Vanguard in Belgium - Zecco or active?

[pj86]

Hello,

Inspired by this board, I am looking into buying Vanguard index funds in Belgium (where I live).

However, we can not buy the Vanguard funds the way US investors can. We have 2 possibilities:

1. 'Cortal Avenue' from French stock broker Cortal Consors, the partner of Vanguard for the Belgian market. They offer 60/40 Vanguard index/actively managed funds, with 25K euro minimum buy-in. 'Free' profiling of your needs. Expense ratio 0,50% (this is quite high, right?).

I suspect these guys will push me to the lowest expense Vanguard funds, so they effective expense ratio of the active part will easily exceed 1%. However, if they allow me to take a lot of emerging markets (generally higer expense ratio's, right?), this might be a good deal.

2. Zecco. I think I can invest in ETF's there whithout paying the US capital gain taxes (let's assume this). I should be able to have an expense ratio of below 0,25% this way, right? My fear, however, is that Zecco will introduce fees and I trust Vanguard/Cortal more than a start-up, frankly. I don't know if this fear is justified.

My basic question to you is: What should you do? Also, if I make any mistakes in my reasoning, please tell me.

(Fyi, so far, I think I will end up with a combination of both options.)

Thanks a lot.

[MooreBonds]

Quote:

Originally Posted by pj86 2. My fear, however, is that Zecco will introduce fees and I trust Vanguard/Cortal more than a start-up, frankly. I don't know if this fear is justified. My basic question to you is: What should you do? Also, if I make any mistakes in my reasoning, please tell me.

The way I look at it, if Zecco starts jacking up fees, you can always transfer your account later on to Vanguard/Cortal, correct? (Check the fees charged by Zecco to close/transfer an account). So, you could always start with Zecco with reasonable expenses, and close the account if they start attacking your account with fee after fee.

Quote:

Originally Posted by pj86 (Fyi, so far, I think I will end up with a combination of both options.)

If the euros we're talking about is large enough, then I'd second that nomination (I'm always a big believer in diversification ).

[bpp3]

Quote:

Originally Posted by pj86 1. 'Cortal Avenue' from French stock broker Cortal Consors, the partner of Vanguard for the Belgian market. They offer 60/40 Vanguard index/actively managed funds, with 25K euro minimum buy-in. 'Free' profiling of your needs. Expense ratio 0,50% (this is quite high, right?). I suspect these guys will push me to the lowest expense Vanguard funds, so they effective expense ratio of the active part will easily exceed 1%. However, if they allow me to take a lot of emerging markets (generally higer expense ratio's, right?), this might be a good deal.

This sounded funny to me, so I had a glance at their web page. My first impression was that the 0.5% fee is charged on top of the Vanguard fee, not that it includes the Vanguard fees. They then waive this fee for active funds (presumably getting a kickback from the funds), but not for index funds. On second glance, the fee structure for index funds looks ambiguous.

Either way, I think Zecco would be the cheaper option for you. The main thing I would worry about in your shoes is whether I could get my money back out of the US when needed without running into any PATRIOT Act red tape or whatever. I might split my investments just to hedge against that kind of risk.

[Medit8]

You should be able to go directly to their offshore administrator as an individual investor. You can contact them at:

Vanguard Investments
c/o JPMorgan Administration Services (Ireland) Limited
Attn: Transfer Agency
JPMorgan House
International Financial Services Centre
Dublin 1
Ireland

[nun]

Quote:

Originally Posted by pj86 Hello, Inspired by this board, I am looking into buying Vanguard index funds in Belgium (where I live). However, we can not buy the Vanguard funds the way US investors can.

Are you a US citizen? If you are you can buy funds through Vanguard USA?

The offshore Vanguard company does not sell US based index funds and if you are a US citizen its products, indeed any foreign based mutual fund, should be avoided like the plague as they will fall under US PFIC taxation rules.

If you are a Belgian citizen I don't know the situation, but I'd call the number in Ireland.

[Medit8]

Yes, my suggestion was made based on the assumption that you are NOT a US citizen or green card holder

[nun]

Quote:

Originally Posted by Medit8 Yes, my suggestion was made based on the assumption that you are NOT a US citizen or green card holder

If the OP is a Belgian citizen whey not try ing.be or citibank.be, lots of funds there.

[chinaco]

Consider just using ETFs... perhaps they are available on your local exchange.

[bpp3]

Quote:

Originally Posted by nun If the OP is a Belgian citizen whey not try ing.be or citibank.be, lots of funds there.

Or Internaxx, in Luxembourg, if he is eligible to open an account there. They offer direct access to the US markets, and hence presumably the Vanguard ETFs.