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070821 Best Ireland Domiciled ETFs

Best Cheap Ireland Domiciled ETFs for Singaporeans To Consider Looking Into

profileJoel Koh

When it comes to investing, one of the most popular and proven ways to gradually grow your wealth is to implement a passive investing strategy.

This strategy is great for those who do not want to spend all their time monitoring their investments.

By implementing this strategy, investors can buy and hold their investments for the long term and focus on improving their earning power and savings rate.

One of the best ways to employ this passive investing strategy is to buy and hold a broadly diversified portfolio of companies across numerous industries, sectors, ā€‹market capitalizationĀ sizes, and even countries.

You can do so by buying low-cost and well-diversified exchange-traded funds (ETFs) that will produce returns that track the market.

These ETFs also automatically reinvest all the dividends to take advantage of the power of compound interest.

However, there are some cons to this approach:

  • These passive ETFs will never beat the market even in a bear market as by design, the core holdings of these ETFs track the market.
  • This means that you will not get the market-beating returns that skilled active stock pickers might get. However, do note that these active investing rewards come with a lot more risk as well.

Intrigued?

Here are some of the best low-cost Ireland Domiciled ETFs for your to consider!


TL;DR: Best Best Ireland Domiciled ETFs For Singaporeans to Buy and Hold

ETFDetailsTotal Expense Ratio (p.a.)5 Year Returns (Annulised)Standard Deviation (Past 1 Year)
Vanguard FTSE All-World UCITS ETF (VWRA)Developed & emerging market companies0.22%13.72%11.03%
SPDRĀ® MSCI World UCITS ETF (SWRD)Developed market companies0.12%14.83%11.97%
iShares Core MSCI EM IMI UCITS ETF (EIMI)Emerging market companies0.18%10.39%11.81%
iShares Core S&P 500 UCITS ETF ACC (CSPX)Top 500 U.S. companies0.07%16.95%11.86%

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ā€‹Readers should always do their own due diligence and consider their financial goals before investing in any stock.Ā 


Why Ireland Domiciled Exchange Traded Funds (ETFs)?

One of the main ways to keep costs down is to pay less on dividends.

Personally, I prefer Ireland domiciled ETFs to the U.S. based ETFs because they reduce the withholding taxes you have to pay on the dividends received and help you avoid estate duty/inheritance tax/death taxes complications in the unfortunate event that the investor passes on.

You can read all about it here:

Do note that these ETFs are all listed on the London Stock Exchange (LSE) and are domiciled in Ireland.

Vanguard FTSE All-World UCITS ETF (VWRA)

First up we have the Vanguard FTSE All-World UCITS ETF: an Ireland domiciled ETF that aims to physically track the performance of the FTSE All-World Index. This ETF was incepted on 23 Jul 2019.

There are two main variants of the ETF you can pick from.

The accumulating variant VWRA automatically reinvests all the dividends to take advantage of the power of compound interest while the distributing variant VWRD distributes the dividends that are paid out.

This ETF is actually a market capitalisation weighted ETF and is made up of 3,618 large and mid-cap companies from developed and emerging countries with a median market cap of US$84.6B.

Here is a breakdown of the exposure of the ETF.

Source: Vanguard

As such, you can see that the ETF is heavily weighted towards large-cap technology companies based in the United States.

More specifically, the market allocation of the portfolio is mainly made up of developed countries, with a small portion of the portfolio (4.7%) allocated to China companies and other emerging market countries.

Current Price

The ETF is currently trading at a price of US$114Ā per share as of 6 August 2021 close.

Total Asset Value

As for fund size, VWRA is huge as the ETF’s total assets amount to about US$11.9B.

This means that there should be quite a decent amount of liquidity with lower bid-ask spreads.

Total Expense Ratio

The total expense ratio at 0.22% per annum (p.a.) is not too high either.

In other words, you will be payingĀ $22 in fees per $10,000 invested on top of the fees brokerages charge.

Returns (As of 31 Jul 2021 Close)

In terms of returns, the fund is also performing pretty well according to Vanguard:

Source: Vanguard

If you look at the benchmark performance it tracks, the benchmark has been returning annualised returns of 13.72% for the past five years.

