are the "実質コスト"). Then the difference between the dashed line and the actual fund performance is due to the tax inefficiencies, among other things.
TLDR Rakuten's VT has a large divergence from the dashed line. eMaxis Slim & Tawara do not.
In the chart below, there a significant gap between the dotted line and the Nissei fund.
https://shintaro-money.com/wp-content/u ... 202210.jpg
https://shintaro-money.com/tawara-msci-kokusai/#i-6
Why? Is that for reasons other than tax inefficiencies?
I thought the ＜購入・換金手数料なし＞ニッセイ funds were not triple-taxed. I ask because I have one of their funds.
https://www.nam.co.jp/report/pdf/mo121332-1.pdf
Re: IDeco - An Annoyance
Posted: Wed Nov 01, 2023 11:44 am
by Tkydon
TokyoBoglehead wrote: ↑Fri Mar 31, 2023 2:26 pm
Rakuten's high fee for their global equities fund gets my goat.
I pay 68,000 monthly into iDeco, and will for the next 30 years if I can.
The .2% fee is brutal but I cannot go through the pain of switching providers, as it takes months and you loose the ability to contribute.
I'm considering switching to Towara's MSCI kokusai fund
(.1 vs .2 % fee + no triple taxation). It's very similar but (ex Japan/EM). My thought is that my Nisa and Taxable will be global, so it will be just a small underweight of EM and Japan in my total portfolio.
Rakuten fund
https://dc.rakuten-sec.co.jp/dc/apps/pr ... 0030&pre=0
Tawara fund
https://member.rakuten-sec.co.jp/app/dc ... &lmn=&fmn=
Tax drag with 2.5 million invested, adding 68,000 monthly for 30 year (not factoring triple taxation with Rakuten, as I cannot get the math right. So it'll be actual worse than this).
A .2 % fee vs a .1% fee
Screenshot_20230331-224154.jpg
Actually, depending on your Marginal Tax Rate, you actually only end up paying around Y40,000 to Y45,000 and the National and Local Governments pay around Y28,000 to Y23,000 respectively, due to the increased deductions from Taxable Income and saved taxes, so it is tax-advantaged on the way in...
