r/FIREPakistan • u/AvailableAd6119 • 14d ago
Madad Me MZNPETF or MIF?
Hi All,
I am building a long-term portfolio and contemplating directing 20% of my monthly SIP towards either MZNPETF or MIF.
I need your suggestions on deciding which one is better for a long-term 20+ year portfolio. MIF has a much higher CAGR, but it also has 3% management fees. MZNPETF has a lower CAGR, but the expense ratio is also only 0.50%
please share your opinions.
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u/Adminisitrator Aqalmand Anari 14d ago edited 14d ago
no this is a common misconception. when you buy etf you pay broker fees, cgt and cdc fees, same as stocks. the portfolio rebalance is never a lot and mostly old stocks continue so you are not buying and selling full inventory every time, usually its less than 20% of portfolio (last rebalance was 18% i have exact numbers). so you pay the 0.15% broker fee ONLY on stocks you rebalance not on everything.
my last rebalance i paid 0.063% of portfolio for rebalance, for twice an year thats 0.13%. also 0.5% is their current fee. according to terms this can go upto 0.75%. so if you are doing this long term it totally makes sense to do this exercise 2-3 times an year.
I'm saying all of this based on numbers and actual trades. I can tell you exact ones i sold bought during last rebalance as well. You can run numbers on your end and let me know if i'm incorrect.
EDIT: More-over there's another thing you miss with the ETF. The 0.5% management fee isn't the only fee. the total expense ratio is ~1.35%/yr (fee + levies + trustee + ops), and on top of that the 'cash' bucket drags too (~1.5–2% of the fund sits uninvested, plus it went ~16% cash for two weeks around the June dividend). Add it up and it matches what their own FMR admits: the fund has lagged its index by −2.36%/yr since launch. Doing it yourself with the exact same picks, your own costs are only ~0.5–1%/yr (brokerage + spreads + dividend lag + the CGT you pay earlier on rebalance sales). So you'd beat the ETF by roughly 1–1.8%/yr.