{"id":2801,"date":"2024-05-26T10:50:42","date_gmt":"2024-05-26T10:50:42","guid":{"rendered":"http:\/\/localhost\/dpetkovski\/?p=2801"},"modified":"2024-07-03T18:39:29","modified_gmt":"2024-07-03T18:39:29","slug":"northern-trust-funds-vs-etfs-full-comparison","status":"publish","type":"post","link":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/","title":{"rendered":"Northern Trust Funds vs ETFs: Full Comparison"},"content":{"rendered":"<p>The Northern Trust <a href=\"https:\/\/dpetkovski.com\/index-investing-index-funds-a-gentle-introduction\/\">index funds<\/a> are quite popular with Dutch investors.<\/p>\n<p>Due to their low costs, tax optimization, and availability at the local banks, many investors from the Netherlands prefer the Northern Trust (NT) funds over <a href=\"https:\/\/dpetkovski.com\/etfs-exchange-traded-funds\/\">ETFs<\/a>.<\/p>\n<p>In this post, I&#8217;ll compare the total cost of a portfolio of NT funds with the alternatives.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_60 ez-toc-wrap-center counter-hierarchy ez-toc-counter ez-toc-white ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-6765d6a632edb\" ><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input aria-label=\"Toggle\" aria-label=\"item-6765d6a632edb\"  type=\"checkbox\" id=\"item-6765d6a632edb\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Northern_Trust_Funds_and_the_Banks\" title=\"Northern Trust Funds and the Banks\">Northern Trust Funds and the Banks<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Dutch_Banks_Costs_for_Investors\" title=\"Dutch Banks&#8217; Costs for Investors\">Dutch Banks&#8217; Costs for Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Why_People_Choose_NT_Funds\" title=\"Why People Choose NT Funds?\">Why People Choose NT Funds?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Comparison_Northern_Trust_Index_Funds_vs_ETFs\" title=\"Comparison: Northern Trust Index Funds vs ETFs\">Comparison: Northern Trust Index Funds vs ETFs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#VWCE_All_Expenses_Breakdown\" title=\"VWCE: All Expenses Breakdown\">VWCE: All Expenses Breakdown<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#1_VWCE_TER\" title=\"1) VWCE: TER\">1) VWCE: TER<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#2_VWCE_Dividend_Leakage\" title=\"2) VWCE: Dividend Leakage\">2) VWCE: Dividend Leakage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#VWCE_Total_Cost\" title=\"VWCE: Total Cost\">VWCE: Total Cost<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Northern_Trust_Funds_All_Expenses_Breakdown\" title=\"Northern Trust Funds: All Expenses Breakdown\">Northern Trust Funds: All Expenses Breakdown<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#1_Bank_Investment_Account_Expenses\" title=\"1) Bank Investment Account Expenses\">1) Bank Investment Account Expenses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#2_Fund_Expenses\" title=\"2) Fund Expenses\">2) Fund Expenses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Northern_Trust_Fund_Total_Cost\" title=\"Northern Trust Fund: Total Cost\">Northern Trust Fund: Total Cost<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Conclusion_10_Northern_Trust_Funds_vs_VWCE\" title=\"Conclusion 1.0: Northern Trust Funds vs VWCE\">Conclusion 1.0: Northern Trust Funds vs VWCE<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Commentary_Unfair_Comparison\" title=\"Commentary: Unfair Comparison\">Commentary: Unfair Comparison<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Conclusion_20\" title=\"Conclusion 2.0\">Conclusion 2.0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#Your_Turn\" title=\"Your Turn\">Your Turn<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Northern_Trust_Funds_and_the_Banks\"><\/span>Northern Trust Funds and the Banks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Northern Trust Funds aren&#8217;t available directly to retail investors.<\/p>\n<p>However, Dutch residents have an easy way to invest in these funds through the three major banks (ING, ABN Amro, Rabobank).<\/p>\n<p>Thus, the <a href=\"https:\/\/dpetkovski.com\/investing-expenses-full-breakdown\/\">total cost<\/a> of investing in Northern Trust index funds can&#8217;t be analyzed in isolation. We must consider\u00a0<strong>both\u00a0<\/strong>the costs of <em>the funds<\/em>\u00a0<strong>and\u00a0<\/strong>the costs charged by <em>the banks<\/em>.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Dutch_Banks_Costs_for_Investors\"><\/span>Dutch Banks&#8217; Costs for Investors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>All Dutch banks charge fees as a percentage of an investor&#8217;s portfolio. I already did the comparison and will publish it in a separate post.