US ETF vs Vanguard UK mutual fund

Discussion in 'Exchange Traded Funds (ETFs)' started by Zoolander, Mar 8, 2016.

  1. Zoolander

    Zoolander New Member

    I am interested in the Vanguard UK Lifestrategy mutual fund. Assuming direct investment with Vanguard is possible. Alternatively, I am weighing up the 'bad' ETF route as discussed on this forum.

    The aim of the investment is to accumulate over the next 5-8 years and then be drawn down to pay the bills or supplement a lower income. Am I missing any information which could make one option more attractive than the other?

    Common disadvantages to both:
    • Conversion of euro funds to either US$ or ¬£UK.

    LifeStrategy Mutual fund advantages:
    • Low TER of 0.24%
    • Accumulating with no distribution of income.
    • Diversity within the fund, sub funds listed below.
    • Losses within the fund are offset against gains within the fund.

    ETF advantages:
    • Low TER.
    • Gains subject to CGT as compared with Exit Tax.
    • Losses can be offset against other capital gains.

    ETF disadvantages:
    • Not accumulating, distributions are subject to income tax+PRSI+USC. Although distributions can be reinvested subject to fees.

    Allocation to underlying Vanguard funds
    As at date 31 January 2016

    Vanguard FTSE Developed World ex-U.K. Equity Index Fund 19.5%
    Vanguard Global Bond Index Fund 19.0%
    Vanguard FTSE U.K. All Share Index Unit Trust 15.4%
    Vanguard U.S. Equity Index Fund 14.4%
    Vanguard U.K. Government Bond Index Fund 6.1%
    Vanguard FTSE Developed Europe ex-U.K. Equity Index Fund 4.2%
    Vanguard Emerging Markets Stock Index Fund 3.8%
    Vanguard U.K. Investment Grade Bond Index Fund 3.5%
    Vanguard U.K. Inflation-Linked Gilt Index Fund 3.1%
    Vanguard Japan Stock Index Fund 2.3%
    Vanguard Euro Government Bond Index Fund 1.8%
    Vanguard Investment Series PLC - US Government Bond Index Fund 1.8%
    Vanguard U.S. Investment Grade Credit Index Fund 1.8%
    Vanguard Japan Government Bond Index Fund 1.3%
    Vanguard Pacific ex-Japan Stock Index Fund 1.1%
    Vanguard Euro Investment Grade Bond Index Fund 0.8%
    Vanguard U.K. Government Bond UCITS ETF 0.1%
    Total 100%
  2. landlord

    landlord Frequent Poster

    I phoned vanguard uk directly last year to be told there mutual funds were not available to Irish citizens.
  3. Zoolander

    Zoolander New Member

    Ah, thanks landlord. I think there are accessible through TDWaterhouse but then are subject to custody fees but possibly not trading fees. A small advantage then, over an ETF.