Best ETF for Europeans

[nikao]

Being located in the Netherlands I don't have cost effective access to most Vanguard funds. Not for small additions at least, and I'd like to add to my position on a monthly basis automatically. This makes sure I don't have to think about the portfolio and can be truly 'passive'.
The way I do it now is using a broker that is offering 4 funds. The stock ETF for worldwide coverage is actually from Northern Trust and following the MSCI World Index.
It's exposure is 58.6% US, 8.8% Japan, 7.7% UK, and then smaller percentages in other EU countries mostly, along with Canada and Australia.
TER for me is 0.5%.
Would you say this is suitable for the Stock part of the PP?

Currently I have 85% of stocks in this ETF, and 15% in Vanguard Emerging Markets Index Fund.

It seems to me this is a cost effective way of being diversified for stocks, but curious if you guys would say this is suitable from the PP perspective? Or should I be looking at other ways of adding to the Stocks part of the portfolio?

[koekebakker]

For the PP it's usually advised to use domestic stocks, in your case that probably means Eurozone stocks. In theory want the stock part of your portfolio to be tied to the same economy as the bond/cash part. By holding the MSCI World index your stock part might behave differently from the Eurozone stock market.

The MSCI World gives you a lot of diversification but also adds currency risk to your portfolio. In a stock/bond portfolio you'd probably welcome that but the PP already holds 25% gold. Gold reacts to fluctuations of the Euro and by adding 25% mostly non-euro stocks the currency risk will increase further.

Of course you can use a mix of Eurozone stocks and a MSCI World fund/etf as well.

There are some cheap and liquid Eurozone etfs like the Ishares Core Eurostoxx 50 and the Ishares MSCI EMU but for these you need a broker.
Are you using Meesman index funds right now? Meesman has a European Stock Index Fund which could be used as a core for a European PP. It also invests in non-Eurozone countries though.

[nikao]

For the PP it's usually advised to use domestic stocks, in your case that probably means Eurozone stocks. In theory want the stock part of your portfolio to be tied to the same economy as the bond/cash part. By holding the MSCI World index your stock part might behave differently from the Eurozone stock market.

The MSCI World gives you a lot of diversification but also adds currency risk to your portfolio. In a stock/bond portfolio you'd probably welcome that but the PP already holds 25% gold. Gold reacts to fluctuations of the Euro and by adding 25% mostly non-euro stocks the currency risk will increase further.

Of course you can use a mix of Eurozone stocks and a MSCI World fund/etf as well.

There are some cheap and liquid Eurozone etfs like the Ishares Core Eurostoxx 50 and the Ishares MSCI EMU but for these you need a broker.
Are you using Meesman index funds right now? Meesman has a European Stock Index Fund which could be used as a core for a European PP. It also invests in non-Eurozone countries though.

Thx for the info, I'll have to look into that I guess
I'm indeed using Meesman, and will have a look at the European Stock Index Fund.
The bonds they offer seem to be different between worldwide and EU as well; they signal more risk for the EU bonds, but exactly sure why, but I'm mostly in world bonds there as well.
So I guess I have to much exposure to outside Eurozone, although that does make me feel safer I must admit

[koekebakker]

This thread about a global PP might interest you as well:
http://gyroscopicinvesting.com/forum/pe ... global-pp/

[koekebakker]

If I were a European, I'd buy index funds for Northern European and UK country stock markets, and entirely skip the Sick Men of Europe. Italy, Spain, Portugal, Greece. Maybe hold those together with the rest of Emerging Europe, in a small amount.

I'm curious why would you want to do that? I understand the extra risks of southern european bonds but why avoid the stocks of those countries as well?
Even if you want to do this it might not be worth the trouble to combine national indices. The eurostoxx 50 for example only holds 18% Italian/Spanish stocks. The MSCI Europe index holds even less. It's unlikely to make a big difference wether you include those stocks or not.

[nikao]

This thread about a global PP might interest you as well:
http://gyroscopicinvesting.com/forum/pe ... global-pp/

Interesting topic, thx! To bad it derailed into a 'what money is' discussion...

[Kike Moreno]

In my opinion the closest one can get to HBPP from the eurozone is:
- 25% eurozone stock index like MSCI EMU (--> whole market in your currency)
- 25% German 30yr bund (--> the safest long term bond in your currency)
- 25% high quality short term bonds
- 25% gold

The main drawback with respect to the USD HBPP is that gold does not protect euros from inflation to the same level that it protects dollars.

In this post (in Spanish) there is a proposal of ETFs that are appropriate for this approach:

http://www.carterapermanente.es/cartera ... -con-etfs/

[porpoison]

There is a broker for Ishares Core Eurostoxx 50 and the Ishares MSCI EMU. But these were the best europeans etfs. Meesman has a European Stock Index Fund which could be used as a core for a European PP. These are the best  Eurozone stocks and a MSCI World fund/etf.

[frugal]

Hi,

PP is the most confortable portfolio.

Read the book!

Keep me informed of your decisions.

Regards