European version of S&P500

[Family father]

I'm in the process to educate myself in finance, so I've been looking at S&P500 ETF's and funds.

Then I read somewhere that I should invest in my own coin and region, to avoid region an exchange risks, and since it made sense I started looking at it... but I only know about IBEX35 (as the spanish main index) and Eurostoxx 50 (european).

I'm not sure they are the same because:

1- S&P500 has 500 companies whereas IBEX only has 35 (dont know Eurostoxx 50) and thus the risk is not the same...
2- Their long term graphs surely don't look the same (IBEX35 and EUROSTOXX 50 suck while S&P500 looks gorgeus )

Any insights here?

[Riggerjack]

Try searching the forum for diy indexing. The S&p has 500 companies, but if I remember correctly, the index could be nearly replicated with only 30 stocks.

My individual stock purchases have been... An excellent justification for paying a mutual fund's experience ratio. But I like the idea of owning individual stocks, and avoiding the fees.

Just for a different spin on it. There are plenty of European posters here who may be more help.

[jacob]

https://en.wikipedia.org/wiki/List_of_s ... et_indices

[Seppia]

I'm now assuming you are located in España.
For tax reasons, it's better if you purchase UCITS compliant armonized ETFs.
Most of those who are from large institutions such as blackrock (ishares) vanguard and lyxor AND are traded in Europe will do the trick.

Example: among vanguard, buy VEUR (traded in Amsterdam, Frankfurt, London and Zurich) and not VGK (traded in the USA).

Vanguard VEUR is based on FTSE Developed Europe index, its the top 1200 or so european companies.

IShares EXSA is based on Stoxx600 (top 600 companies).

The two indexes and ETFs mentioned above are essentially interchangeable, and are a good way of investing in a diversified, cap weighted, basket of european equities.

Hope this helps

[Dunkelheit]

Hi Family father, here another spaniard investor.

I would like to remark a point that may be very interesting for us, which is not investing in ETFs but in accumulation mutual funds. You have more or less the same Vanguard Europe ETF in its mutual fund version Vanguard European Stock Index Fund .

The main advantage for us is that we can transfer between funds without the obligation to pay for the capital gains, which can be a huge advantage if later you want to move the money to another index funds or money market funds.

Another point is that you don't need to invest only in an european fund, but can also combine global or emerging funds in order to diversify more among several markets.

Anyway, I highly recommend you a thread in a forum where you can find a looooot of information about index investing related to spanish investors: https://www.rankia.com/foros/fondos-inv ... indexacion

Mucha suerte!
Dunkelheit

[Family father]

Thank you all!

@Seppia,

Yes, I'm in spain!

@Dunkelheit

Yes, Funds better than ETF in Spain, I've read that (I knew of Rankia, but I get lost there with so much and technical information).

This Vanguard is what I was looking for, do you have any recommendation for global fund?

[Dunkelheit]

This Vanguard is what I was looking for, do you have any recommendation for global fund?

As a global fund you also have the Vanguard Global Stock Fund

I recommend you to open an account in BNP Paribas which is the only bank I know that offers them in Spain for small sums of money (otherwise you need 100k to buy them directly from Vanguard).

If you have more doubts, ask please. Or take a look at the thread I pasted. In the first page of it you can find some short guides.

Good luck!

[Family father]

Thanks!

[Josué]

Hola!

I buy the iShares Core EURO STOXX 50 UCITS ETF (Acc) (CSX5) which tracks the Euro Stoxx 50 index. I thought about buying a Stoxx 600 ETF from iShares but, for that index, they seemed to only have an ETF that distributes dividends instead of accumulating.

As for your comment on the graphs, I can only find graphs of Euro Stoxx 50 that start around year 2000. If you focus on S&P500 from that year it looks roughly the same until 2012, where we see a gorgeous trend, to use your own words. Maybe Euro Stoxx 50 will follow that trend soon? If that's the case now would be a good moment to buy...

