I have recently started investing and would like some help in deciding the ETFs to buy since my broker offers no commissions for some ETFs when buying. Here is the template for basic information, more info on my situation is below.
Country of Residence: Italy
International Lifestyle: I expect to remain in Italy
Currency: EUR
Emergency funds: Already taken care of
Debt: No debt
Age: 27
Desired Asset allocation: 80% stocks / 20% bonds (I already have a decent amount of bonds so I will only be investing in stocks for at least 1/2 years)
Current size of the total portfolio: mid five-figures
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I am currently investing around 300€/month in VWCE, with a long-term objective (at least 10 years, probably more). The broker I use is non-negotiable: it automatically does my taxes and pays them so I don't have to manually fill tax documents every year, and does this with the lowest fees in Italy (that I know of, at least).
The commissions are 0.19% for each buy/sell, with a minimum of 1.5€ (there's an option for a flat 5€ fee if you move much more than I do for a single movement, but it's not important).
However, this broker also provides the option of automatically setting a monthly (or bi-weekly) buy order for ETFs with zero buy commission (I think the selling commission will be applied), on a restricted amount of ETFs (this is the list). This is convenient as it's an automatic "set it and forget it" operation. It also provides some commission advantage, which is certainly small, but why waste money when I can avoid it?
My question is whether the ETFs they propose are worth the savings (since they are not commonly recommended in the wiki/Reddit/etc) or if the savings are so small that I may as well stick with VWCE. I am ok with around 90% developed markets and around 10% emerging markets, which is roughly what VWCE has. Maybe I will add a small percentage of European small caps in the future.
Here are some practical options that I have:
- Invest 300€/month in VWCE (0.22% ter). What I am currently doing, paying 0.5% commission on each buy order.
- Stick with VWCE but invest every 2 or 3 months instead of monthly. This will reduce commissions to 0.25% or 0.19% when I buy.
- Buy a MSCI world ETF and a MSCI emerging market ETF between the ones with no buy commission. Since the orders are automatic, I will probably need to do some rebalancing once in a while. Some examples of the available ETFs are:
- MSCI World:
- MWRD (0.18% ter, Physical replication, 897 M€ size)
- CW8 (0.38% ter, unfunded swap replication, 2485 M€ size)
- WLDC (0.3% ter, unfunded swap, 31 M€ size)
- MSCI Emerging markets:
- AEEM (0.2% ter, unfunded swap, 2310 M€ size)
- EMKT (0.55% ter, unfunded swap, 842 M€ size)
- MSCI World:
- Instead of VWCE I can also do manual investments in VHVE+VFEA (or SWRD+EIMI) (investing once in VFEA/EIMI every 8 or 9 investments in VHVE/SWRD) to have a lower ter. The investments in emerging markets would be less periodic and more subject to fluctuations but I will pay less annual expenses.
According to this, what would be a suitable strategy? For now, I am thinking of buying VWCE every 2/3 months, but I am a newb in investments and just read something off the Bogleheads wiki before starting, so I'd like to ask someone with more experience. If the answer is "the difference is so small it does not matter between any one of those strategies", good to know, but I'm asking since I wouldn't be able to determine that myself.
Thanks, everyone!