The largest active ETF manager in the US, Dimensional Fund Advisors, has listed its first active European ETFs on the London Stock Exchange and Xetra in Frankfurt.
The Global Core Equity UCITS ETF and the Global Targeted Value UCITS ETF are listed in GBP and USD in London, and EUR in Frankfurt. Both funds are registered in Finland, Germany, Ireland, the Netherlands, Norway, Sweden and the United Kingdom.
It doesn’t seem to be available for purchase yet, but it can already be found at least on Nordnet.
The fund portfolio currently includes SPYI and LYP6.
Despite the funds’ broad diversification, the largest holdings constitute a reasonably large portion of these, e.g., SPYI’s 5 largest holdings account for 16% of its value. Which, in my opinion, is a lot considering the total number/amount of investments.
Of course, this reflects the weight of these companies in the market, and historically, the largest returns have come from a small number of stocks, so it has paid to be with the winners. My own view, however, is that an AI bubble is forming, and a correction is coming in the (near-medium…) future. To prepare for this, the goal would be to limit the risk associated with AI stocks (the old winners), so that a potential correction in them feels smaller in the portfolio.
So, would there be recommendations for low-cost ETFs that invest as broadly as possible in the market, but at the same time, the weighting of individual stocks is limited to a smaller proportion? The ETF should also directly own the stocks, i.e., not be synthetic. The target markets are the whole world, as well as the USA and Europe separately.
PS. And perhaps as a clarification, I’m not necessarily looking for an ETF where all holdings are equally weighted, but rather one where the values of large holdings have been reduced.
There isn’t a very neat way to achieve that specification, and your portfolio will become quite a bit more complex. The easiest would be to just dilute the US weight by adding home market bias (LYP6).
Other options
With the SPYL+EXUS+IS3N combo, you could set the desired USA, DM ex USA, and EM IMI allocations. If you want to keep the US weight the same but reduce the M7 weight, you could, for example, replace SPYL with XMGA (USA Ex Mega Cap) or an S&P 500 equal weight, but the costs for these are clearly higher. IMO, if you separate the US like this, it would be advisable to give up the physical replication requirement and replace SPYL with I500, which would also provide cost savings from unpaid withholding taxes.
With the JPGL+IS3N combo, you would get a world equal weight multi-factor + EM IMI allocation.
Additionally, AVWS is suitable for both of the above-mentioned options to bring additional diversification to small-cap companies.
Factor ETF offering is improving. Now Dimensional’s ETFs are available for purchase at least on Nordnet.
Also, such an active multi-factor ETF has become available for purchase. TER 0.45%, so the costs are not bad for an active one. It also includes emerging markets and, as a special feature, targets negative CMA exposure. Historical performance quite impressive.
The fund’s factor exposure is strong across the board, though strong negative exposure to the investments premium (i.e., CMA), which is directly targeted, does offset some (but not all) of the strong exposure to the value- and profitability premia (i.e., HML and RMW respectively). The regression results that exclude CMA paint a more conservative picture. In fact, the fund’s factor exposure lines up very closely with that of the MSCI World Small Cap Diversified Multiple-Factor index, which as of yet is not tracked by any fund.
Overall an exciting addition to the UCITS space. Perhaps also interesting to note is that the fund contains emerging markets stocks.
Apparently JOGS can buy, as a 2k€ purchase went through more or less by accident, lol. If only these had a loan-to-value ratio, then an All SCV portfolio with leverage would almost be possible
I also tested that placing an order works, but I haven’t bought yet. I sent a message to NN customer service asking them to set the lending rate for these (JOGS, DEGT). In Nordnet, for some reason, it requires at least one owner before they can set it, so it’s good to know that there’s at least one now
Has anyone wiser looked into those Nordea index funds? (E.g., World Passive or USA Passive) The fees decreased recently for them. Now the management fee is 0.37%.
If you compare them to, for example, OP’s equivalent or Storebrand Global All Country and Handelsbanken USA fund, it seems they’ll lose out, at least in terms of fees.
(In All Country, the running costs are 0.31% and in Handels USA, 0.2%.)
The only reason I’m considering them is that I inquired about a mortgage offer from Nordea, and if I had 80k€ in (investment) assets there, it would be possible to become a premium customer, who get a slightly smaller margin and no monthly fees for banking services.
But indeed, they probably aren’t worth it due to the higher fees.
Another option would be to transfer stocks to Nordea from Nordnet, but Nordea’s user interface is absolutely terrible compared to Nordnet.
Instead of index funds, can’t you transfer/buy a global ETF in Nordea for that 80k, or were there some restrictions regarding this in the Premium customer relationship?
Yeah.
I got a bit mixed up there.
For me, it would probably be most profitable to put the money into an ETF (e.g., SPYI), but the amounts to be invested for the children and wife are such that it would be better to stick to index funds.
Hi. I understood that those ETFs can be bought / under a service agreement, 1-4 units per month for 2.5 euros. So if you buy four different ETFs, the trading costs will already be reasonable, because that 2.5 euro fee doesn’t apply to each of the four, but to the total.