Could someone enlighten me on the advantages of a Vanguard fund over a Black Rock one? Most online literature (American-centered) focuses on Vanguard, so I wonder if people are biased towards them because of that, or if there are objective reasons to prefer Vanguard.

EDIT: The Stoxx 600 ETF I mentioned is the EXSA that Seppia referred to. Another point against that ETF is its expense ratio of 0.20%, twice that of CSX5.

[Seppia]

Hi Family father, here another spaniard investor.

I would like to remark a point that may be very interesting for us, which is not investing in ETFs but in accumulation mutual funds. You have more or less the same Vanguard Europe ETF in its mutual fund version Vanguard European Stock Index Fund .

The main advantage for us is that we can transfer between funds without the obligation to pay for the capital gains, which can be a huge advantage if later you want to move the money to another index funds or money market funds.

Another point is that you don't need to invest only in an european fund, but can also combine global or emerging funds in order to diversify more among several markets.

Anyway, I highly recommend you a thread in a forum where you can find a looooot of information about index investing related to spanish investors: https://www.rankia.com/foros/fondos-inv ... indexacion

Mucha suerte!
Dunkelheit

Great points, let me play devil's advocate though:

1- ACC funds pay taxes when you redeem (sell) them, at least here in italy.
Over the long run the difference between a distributing and an accumulating funds are minimal (very rough approximation: about one dividend every 10 years in italy).
For me, there is a slight advantage in having a fund/ETF that distributes dividends, both psychological and practical (it creates money i can use to rebalance or buy other stuff without me having to sell, which would have me pay the taxes PLUS the commission).

2- The minimal tax advantage ACC have, in the case for vanguard, is killed by the higher expense ratio (VEUR is 0,12%, the equivalent ACC fund you mention is 0,35%)

Keep in mind spanish taxation can be dramatically different VS italian
Hope this helps

[Family father]

Giving a second think to the fund/ETF advantatges in Spain: in wich cases might you want to move the investments to another fund?

If you are a very long term index investor, shouldn't your changes be minimal to none?

And about accumulation vs distribution, Seppia makes an interesting point....

PS: I just oppened a BNP account

[Dunkelheit]

Great points, let me play devil's advocate though:

1- ACC funds pay taxes when you redeem (sell) them, at least here in italy.
Over the long run the difference between a distributing and an accumulating funds are minimal (very rough approximation: about one dividend every 10 years in italy).
For me, there is a slight advantage in having a fund/ETF that distributes dividends, both psychological and practical (it creates money i can use to rebalance or buy other stuff without me having to sell, which would have me pay the taxes PLUS the commission).

2- The minimal tax advantage ACC have, in the case for vanguard, is killed by the higher expense ratio (VEUR is 0,12%, the equivalent ACC fund you mention is 0,35%)

Great points! The difference between accumulation or distribution is very slight and overcompensated by the lower comissions, but the difference between funds and ETFs...

Keep in mind spanish taxation can be dramatically different VS italian

...at least in Spain you can transfer a fund to another fund without paying taxes for the capital gains (you don't need to redeem them, just transfer them). And that's something you only can do with mutual funds, not with ETFs (at least not yet, maybe in the future).

Greetings!
Dunkelheit

[Dunkelheit]

Giving a second think to the fund/ETF advantatges in Spain: in wich cases might you want to move the investments to another fund?

If you are a very long term index investor, shouldn't your changes be minimal to none?

And about accumulation vs distribution, Seppia makes an interesting point....

PS: I just oppened a BNP account

Being a very long term investor is easy to say, difficult to do . You never know when you will want to move your stock funds to a bond fund. And you can do it "for free" with funds, not with ETFs. If you need dividends you can always sells some shares.

Accumulation and distribution don't seem to make a big difference. In the first one you pay taxes before, in the second one you pay higher comissions.

Buena suerte!
Dunkelheit