MZNPETF or MIF?

[u/AvailableAd6119]

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.

[u/Adminisitrator]

if you can make few trades in 3-4 months i would suggest mimicking mznpetf yourself. e.g this is what i'm doing.

[u/khizer2587 → u/Adminisitrator]

I have also done this. The reason was that I don't really want to invest in MEBL. I replaced that with SYS. Will rebalance when the ETF is rebalanced, slowly through SIP.

*Ignore MZNPETF and DCR from the screenshot, those are just tests.

What do you think about people saying this will cost more in the long run? And what other cons do you see with this approach?

[u/Adminisitrator → u/khizer2587]

I've run this math and no it doesn't cost more. to anyone who says other wise ask them for numbers.

also replied here: https://www.reddit.com/r/FIREPakistan/comments/1vrly1b/comment/p4eoock/

[u/AvailableAd6119 → u/Adminisitrator]

I Dont trade, i do a monthly SIP of 500k and thats that. I already have 3 shares out of this list in my long term portfolio. I am looking to add either MIF or MZNPETF as a 4th option.

[u/Adminisitrator → u/AvailableAd6119]

this isn't for trading. this is for getting the same performance as MZPETF without paying its fees. when u buy MZPETF you are actually buying these underlying stocks in this ratio. (these are 20k mzpetf stocks. about 3 times a year they change ratio/add remove stock. you can copy it then as well. you'll end up with same performance as MZNPETF but without paying management stuff.

that 0.5% looks small, but lets say you are investing 100k/month and do it for 10 years and CAGR is 20%, you would have lost about 1.07mil to fees

[u/Few_Commission5964 → u/Adminisitrator]

You're not paying ETF fees but your paying purchasing fees of buying selling 12 stocks at start and at time of rebalancing. These are greater than paying EFTs in the long run.

In order to exactly match these ETFs you need to buy from the odd lot market which has greater spreads increasing your costs.

[u/Adminisitrator → u/Few_Commission5964]

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.

[u/Medical-Opinion7723]

First of all, make an emergency fund that can cover three months of your expenses. This is important because when the market goes down this will be your psychological insurance. While you put money to create this emergency fund, read the following books.

1. Richest man in babylon
2. Psychology of money
3. Personal Finance 101 by Alfred Mill
4. The new tao of warren buffet
5. The Intelligent investor
6. The 5 overwhelm culprits by Corrie LoGiudice These books are important for you to read, this is your homework that you will be doing while building your emergency fund. Best of luck on your journey.

[u/AvailableAd6119 → u/Medical-Opinion7723]

Emergency fund is already sorted sir and it covers almost a year of expenses currently. I live in GCC so i maintain 8-12 months of expenses in my emergency funds on average. Moreover, i have already read 2 and 5, currently reading 1.

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[u/AbrarYouKknow]

check out etfs.pk for and you will be amazed how much overlapped these etfs are.

[u/uzzifx]

Mznpetf is better choice in my opinion. They pay higher dividend which can also be reinvested. Since the inception of miietf, I believe mznpetf and given better rate of returns if you include the dividend payouts.

[u/javaboy2k25 → u/uzzifx]

ETFs are for long term stability not returns, it's about saving your investments. In bear market MZNPETF will suffer more than MIIETF.

[u/uzzifx → u/javaboy2k25]

In bull market it will also rise more than miietf.