Non-US Investing • Moving from VTI/VXUS to VWCE (UCITS) Ireland based ETF. Larger position

For tax reasons in my new country it would be optimal to sell my VTI/VXUS and buy something like VWCE, an Ireland based ETF that doesn't pay dividends. I'll also need to convert USD to EUR. I'm with IBKR US. The position is 6 figures.

Are there any best practices to do this? I'm thinking of splitting the order in smaller parts.

I also asked Chat GTP.

Switching from the US-based ETF *VT* (Vanguard Total World Stock ETF) to the UCITS ETF *VWCE* (Vanguard FTSE All-World UCITS ETF) involves careful planning, especially for a large position like $200,000. Here's a step-by-step approach to consider:

### 1. **Consider Tax Implications**
- **Capital Gains Tax**: Selling VT could trigger capital gains tax, depending on your cost basis and how long you have held the ETF. Since you are moving your tax residency to Thailand, it's essential to understand how capital gains tax applies there, as Thailand does not tax gains on foreign investments. However, be mindful of any tax obligations in the Netherlands or other countries you might be linked to during this transition.
- **Currency Exchange**: VWCE is traded in EUR, but your current position is in USD. The switch may involve currency conversion, which could have tax implications or forex fees.

### 2. **Optimal Timing**
- **Avoid Volatile Market Days**: To minimize slippage and unexpected price changes, avoid selling and buying on days when markets are volatile. Consider spreading the trades over several days to avoid market impact, especially for such a large amount.
- **Avoid Bid-Ask Spread Loss**: Ensure you're trading when both the U.S. and European markets are open to reduce spreads, particularly for VWCE on European exchanges.

### 3. **Currency Conversion**
Since VWCE trades in EUR, you’ll likely need to convert your USD holdings into EUR before purchasing. Interactive Brokers typically offers competitive currency conversion rates, but:
- **Use Limit Orders** for conversion to avoid unfavorable exchange rates.
- **Consider Hedging**: Depending on your outlook for the EUR/USD exchange rate, you might want to hedge against potential forex losses.

### 4. **Executing the Trade**
- **Sell VT in USD**: When you're ready to sell, use a limit order to avoid slippage. Ensure that you sell in portions if market liquidity is a concern.
- **Buy VWCE in EUR**: After selling VT and converting to EUR, use a similar approach to buy VWCE, placing limit orders and avoiding large orders that might move the market.

### 5. **Minimize Fees**
- **Brokerage Fees**: Interactive Brokers charges low commissions for ETF trading, but check if there are any additional costs for currency conversion or specific market access fees for European ETFs.
- **FX Fees**: Look into currency conversion costs to ensure you're not paying excessive fees to convert USD to EUR. IB typically has low forex conversion costs, but it’s worth confirming the exact rates.

### 6. **Check Domicile Benefits**
- **Tax Withholding**: One advantage of UCITS ETFs like VWCE over US ETFs like VT is the potential reduction in withholding tax on dividends, especially if you are no longer a U.S. tax resident. UCITS ETFs are structured to be more tax-efficient for non-US residents.

### 7. **Evaluate Liquidity**
- **Liquidity of VWCE**: While VT is a highly liquid ETF in the U.S. markets, VWCE, though popular, might have less liquidity on European exchanges. Ensure that the trading volume of VWCE is sufficient to handle your large order without significantly impacting the price.

### Summary of Best Practices:
- Be mindful of capital gains taxes, especially considering your move to Thailand.
- Sell VT and buy VWCE using limit orders to avoid market impact.
- Consider currency exchange timing and hedging strategies.
- Execute trades during overlapping market hours to minimize spreads and volatility.
- Utilize Interactive Brokers' low-cost forex conversion tools for USD to EUR exchange.

This approach can help minimize costs and risks while executing the switch.

Statistics: Posted by shcnno — Sat Sep 14, 2024 1:39 am — Replies 1 — Views 84