Why Structure Matters

I shared that I swapped my holdings in VT (US-domiciled) for VWRA (Ireland-domiciled). But why exactly did I make the move?

When I first started, I chose VT because I wanted to diversify across the entire global stock market. As a long-term investor, I’m not interested in frequent trading, stock picking, or trying to "time" the market. My goal is simple: participate in global economic growth through broad diversification.

VWRA (Vanguard FTSE All-World UCITS ETF) is issued by the same trusted provider, Vanguard, and serves the exact same purpose. With just one ETF, you own the world’s leading companies across both developed and emerging markets.

▋ VT vs. VWRA: What’s the Difference?

While they both aim to "buy the world," there are slight differences in their baskets:

VT: Includes Large-cap + Mid-cap + Small-cap (Approx. 9,000 stocks).

VWRA: Includes Large-cap + Mid-cap (Excludes Small-cap) (Approx. 3,500–4,000 stocks).

Small-caps only make up about 5-10% of the total global market value, meaning their impact on overall long-term returns is relatively limited. Essentially, VWRA buys the "World's Major Players," while VT buys the "World's Major Players + The Little Guys." Both use market-cap weighting, meaning the returns for both come from the same source: the collective growth and profitability of the global economy.

▋ The Hidden Edge: Tax Efficiency

The real reason I switched to VWRA comes down to Tax Efficiency and Compounding.

1. Automatic Reinvestment VWRA is an "Accumulating" ETF, meaning it doesn't pay out dividends to your broker account; it automatically reinvests them back into the fund. This creates a "set it and forget it" compounding machine. It also gives me control over when to realize gains, helping me avoid unnecessary overseas income tax filings in Taiwan.

2. The 30% vs. 15% Difference

VT: As a US-domiciled ETF, dividends are hit with a 30% withholding tax before they reach your pocket. You get "taxed cash."

VWRA: Because it is domiciled in Ireland, it benefits from the US-Ireland tax treaty. The internal withholding tax on US dividends is reduced to roughly 15%. That’s a 50% tax savings right off the bat, leaving more money inside the fund to compound.

3. Estate Tax Protection

For non-US investors, US-domiciled assets (like VT) exceeding $60,000 are subject to a US Federal Estate Tax of up to 40%. This is a massive risk for those planning for family legacy or long-term wealth transfer. Since VWRA is a non-US asset (Ireland-domiciled), it bypasses this "death tax" trap entirely.

4. Costs

While VWRA’s expense ratio is slightly higher (0.19% as of 2025) compared to VT’s 0.07%, the tax savings and the avoidance of Taiwan’s NHI (National Health Insurance) supplementary premiums on dividends more than make up for the difference over time.

▋ Why VWRA is the Clear Winner for Many

For Taiwanese investors, the performance of the underlying stocks in VT and VWRA will be nearly identical. The real gap in your final bank balance won't come from market fluctuations—it will come from tax structure.

By choosing VWRA, you turn dividends into "Net Asset Value (NAV) growth." In Taiwan, capital gains are currently untaxed. This makes the accumulating design of VWRA a perfect fit: it reduces paperwork, lowers tax leakage, and protects your family’s future from the US estate tax.

If your goal is passive, long-term holding with minimal management "noise," VWRA is structurally superior for the non-US investor.

Risk Disclosure: This article is for educational and informational purposes only and does not constitute investment advice, recommendations, or solicitation. The "indexing tools" mentioned are used for demonstration purposes. Please assess your own risk tolerance and consult with a qualified professional before investing. Reminder: Past performance is not indicative of future results; investment involves the risk of loss of principal.