By combining VEVE and VFEM as opposed to VWRL you have an expense cost of around .13% pa, is small cap worth it ?
Some funds bury in their small print that the benchmark compared to is the net total return (net of dividend withholding taxes). Yet other funds, even from the same provider such as Vanguard might instead mention in the small print that ...
Basis of fund performance NAV to NAV, net of expenses, with gross income reinvested.
A assumption of a comparison figure that includes 'gross' dividends having been reinvested but where in practice gross dividends would have had withholding taxes applied at various rates in different countries?
Average dividend withholding taxes globally is something like 30%, so getting on for 1% tax/deduction for a 3% dividend yield. By comparing actual fund to net tax deducted benchmark, or comparing a funds nav with assumption of gross dividends reinvested compared to a gross index it can be made to look like a fund compared closely to the 'benchmark' index, perhaps by just the expense ratio difference, but where that might actually be >1% or more less than the actual index.
A multi-national such as Vanguard could do internal stock lending, perhaps where it incurred just a 15% withholding tax instead of 30% by lending the stock over the ex-dividend period to another office region/state. Is that flowing back to investors? Perhaps. Juniors at Vanguard earn upwards of $66,000 (average salary in UK is $100,000+). With 17,600 total employees then at that average wage = $1.75Bn/year wage bill. With $5.6 trillion assets under management and a average (
https://about.vanguard.com/who-we-are/fast-facts/) 0.1% average ER = $5.6 billion. Building/office/licencing/commissions and trading ...etc. costs of approaching $4Bn/year (after wages) does seem reasonably aligned.
What are others actual experiences? Are the rewards from the likes of VWRL actually close in practice to the Russells FTSE All World Index after discounting the Expense Ratio, or are actual returns more aligned to after 30% average dividend withholding taxes having been 'lost'? Published "Past Performance" tables/charts more often show benchmark and fund having just close to the Expense Ratio difference, so either Vanguard is receiving dividends from globally very tax efficiently or the benchmark compared to is after withholding taxes. Either way that's potentially 1% lower than the 'Index'.
VWRL prospectus indicates
The OCF will not cover (to the extent not included in the Operational Fees as detailed below) non-recurring and extraordinary or exceptional costs and expenses (if any) as may arise from time to time (such as, without limitation, material litigation) and withholding taxes deducted from interest and dividend payments to the relevant Fund, stamp duties or other documentary transfer taxes, or similar duties and brokerage fees (excluding costs for research) arising on investment management activity on the purchase or sale of securities by the relevant Fund which, if they arise, will be paid out of the assets of the relevant Fund.
So the 0.22% VWRL OCF doesn't include withholding taxes that are 'taken out' (more strictly amounts not received), by the fund.
If calculations based on historic index total returns indicate that a 4% safe withdrawal rate might have been OK in say 95% of samples, but where after dividend withholding taxes of 1%, fund fees/expenses of 0.22% are added in then that pushes the figure to the equivalent of a 5.22% withdrawal rate, and that can mean significant differences in outcomes. Are customers being sold gross total return reward sales pitch by Financials, whilst actually being rewarded >1% lower actuals?
Would be nice if funds more openly published the total amounts of dividend withheld taxation figures each fund incurred - but they don't such that making informed decisions is more difficult.