Vanguard Funds - where in UAE?

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Vanguard Funds - where in UAE?

Postby minion » Wed 23 Feb 2011 22:43

Hi everyone.
I'm not a trader but I would like to save some money for my retirement. I have read some books and decide to put money in passive index funds. Especially in Vanguard.
Is there any passive funds in UAE? Which broker has the Vanguard funds, or which has the biggest variety of such a funds?

I would like to invest directly from UAE not to pay capital gains tax.
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Re: Vanguard Funds - where in UAE?

Postby ixtira » Thu 24 Feb 2011 19:03

The first question is easy: You have the Dow Jones UAE Select Index and the Dow Jones UAE 25 Index (local). These products will replicate the performance of the DFM/ADX.

Your second question is a bit tricky: These products don’t trade in the UAE and the whole question of eligibility to buy UAE stocks depends on your nationality and residency.
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Postby minion » Thu 24 Feb 2011 20:29

Thanks a lot for those two funds.
I have contact Vanguard and they have told me that their funds are only available for US residents. But maybe there is a way to purchase them indirectly.
I would like to diversify on more than one market that's why only UAE is not an option. To be specific I would like to invest in low cost funds which are investing in emerging markets or whole world. I have chosen two from Vanguards portfolio:
- Emerging Markets Stock Index
- Total International Stock Index
Is there any way to invest in similar funds from UAE? Maybe not Vanguard?
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Postby ixtira » Fri 25 Feb 2011 13:32

minion wrote: I have contact Vanguard and they have told me that their funds are only available for US residents.


... why don’t you just go to Vangards website you will see that they operate in many countries outside the US (UK, EU, Switzerland, Japan).

Just visit : www.vangard.co.uk

Most major international banks have suite of products that usually include a MENA fund (Middle East North Africa). HSBC, Barclays, RBS, Credit Suisse etc etc.

The range of funds offered by these banks will be much larger than offered by a small institution such as Vangard.
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Postby ixtira » Fri 25 Feb 2011 13:38

Out of interest: What is it about the UAE market that you find attractive from an investment point of view?
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Postby minion » Fri 25 Feb 2011 19:47

Site www.vangard.co.uk is not working...
You have right that they operate outside U.S. They have 3 sites;
- Europe; personal and business, nice sophisticated offer for each country
- Caribbean and the Americas; business only, I'm in a middle of registering process as a intermediary :) - desperacy
- Asia; only business
I would like to invest in those funds because they are well diversified and have smallest fees on the market. What's the point using such a fund though bank which fees (In UAE those fees are just ridiculously large) will negate one of reasons why I want to invest in funds. Invest with large diversification I can everywhere.

You have asked the most important question:
ixtira wrote:What is it about the UAE market that you find attractive from an investment point of view?

0% capital gains tax! Since I don't want actively manage my account I want not to pay fees! Since I'm in tax heaven what's the point investing in e.g. Germany and give up 25% gains on my investments?

I suppose you know how work compound interest? Getting rid of capital gains tax and lovering fees can make my investment unbeatable comparing to other made outside UAE.

I will try to invest directly in some passive funds. If I don't succeed, I will check UAE banks offer and compare their fees. I will inform you about my progress. Wish me luck.
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Postby wisk » Fri 25 Feb 2011 21:41

https://www.vanguard.co.uk/uk/portal/home.jsp

www.vanguard.co.uk


This is the correct address of Vanguard...

Try it...

Good Luck
sMiLeS AcRoSS MiLeS
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Postby ixtira » Sat 26 Feb 2011 14:14

:oops: Cheers Wisk

MINION wrote: 0% capital gains tax! Since I don't want actively manage my account I want not to pay fees! Since I'm in tax heaven what's the point investing in e.g. Germany and give up 25% gains on my investments?


Minion – You’ve got wrong end of the stick … I suggest getting some investment advice from one of the following:

DeVeres, Mondial or Guardian (These are three of the investment companies in Dubai specialising in services for EU expats)

www.devere-group.com
www.mondialdubai.com
www.guardianwealthmanagement.com

Bottom line you can invest in almost any country or fund category you want without paying capital gains tax.

