US ETF vs Vanguard UK mutual fund

Zoolander

Registered User
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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
Percentage

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