Visualizing overlaps of ETFs in an UpSet diagram

Today, two topics I find particularly exciting come together: data analysis and visualization, and finance. Choosing the right ETFs is a topic that fills countless web pages and financial magazine articles. However, it’s equally fascinating to explore the overlaps between ETFs. Previously, I compared the Vanguard FTSE All-World High Dividend Yield UCITS ETF USD Distributing (ISIN: IE00B8GKDB10) and the iShares STOXX Global Select Dividend 100 UCITS (ISIN: DE000A0F5UH1). I also analyzed the performance of these two alongside the VanEck Morningstar Developed Markets Dividend Leaders ETF (NL0011683594) and an MSCI World ETF (IE00B4L5Y983).

The holdings included in an ETF can be downloaded from the respective provider’s website; I performed this download on October 5. The data requires significant transformation before it can be compared. My R-based notebook detailing this process can be found [here]. For the visualization, I chose an UpSet diagram, a relatively new type of visualization that I’ve used in a paper and another project. While Venn diagrams are commonly used for visualizing overlaps between datasets, they become unwieldy with more than 3 or 4 datasets. This challenge is clearly illustrated in examples like this:

The size of the circles, for example, does not necessarily reflect the size of the datasets. An UpSet diagram is entirely different:

Yes, it takes a bit of effort, but it shows much more clearly how the datasets relate to one another. On the far left, we see the size of the datasets, with the Vanguard FTSE All-World High Dividend Yield having the most holdings—over 2,000. On the right-hand side, we see the overlaps. The point at the very bottom beneath the tallest vertical bar indicates that the Vanguard FTSE […] has 1,376 stocks that no other ETF includes. Similarly, the iShares Core MSCI World has 757 titles that no other ETF contains. In the third column, we see that these two ETFs share 486 titles that the other two ETFs do not include. I find that quite fascinating. For example, I wouldn’t have thought that the Vanguard contains so many stocks that the MSCI World does not.

The VanEck allegedly has one stock that no other ETF contains, but that’s not accurate; that entry was just cash. Otherwise, 81 of its 100 titles are also included in the MSCI World. All of its titles are included in the Vanguard.

It would now be interesting to see how the weightings align. However, that’s an additional dimension that would likely be difficult to represent in an UpSet diagram. Still, it’s necessary to take a closer look at this because the overlaps might result in unintended overweighting of certain stocks. That would be a topic for the next blog post.

Dividend Strategies: Missed Opportunities?

Disclaimer: This is not financial advice or a recommendation!

The article When Chasing More Dividends Leaves You With Less from the Wall Street Journal by Jason Zweig (who, by the way, wrote the commentary for The Intelligent Investor) sheds light on the appeal and associated risks of dividend strategies. Investors who focus on high dividend yields often hope for a steady income stream, especially in times of low interest rates. However, as the article points out, chasing high dividends can ultimately reduce long-term returns. The problem arises when investors blindly flock to funds that offer exceptionally high dividend yields.

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The advantage of ETFs with domicile in Ireland… sometimes.

Disclaimer: This is not financial advice! No warranty.

When selecting ETFs, various factors come into play, including tax considerations. In the last article, we discussed what partial exemption means. However, the tax differences between ETFs with different domiciles and their holdings in US stocks are also interesting. This article focuses on two specific and popular ETFs, and even though both contain US stocks, that doesn’t necessarily mean that the ETF domiciled in Ireland will deliver higher returns.

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Partial Exemption and Taxation of ETFs: What Does That Mean?

Disclaimer: This is not financial advice, all information is provided without warranty!

Introduction

Investments in ETFs (Exchange Traded Funds) are highly popular among investors due to their diversification, low costs, and ease of use. There are two main types of ETFs: distributing ETFs, which pay income directly to investors, and accumulating ETFs, which automatically reinvest income. However, the taxation of these earnings can be complex, particularly due to the partial exemption and the pre-tax lump sum. This article explains how partial exemption works and how accumulating ETFs are taxed in Germany.

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Is Graham’s “The Intelligent Investor” still relevant?

Benjamin Graham - The Intelligent Investor

Those who have been following my blog for a while may have noticed that I’ve been covering more financial topics in recent years. For years, I trusted an MLP financial advisor, and while I did set many things up correctly because of that, over time, I started feeling increasingly uncomfortable, sensing that he wasn’t telling me the whole truth. Last year, I parted ways with him and MLP after I got fed up with the constant chatter about how great a fund manager was doing his job and how his 2.4% markup was worth it. A consultation with an independent fee-based advisor (note: many claim to be independent, but true independent advisors are paid by the client, not by commissions from insurance companies) revealed just how much my financial affairs were being managed to my detriment. I will write more about this later, but today, I want to focus on one specific area: stocks, funds, and ETFs. And I deeply regret not having read Graham’s book much earlier.

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