Good Luck.
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Postby minion » Sat 26 Feb 2011 22:12

Ixitra. Finally you have understood me :)

I'm looking for something exactly like deVere.
Today I was at Barclays and HSBC, they have pure "wealth management". Which can be translated as; sign monthly contribution for 5 years and we will do everything for you. I won't say that it is wrong, some people are looking for that, but I would like to handle my investments by myself.

HSBC have: almost only their funds, on site you will find only HSBC funds. Advisor was mumbling something about other funds, but I didn't manage to get any details.
Barclays have: Blackrock, Fidelity, JP Morgan, Permal, Old Mutual

But there is no significant difference because both advisors try to sell you Zurich investment products. And when you are saying that's not what you want they are arguing that you won't find better product on UAE market. Personally I think advisors have biggest income from Zurich wealth management plans, that's why they are pushing them.

After quick look at both banks I can say;

HSBC- Very nicely diversified World Selection funds. If I would not be so stubborn about passive funds I would choose one of them. Lump sum entry fee 3%, 1% annum fee and ~2% fund management fee.

Barclays- Big variety of funds. $2000 monthly contribution gives you access to Premiere, your personal advisor, newsletters and professional research bulletins. Lump sum entry fee 4%, 1% annum fee and ~2% fund management fee.

And big advantage of those banks over other investment companies - All products in one place available all over the world.

Of course this is brief comparison which do not include contribution plans.

I will check other companies and try to compose a comprehensive comparison or description of UAE investment opportunities.
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Postby Sebastien » Thu 06 Jun 2013 10:05

Hello Minion,

I have been doing the same research about buying Vanguard from the UAE.
Did you find a way to buy Vanguard funds? Or did you find other similar low expenses index funds?
I know it was couple of years ago but I would be interested in hearing about your experience.

Cheers.
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Postby minion » Thu 06 Jun 2013 16:17

Yes. I managed to find out that without outrageous commissions, in UAE, you won't be able to invest in any foreign based funds.
All brokers and so called financial advisors in UAE will try to rip you off. Just imagine that deVere have a 5% commission when buying funds! Put it in excel formula and you will see how your capital will evaporate.

But don't worry there is solution.
I researched other countries in which you don't need to pay capital gain taxes and found Boom.com.hk and tddirectinvesting.com (old Internaxx).
I was searching for well established brokers, sound financially and with low fees. Each of those came first in it's region. Boom was the best in East Asia and TD is best in Europe. I didn't consider tax heavens like Cayman Islands, etc. options.
When it comes to competition there is really not much in Europe. But in Asia you should focus on Singapore. Boom win just by bit with OCBC, and there is many more in Singapore.

Investment procedure is very simple. You are wiring money like you would do to your domestic broker and from that moment you can enjoy almost full world markets coverage. Wiring money is more expensive since it incur additional fees. But low trading fees will make it up for you very quickly.

Just remember to fill W8-BEN form to be exempted from tax in US. It'll be necessary since Vanguard is listed in US.

If you have any other questions don't hesitate to ask.
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Postby Sanity » Sat 08 Jun 2013 16:12

About long term retirement funds.

Never buy from insurance companies.. they tend to mix huge premium disguised in life risk cover (unless one can short live the actuarial schedule - life expectancy by a long shot). There is also management fee wrapped around the underlying funds which also charge all sorts of fees.

Unfortunately, all over the world, fees are hidden and heavy. Only place could be mutual funds in US where they are highlly transparent and efficient.. (however, they or may not be available for folks from other countries).

Never stick with any one kind of fund. Since funds are design to do a narrow field or market. Best if within the plan the ability to rotate from US, Europe, Asia etc. Fund manager would never stay in cash even if they know the market is going down for sure...they are design to be almost fully invested in a certain market or region. Large cap, small cap or medium caps..etc.

Fund managers could be right for a few years within a certain region or industry, but they will be hit by adjustments for sure... sometimes the signals are so clear, yet they still have to be invested.. otherwise, investors would blame them.. investors are the ultimate asset allocators.

All the retirement themed funds are avaialbe in Hong Kong and Singapore or online, but they tend to have a huge hidden wrap.. disclosure of success fees and additional charges usually are not disclosed until one sees the disparity in performance between the underlying funds and the entire portfolio.

