Yes, you will be advised next week as to how to switch subscription and get any due credits/refunds. All “extra” payments will be refunded by Ben. Might take him 2-3 days, depending on the volume of requests, but no longer than that.
EEM has a 0.70% management fee versus 0.09% in the newer, but supposedly near-identical iShares IEMG, or 0.08% in the VWO. What is the compelling reason to select EEM over either of the other two?
Regarding HEWJ, I notice that it paid a massive one-time dividend in December 2022 of $12, which digging in the fund details on iShares was a split of 5.1 short term and 6.6 LT capital gains. Do you have any idea what the catalyst for that action was and the likelihood of then doing that again?
Okay, so I have now come across the ishares brochure “understanding-ishares-etf-dividend-distributions” regarding rules for etfs as regulated investment companies and impact of excise taxes, which may explain the payout. Still, DXJ, the WisdomTree equivalent fund did not have such a dividend in December 2022.
Many of the big well-known ETFs have near-identical, lower-cost alternatives. I wouldn’t expect Nick to look them up for us, because then even more people would ask what they are : )
But for those interested in alternatives, here’s my cheat sheet:
(1.) S&P 500: consider SPLG (0.02%) instead of SPY (0.0945%).
(2.) Nasdaq 100: consider QQQM (0.15% expense ratio) instead of QQQ (0.2%).
(3.) Gold: consider GLDM (0.10% expense ratio) instead of GLD (0.4%).
(4.) Japan: consider FLJH (0.09% expense ratio, same strategy from a different company) instead of HEWJ (0.5%).
Just keep in mind if he starts buying/selling options on any of these ETFs, the liquidity will be poorer and so the main ETF may be preferred.
These savings aren’t so relevant if you’re holding ETFs for short periods of time, as we often are in this portfolio. Also, they tend to be less liquid and more volatile, so you end up paying more than what you save in a minimal yearly fee differential.
Hi Nick. I am just a little concerned about HEWJ, currency-hedged or not, because the correlation ratio with USDJPY is quite high, and while the BoJ seems to be slowly starting a hiking cycle, the Fed is starting to ease (and you expect the dollar to weaken as a result, if I understood correctly). Is this perhaps a headwind that I should not be worried about? Thank you.
Nick, I want to join GB^2 come sept 1st but Fidelity does not offer futures trading. I have no interest in switching brokerages. What are you thoughts based on this scenario? Just stick with the original 2GB?
You can trade the cash but you would need to know how to calculate the basis difference and convert the futures amount to cash. You would also need to be able to borrow for the leverage.
19 Responses
Good episode! The chain of reasoning presented earlier in the episode nicely set up the later portfolio change advisements.
Will 2greybeards original yearly subscriptions be prorated if the subscriber chooses to switch to the squared or total option in September?
Yes, you will be advised next week as to how to switch subscription and get any due credits/refunds. All “extra” payments will be refunded by Ben. Might take him 2-3 days, depending on the volume of requests, but no longer than that.
Hi Nick
Couple of questions on the selection of the ETFs.
EEM has a 0.70% management fee versus 0.09% in the newer, but supposedly near-identical iShares IEMG, or 0.08% in the VWO. What is the compelling reason to select EEM over either of the other two?
Regarding HEWJ, I notice that it paid a massive one-time dividend in December 2022 of $12, which digging in the fund details on iShares was a split of 5.1 short term and 6.6 LT capital gains. Do you have any idea what the catalyst for that action was and the likelihood of then doing that again?
Thanks, SPX Macaw
Okay, so I have now come across the ishares brochure “understanding-ishares-etf-dividend-distributions” regarding rules for etfs as regulated investment companies and impact of excise taxes, which may explain the payout. Still, DXJ, the WisdomTree equivalent fund did not have such a dividend in December 2022.
You can pick other emerging market ETFs, not a problem. That’s the one I am familiar with. No reason not to buy something cheaper.
Many of the big well-known ETFs have near-identical, lower-cost alternatives. I wouldn’t expect Nick to look them up for us, because then even more people would ask what they are : )
But for those interested in alternatives, here’s my cheat sheet:
(1.) S&P 500: consider SPLG (0.02%) instead of SPY (0.0945%).
(2.) Nasdaq 100: consider QQQM (0.15% expense ratio) instead of QQQ (0.2%).
(3.) Gold: consider GLDM (0.10% expense ratio) instead of GLD (0.4%).
(4.) Japan: consider FLJH (0.09% expense ratio, same strategy from a different company) instead of HEWJ (0.5%).
Just keep in mind if he starts buying/selling options on any of these ETFs, the liquidity will be poorer and so the main ETF may be preferred.
These savings aren’t so relevant if you’re holding ETFs for short periods of time, as we often are in this portfolio. Also, they tend to be less liquid and more volatile, so you end up paying more than what you save in a minimal yearly fee differential.
Cheers
thank you
Hi Nick. I am just a little concerned about HEWJ, currency-hedged or not, because the correlation ratio with USDJPY is quite high, and while the BoJ seems to be slowly starting a hiking cycle, the Fed is starting to ease (and you expect the dollar to weaken as a result, if I understood correctly). Is this perhaps a headwind that I should not be worried about? Thank you.
The $ and USDJPY are not necessarily correlated. We picked one hedged and 2 not hedged to diversify. I would not worry about such a small amount.
Ah, this is true, it’s only about 14% of the DXY. And they really are small positions. Thanks again.
Hi Nick and Andy, How about EM bonds? any views?
They should do OK too.
is it a good timing to buy today, any action plan @Nick?
Any dip seems good timing. I have made a mess of it so far…but it is what it is. Don’t think it will matter in a few weeks/months.
Thank you Nick!
Nick, I want to join GB^2 come sept 1st but Fidelity does not offer futures trading. I have no interest in switching brokerages. What are you thoughts based on this scenario? Just stick with the original 2GB?
You can trade the cash but you would need to know how to calculate the basis difference and convert the futures amount to cash. You would also need to be able to borrow for the leverage.