<\/p>\n<p>In summary, if your portfolio is below \u20ac265k, ABN Amro is the cheapest option. Thus, I&#8217;ll use it for the calculations below.<\/p>\n<p>For the purposes of this post, I&#8217;ll assume a \u20ac200k portfolio, as most beginners&#8217; portfolios would be below this amount.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why_People_Choose_NT_Funds\"><\/span>Why People Choose NT Funds?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Why would anyone invest in Northern Trust index funds, if there are extra costs by the banks?<\/p>\n<p>The main selling point, and the reason why they gained popularity, is because of their tax optimization.<\/p>\n<p>Basically, you can recover the <a href=\"https:\/\/dpetkovski.com\/dividend-leakage-understanding-the-hidden-cost\/\">dividend leakage<\/a>. Make sure to read my post on it if you don&#8217;t know what it means.<\/p>\n<p>In an oversimplified summary: it represents withheld dividend taxes when companies make their distributions to the fund.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Comparison_Northern_Trust_Index_Funds_vs_ETFs\"><\/span>Comparison: Northern Trust Index Funds vs ETFs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Before we can make a comparison of the total cost, we need comparable portfolios.<\/p>\n<p>The go-to approach for Dutch investors is replicating <a href=\"https:\/\/dpetkovski.com\/iwda-vs-vwce-and-vwrl-for-european-investors\">VWRL\/VWCE<\/a>. As you probably already know, $VWCE is a globally diversified ETF with the following regional distribution:<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-2802\" src=\"http:\/\/localhost\/dpetkovski\/wp-content\/uploads\/2024\/05\/VWCERegionExposure-1.png\" alt=\"vwce allocation\" width=\"1551\" height=\"563\" \/><\/p>\n<p>As you can see, the developed\/emerging markets allocation is roughly 89\/11%. This is usually simulated by combining the following NT funds:<\/p>\n<ul>\n<li>89% Northern Trust World Custom ESG Equity Fund (ISIN: NL0011225305)<\/li>\n<li>11% Northern Trust Emerging Markets Custom ESG Equity Index (ISIN: NL0011515424)<\/li>\n<\/ul>\n<p>Some investors also prefer to include the Northern Trust World Small Cap ESG Low Carbon fund (ISIN: NL0013552078). But for simplicity, we&#8217;ll focus on a two-fund portfolio.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"VWCE_All_Expenses_Breakdown\"><\/span>VWCE: All Expenses Breakdown<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4><span class=\"ez-toc-section\" id=\"1_VWCE_TER\"><\/span>1) VWCE: TER<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>The <a href=\"https:\/\/dpetkovski.com\/total-expense-ratio-the-importance-of-keeping-it-low\/\">total expense ratio<\/a> of $VWCE is 0.22%.<\/p>\n<p>On a portfolio of \u20ac200k, this is <strong>\u20ac440<\/strong>.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"2_VWCE_Dividend_Leakage\"><\/span>2) VWCE: Dividend Leakage<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>The other cost is more implicit &#8211; the <a href=\"https:\/\/dpetkovski.com\/dividend-leakage-understanding-the-hidden-cost\/\">dividend leakage<\/a>. As mentioned above, this is an amount that &#8220;leaks&#8221; when the companies pay out dividends to the fund.<\/p>\n<p>The current dividend yield of the constituent companies is around 1.6%. This can be seen in the payout details of $VWCE&#8217;s distributing equivalent, <a href=\"https:\/\/www.vanguardinvestor.co.uk\/investments\/vanguard-ftse-all-world-ucits-etf-usd-distributing\/distributions\">$VWRL<\/a>. Keep in mind that this amount varies based on the share price, but 1.6% is a good representation of the mid-term average.<\/p>\n<p>Dividend leak means that around 10-15% of the dividend amount would be lost in taxes. The exact number depends on the <a href=\"https:\/\/dpetkovski.com\/asset-allocation-finding-your-ideal-distribution\/\">internal allocation<\/a> of the fund <strong>and<\/strong> the treatment of dividend across countries. I&#8217;ll use 12.5% for the calculation, as a good average.<\/p>\n<p><strong>12.5% <\/strong><em>(irrecoverable dividend tax) <\/em><strong>of 1.6% <\/strong><em>(dividend yield)<\/em><strong> is 0.2% <\/strong><em>(dividend leakage)<\/em><strong>.<\/strong><\/p>\n<p>On a portfolio of \u20ac200k, this amounts to <strong>\u20ac400<\/strong>.<\/p>\n<p><strong>Again: <\/strong>this amount is variable. I will address the importance of this in a commentary at the end of this post.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"VWCE_Total_Cost\"><\/span>VWCE: Total Cost<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>So the <strong>real <\/strong>total cost of <a href=\"https:\/\/dpetkovski.com\/replicating-vwce-optimize-for-cost-and-performance\/\">$VWCE<\/a> would be the TER + dividend leak. There are no additional costs, as Dutch investors can purchase this ETF at DeGiro, where it&#8217;s a part of the <a href=\"https:\/\/www.degiro.ie\/fees\/etf-core-selection\">Core Selection<\/a> (i.e. ETFs without transaction costs).