It is abosolutely essential to rotate the funds between bonds, international, US and Europe when signs of boom or trouble is becoming clear in a market.. the manger will not do it for you, unless it is fund of funds, but still it may only serve as diversification, and fees are charged twice.

Certainly there is no such products in UAE..

No matter what you need to review the allocation from time to time, and minimize the rotation (swithching fees). I would rather pay a hefty entry fee (no success fee or exit fees) to be able to use such platforms.

So far I have not found one honest platform.
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Postby Sebastien » Thu 18 Jul 2013 21:21

Hi minion,

Thank you for sharing your findings.

I am still doing research on the different options.
TD direct investing was high on my list of preferred brokers until I found Saxo Bank. Saxo Bank is Danish. Does this make a difference compared to Luxembourg, Singapore or HK?
The convenient part of Saxo Bank is that they have a local branch... And I am now trying their DEMO account to learn the basics of investing. It is nice to see they have access to a lot of Vanguard ETFs. Unfortunately not to the funds directly (not even sure if that's possible in fact)

A few more questions for you if you don't mind:
- Regarding the W8-BEN form, how do I know if I am eligible for tax exemption?
- The 30% tax applies to dividends but not on capital gains (http://www.investopedia.com/ask/answers ... enttax.asp). What happens the day I want to sell some of my Vanguard shares? Is this taxed? How would that work?
- Low trading fees are still high compared to my investments (USD 15 per trade with saxo Bank) and I was planning on adding to my portfolio every month for dollar cost averaging. But that clearly drives my costs up a lot. So I need to find a balance between the number of ETFs, the frequency of investments and the amount invested. Any advices?

Sorry for all the questions, there is clearly a learning curve to managing one's own investments :-)

Cheers.
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Postby sharewadi » Mon 12 Aug 2013 15:58

Sebastien wrote:- Regarding the W8-BEN form, how do I know if I am eligible for tax exemption?

Fill it in anyway. If you're not a US citizen and don't live in the USA then you're probably exempt.

Sebastien wrote:- The 30% tax applies to dividends but not on capital gains

What happens the day I want to sell some of my Vanguard shares? Is this taxed? How would that work?

Don't know how it's supposed to work but I discovered the broker kept 30% withholding tax when my shares were sold (30% of the sale value, not capital gain). But that was because my W8 form was out of date and I hadn't sent a new one.

Sebastien wrote:- Low trading fees are still high compared to my investments (USD 15 per trade with saxo Bank) and I was planning on adding to my portfolio every month for dollar cost averaging. But that clearly drives my costs up a lot. So I need to find a balance between the number of ETFs, the frequency of investments and the amount invested. Any advices?

What you said ... find a balance that you're comfortable with.
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US markets and tax with-holding

Postby ravibaldev » Mon 12 Aug 2013 17:16

Hello Sharewadi,
You mentioned 30% witholding of your funds. What happened when you filed a new W8-BEN - did they release the funds back to you?
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Postby Sebastien » Tue 13 Aug 2013 19:46

Please be aware of the estate tax that kicks in from USD 60k when investing in US based funds. (http://en.wikipedia.org/wiki/Estate_tax ... -residents)

This and the 30% tax on dividend are enough to convince to look for other options... such as Vanguard on LSE or PSE instead.

I hope this helps!
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Re: US markets and tax with-holding

Postby sharewadi » Sat 17 Aug 2013 17:35

ravibaldev wrote:What happened when you filed a new W8-BEN - did they release the funds back to you?

Have sent a new one, fund should be released when they receive, will try to remember to update this topic when ... if it happens ...
Please read forum posting guidelines, especially if you have been deactivated.
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Re: Vanguard Funds - where in UAE?

Postby PHS » Tue 21 Apr 2015 10:20

Hi Everyone. Sorry, I know I am late to the party. I have been reading about Index funds and planning to invest in them. Would appreciate if anyone has any suggestions or solid information on opening a Vanguard account. I know there is information posted by various members in the thread in last couple of years when you were discussing it. However would love to hear your experience about the broker you are using and the asset allocation.
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