This is pretty great performance for a passive investing strategy. But do remember that past performance is not indicative of future returns. So please do further due diligence on these ETFs to find out if they can continue growing into the future.

Tracking Difference

However, according to Vanguard, this ETF has an annualised tracking error of 0.04% in the past year compared to the FTSE All-World Index it tracks.

This is ETF demonstrates a very low tracking error which means you can expect the ETF to deliver similar market returns as the benchmark it is tracking.

Sharpe Ratio And Standard Deviation (1 Year)

In terms of risk, the ETF has a Sharpe Ratio of +2.14Ā and a standard deviation of 11.03%.

Here’s some context:

Sharpe Ratio

The Sharpe Ratio was developed by Nobel Laureate William F. Sharpe.

The Sharpe Ratio is the average return earned more than the risk-free rate per unit of volatility.Ā TheĀ higher the returns relative to the riskĀ you are bearing, theĀ higher the Sharpe ratio.

According to Investopedia:

  • Usually, any Sharpe ratio greater than 1.0 is considered acceptable to good by investors.
  • A ratio higher than 2.0 is rated as very good.
  • A ratio of 3.0 or higher is considered excellent.
  • A ratio under 1.0 is considered sub-optimal.

Standard Deviation

The standard deviation of a stockā€™s returns represents the Chinese concept of ā€œriskā€ well.Ā Standard deviation measures the deviation of a stockā€™s returns from its expected returns.

In this case, if a stock performs well in the marketĀ above its expected or historical mean, theĀ standard deviation of the stock increases.

Hence, there is a greater opportunity for investors to benefit from the above-expected results.

Of course, ā€œdangerā€ also lies in the sense that the performance of the stock can be much worse than what is expected.

Who is This ETF For?

This ETF is great for those who are looking for a cheap, globally diversified and passive investment vehicle that covers the developed and emerging markets.

SPDRĀ® MSCI World UCITS ETF (SWRD)

Alternatively, if you just want exposure to the developed markets, the SPDRĀ® MSCI World UCITS ETF (SWRD) which was incepted on 28 Feb 2019 might be for you.

SWRD is an accumulating Ireland domiciled ETF that aims to physically track the performance of the MSCI Total World Index: a market capitalisation weighted index made up of about 1,643 large and mid-cap companies across developed marketĀ countries.

In addition, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Here is a breakdown of the exposure of the ETF:

Source: State Street Global Advisors

SWRD is similar to VWRA as it is heavily weighted towards large-cap technology companies based in the United States.

However, SWRD excludes emerging market country companies.

Current Price

The ETF is currently trading at a price of US$30.98 per share as of 6 August 2021 close.

Total Asset Value

ETF’s total assets amount to about US$1.1B.

This means that liquidity will not be as good as VWRA with worse bid-ask spreads.

Total Expense Ratio (p.a.)

In terms of expense ratio, this ETF charges 0.12% p.a. which is almost half of VWRA’s total expense ratio.

Returns

Source: State Street Global Advisors

In terms of performance, the fund has done pretty well as the index it tracks has given returns of 14.83% p.a. over the last five years.

Tracking Difference

According to Trackinsight, SWRD has a low tracking error of 0.02% in the past year compared to the MSCI World Index it tracks.

This is ETF demonstrates a very low tracking error which means you can expect the ETF to deliver similar market returns as the benchmark it is tracking.

Sharpe Ratio and Standard Deviation (1 Year)

In terms of risk, the ETF has a Sharpe Ratio of +2.10Ā and a Standard Deviation of 11.97%.

Who is This ETF For?

This ETF is great for those who are looking for a cheap, globally diversified and passive investment vehicle that covers only the developed markets.

Also, many get it for the cheaper expense ratio and pair it with EIMI to get exposure to both the developed and emerging markets.

iShares Core MSCI EM IMI UCITS ETF (EIMI)

Speaking of EIMI you might want to look at the iShares Core MSCI EM IMI UCITS ETF (EIMI) ETF. This ETF was incepted on 30 May 2014.

