Comments on: Portfolio Update: Switched from iShares’ XIN to Vanguard’s VEA

By: Dave

Dave — Fri, 01 Jan 2010 03:31:11 +0000

Ryan, I think it’s ok if you’re in your 20s or 30s but once you get a bit older it’s probably a good idea to gradually start shifting towards more CAD as you get closer to retiring, either by selling USD investments, or just buying more CAD investments.

By: Ryan

Ryan — Fri, 07 Aug 2009 21:29:07 +0000

Hello, I know that you originally didn’t want to hold so much USD that’s why you wanted to go with XIN. Now that you’re switching over from XIN to VEA, if you still use the same ratio for your portfolio, you’ll be holding 72% USD. I’m having a hard time trying to diversify using VTI, VEA, and VWO but I don’t know if it’s a wise idea to be holding onto so much USD?

By: VEA vs XIN: Foreign Exchange Fees vs. Higher MER | Investing Intelligently

VEA vs XIN: Foreign Exchange Fees vs. Higher MER | Investing Intelligently — Wed, 22 Oct 2008 06:33:20 +0000

[...] commenter named Blitzkrieg asked: How do currency exchange fees factor into the decision between VEA and XIN? XIN’s MER is 0.35% [...]

By: Blitzkrieg

Blitzkrieg — Tue, 21 Oct 2008 21:29:37 +0000

Dave, thanks for the quick response. I confirmed your calculation of a 13 year break even point. I guess this is an issue to consider when purchasing either of these ETFs in addition to the extra currency exposure with VEA.

By: Dave

Dave — Tue, 21 Oct 2008 19:49:43 +0000

Blitzrieg. I just did a little back of the envelope calculation. Assuming a 2% forex charge when you put the money in and a 2% forex change when you take it out, that means that we get:

FV=0.98*0.98*PV*(1+i)^n

With the Canadian one we don’t have the forex charge but we have a higher MER by 0.35%. So:

FV=PV*(1+i-0.0035)^n

It looks to me like if you hold the investment for longer than 13 years, it becomes more worthwhile to own the USD investments and take the forex hit. After 30 years, for example, the extra 0.35% MER becomes equivalent to a 5% forex charge when putting the money in and 5% when taking it out, for about 10% total.

By: Blitzkrieg

Blitzkrieg — Tue, 21 Oct 2008 15:59:21 +0000

How do currency exchange fees factor into the decision between VEA and XIN? XIN’s MER is 0.35% higher, but it is purchased using Canadian dollars, so there is no exchange fee. VEA’s MER is nice and low, but don’t you immediately lose a few percentage points of your investment when you buy it due to currency exchange fees?

By: Dave

Dave — Mon, 05 Nov 2007 07:33:36 +0000

Hey Paul, thanks for your question. I wrote a lengthly reply here:
Ask Dave: Index ETFs and Rebalancing (or lack therof)

By: Paul

Paul — Sat, 03 Nov 2007 19:56:11 +0000

Hi Dave,

Great blog with some very interesting points.

Just a quick question. With regards to balancing ones portfolio, would ETF’s like VEA and I see there is now one that encompasses the whole world excluding the US, not pose a problem. If for example the European markets did well one year but the Pacific markets performed poorly, then one would be unable to rebalance by selling a Eurpoean based ETF’s (like VGK for example) and buying more Pacific based ETF’s (VPL for example). With everything in one basket one could not take advantage of the gains to be made by selling high and buying low. Is this assumption correct? Or is it true that because VEA comprises 75% VGK and 25% VPL, that it would reflect any net changes made by owning a combination of both VGK and VPL?

Thanks for your time and I look forward to your comments.