""Far higher fees" is a subjective term and misleading. It's all relative."
The comparison shouldn't be with the truly exorbitant fees that GWC is paying now, but more normal fees for offshore and onshore. Just taking a couple of examples, exposure to the S&P500 index and to Lazard Global Listed Infrastructure.
iShares Core S&P 500 ETF has a 0.04% TER.
For the same exposure SCB's US Equity Fund currently charges a 0.5% entry fee, a 1% management fee, plus miscellaneous other fees totalling .2%..
In other words, holding onshore is, in this case, 30 times more expensive than holding offshore.
Again that's misleading. That's not an apples to apples comparison at all. They are two different products. One is an ETF and the other a unit trust
If that's what's wanted, someone could open an account with a broker such as Asia Plus in Thailand.
and buy the same ETF or similar on the exchange it's listed on and pay the same 0.04% TER.
0.04% BTW isn't exactly the norm and is one of the lowest cost ETFs in the world you've picked, and looks like you've picked one of the more expensive Thai offerings to compare it to for what it actually is
A UK expat based in Thailand would be strongly advised against putting all their money in a US large cap equity ETF. Once they've been advised that they will find that costs on ETFs for other geographies to build a more balanced and suitable portfolio are of course more than 0.04%, sometimes around 10 times that for some geographies and sectors. So 0.04% isn't a realistic amount of what building an ETF portfolio would cost at all either. For the small proportion in a US Index ETF - yes. Normal for the rest and majority of investment - No.
Bottom line the same product can be bought with the same annual fee from a broker in Thailand if that's the route someone wanted to go. The differences will be on the one-off of brokerage fees of the brokers on buy and sell. For someone not trading regularly but investing long term, the differences in cost on say USD 50k would be negligible for long term investors, as well as one-off or should I say two-off buy and sell. One thing to watch also is platform or holding fees, which are more common overseas than in Thailand.
I don't currently trade global stocks or ETFs from Thailand. However, I was considering changing arrangements recently, particularly for buying thru my wife's name, although managed by me online. I called Asia plus and confirmed though that as a UK passport holder living in Thailand, I could open the account. One of my previous RM's from Stan Chart now works at a brokerage firm, with another global offering. So the products are there if you know where to look.
The question you've actually raised is whether someone wants to deal on an execution only basis thru a broker and buy the cheapest possible product, or buy a fund thru a financial institution where they would have a relationship manager in Thailand for support, and possibly linked to their overall banking. The former being perhaps preferable for a more experienced investor. The latter perhaps more suitable for an inexeperienced investor who doesn't want to actively do so much themselves That's where the difference in fee comes in for your example. Not Thailand vs overseas
Again generalising, but these days:
Me, experienced investor:
- Use Thai broker for for Thai equity and derivatives trading
- Use Thai financial insitution for Thailand focused products for investing
- Use Singapore for overseas / global and regional products for investment and trading
- Use UK for UK products with a global focus for investment and trading
For me the focus is quality and lower/reasonable costs, and no worries about complexity. Execution only. Though my RM in Singapore does make suggestions sometimes, as is great as a go to person for admin, questions etc. UK is execution only no RM.
My wife, inexperienced investor, who would struggle to operate a brokerage account:
- Use Thai financial institution for both Thai and some global focused products
- Use same Singapore financial institution as me with same relationship manager for some global focused products
For my wife: In both cases whether Thailand or Singapore, I think it appropriate to pay a bit more, for my wife to have support and a stronger financial institution framework around her + relationship manager. If something happens to me she'll be fine, and can manage these with help of an RM. She wouldn't cope managing my investments in the way I do. Worth pointing out though she still has both Singapore/overseas and Thailand.
Being comfortable in your investments is one of the most key factors. I'd rather she was comfortable with reasonable costs than clueless with the cheapest ETFs on the market