EIMI is an accumulating Ireland domiciled ETF that aims to physically track the performance of the MSCI Emerging Markets Investable Market Index: a market capitalisation weighted index made up of about 2,800 large-, mid-and small-cap emerging markets companies.

Here is a breakdown of the exposure of the ETF:

Source: State Street Global Advisors

EIMI is very different compared to VWRA and SWRD as it consists of mainly emerging market companies from China, Taiwan South Korea, India etc.

The ETF also grants entire market exposure which means that you would not miss out on potential growth surprises from often-overlooked smaller companies.

Current Price

The ETF is currently trading at a price of US$36.62 per share as of 6 August 2021 close.

Total Asset Value

ETF’s total assets amount to about US$18.6B.

This means that liquidity will not be better compared to VWRA with better bid-ask spreads.

Total Expense Ratio (p.a.)

In terms of expense ratio, this ETF charges 0.18% p.a. which is close to VWRA’s total expense ratio.

Returns

Source: State Street Global Advisors

In terms of performance, the fund has done pretty well as it has given returns of 10.39% p.a. over the last five years.

Tracking Difference

According to Trackinsight, SWRD has a low tracking error of 0.09% in the past year compared to the MSCI Emerging Markets Investable Market Index it tracks.

This is ETF demonstrates a very low tracking error which means you can expect the ETF to deliver similar market returns as the benchmark it is tracking.

Sharpe Ratio and Standard Deviation (1 Year)

In terms of risk, the ETF has a Sharpe Ratio of +1.36 and a Standard Deviation of 11.81%.

Who is This ETF For?

This ETF is great for those who are looking for a cheap, globally diversified and passive investment vehicle that covers only the emerging markets.

Many buy a combination of SWRD and EIMI to get cheaper exposure to the whole world’s market compared to VWRA. But you will need to keep track of your trading fees to see if this makes sense for you.

Those who get the ETF are also bullish about Emerging Markets.

If you are concerned about the recent crackdown by the Chinese Communist Party on Chinese companies.

I would recommend that you take a look at this guide first to gain some clarity.

iShares Core S&P 500 UCITS ETF ACC (CSPX)

Last but not least we have the iShares Core S&P 500 UCITS ETF (CSPX) that was incepted on 18 May 2010.

CSPX is an accumulating Ireland domiciled ETF that aims to physically track the performance of the S&P 500 Index.

The index is a market capitalisation weighted index made up of about 500 large-cap and established U.S. companies.

The ETF is also somewhat globally diversified as many of these companies are large multinational corporations with a presence around the world.

Source: Blackrock

As you can see from the above, the S&P500 is completely U.S. centric and consists of companies only located in the U.S.

The index is also quite tech heavy as eight out of 10 of the top ten holdings are tech companies.

Current Price

The ETF is currently trading at a price of US$450.47 per share as of 6 August 2021 close.

Total Asset Value

ETF’s total assets amount to about US$49.0B.

This means that liquidity will not be a problem.

Total Expense Ratio (p.a.)

In terms of expense ratio, this ETF charges 0.07% p.a. which is the lowest on this list.

Returns

Source: Blackrock

In terms of performance, the ETF is quite stellar for a passive investment strategy as it has given returns of 16.95% p.a. over the last five years.

Tracking Difference

According to Blackrock, CSPX has a low tracking error of 0.02% in the past three years compared to the S&P 500 Index it tracks.

This is ETF demonstrates a very low tracking error which means you can expect the ETF to deliver similar market returns as the benchmark it is tracking.

Sharpe Ratio and Standard Deviation (1 Year)

In terms of risk, the ETF has a Sharpe Ratio of +2.18 Ā and a Standard Deviation of 11.86%.

Who is This ETF For?

This ETF is great for those who are looking for a cheap, globally-diversified and passive investment vehicle that capture the U.S. market’s growth.

If you are convicted that American companies will continue dominating the world in the next few decades; this ETF is for you.

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About Joel Koh
History student turned writer at Seedly. Before you ask, not a teacher. I hope to help people make better financial decisions and not let money control them.
You can contribute your thoughts like Joel Koh here.

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