<\/p>\n<p>The total annual cost is the sum of the:<\/p>\n<ul>\n<li>Total Expense Ratio (\u20ac440)<\/li>\n<li>Dividend Leakage (\u20ac400)<\/li>\n<\/ul>\n<p>So the <a href=\"https:\/\/dpetkovski.com\/investing-expenses-full-breakdown\/\">total cost<\/a> of a $200k portfolio invested in $VWCE is around \u20ac840.<\/p>\n<p><strong>Total Cost: \u20ac840.<\/strong><\/p>\n<p><strong>Percentage-wise: 0.42%.<\/strong><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Northern_Trust_Funds_All_Expenses_Breakdown\"><\/span>Northern Trust Funds: All Expenses Breakdown<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<h4><span class=\"ez-toc-section\" id=\"1_Bank_Investment_Account_Expenses\"><\/span><span style=\"font-size: 1.5rem;\">1) Bank Investment Account Expenses<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>As mentioned earlier, Dutch banks charge a fee as a percentage of the investor&#8217;s portfolio.<\/p>\n<p>ABN Amro&#8217;s costs are as follows:<\/p>\n<ul>\n<li>0.2% of the amount up to \u20ac100k<\/li>\n<li>0.12% of the amount between \u20ac100k and \u20ac400k<\/li>\n<li>0.06% of the amount over \u20ac400k<\/li>\n<\/ul>\n<p>From\u00a0<a href=\"https:\/\/www.abnamro.nl\/en\/personal\/investments\/types-of-investing\/self-directed-investing-basic\/index.html\">ABN Amro\u2019s website<\/a>:<\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-2803\" src=\"http:\/\/localhost\/dpetkovski\/wp-content\/uploads\/2024\/05\/abn-costs-1.png\" alt=\"abn costs\" width=\"589\" height=\"353\" \/><\/p>\n<p>Thus, an investor with a portfolio of \u20ac200k would have the following costs for his investment account:<\/p>\n<ul>\n<li>0.2% of the first \u20ac100k\u00a0<strong>(\u20ac200)<\/strong><\/li>\n<li>0.12% of the second \u20ac100k\u00a0<strong>(\u20ac120)<\/strong><\/li>\n<\/ul>\n<p><strong>Total Bank Cost: \u20ac320<\/strong><\/p>\n<h4><span class=\"ez-toc-section\" id=\"2_Fund_Expenses\"><\/span>2) Fund Expenses<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><strong>Northern Trust World<\/strong> has a TER of 0.15%. <strong>Northern Trust Emerging Markets<\/strong>\u00a0has a TER of 0.25%.<\/p>\n<p>Given their respective allocations (89% and 11%), the total expense ratio of this portfolio would be: <span id=\"su_tooltip_6765d6a630a0d_button\" class=\"su-tooltip-button su-tooltip-button-outline-yes\" aria-describedby=\"su_tooltip_6765d6a630a0d\" data-settings='{\"position\":\"top\",\"behavior\":\"hover\",\"hideDelay\":0}' tabindex=\"0\">0.16% (hover for details)<\/span><span style=\"display:none;z-index:100\" id=\"su_tooltip_6765d6a630a0d\" class=\"su-tooltip\" role=\"tooltip\"><span class=\"su-tooltip-inner su-tooltip-shadow-no\" style=\"z-index:100;background:#222222;color:#FFFFFF;font-size:16px;border-radius:5px;text-align:left;max-width:300px;line-height:1.25\"><span class=\"su-tooltip-title\"><\/span><span class=\"su-tooltip-content su-u-trim\">0.89 * 0.0015 + 0.11 * 0.0025<\/span><\/span><span id=\"su_tooltip_6765d6a630a0d_arrow\" class=\"su-tooltip-arrow\" style=\"z-index:100;background:#222222\" data-popper-arrow><\/span><\/span>.<\/p>\n<p><strong>Total Fund Cost: 0.16%<\/strong><\/p>\n<p>On a portfolio of \u20ac200k, this would be: <strong>\u20ac320<\/strong>.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Northern_Trust_Fund_Total_Cost\"><\/span>Northern Trust Fund: Total Cost<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>All costs associated with owning a Northern Trust index fund with ABN are:<\/p>\n<ul>\n<li>Bank investment account costs (\u20ac320)<\/li>\n<li>TER (\u20ac320)<\/li>\n<\/ul>\n<p>The <a href=\"https:\/\/dpetkovski.com\/investing-expenses-full-breakdown\/\">total annual cost<\/a> of a $200k portfolio invested in the Northern Trust funds is around \u20ac640.<\/p>\n<p><strong>Total Cost: \u20ac640.<\/strong><\/p>\n<p><strong>Percentage-wise: 0.32%.<\/strong><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Conclusion_10_Northern_Trust_Funds_vs_VWCE\"><\/span>Conclusion 1.0: Northern Trust Funds vs VWCE<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>Investing in NT Funds is cheaper than $VWCE.<\/strong><\/p>\n<p>Even after the costs from the banks it, comes down to 0.32% vs 0.42%.<\/p>\n<p>And the biggest contributor to this is the recovery of the <a href=\"https:\/\/dpetkovski.com\/dividend-leakage-understanding-the-hidden-cost\/\">dividend leak<\/a>.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Commentary_Unfair_Comparison\"><\/span>Commentary: Unfair Comparison<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The appeal of $VWCE comes from the fact that it&#8217;s the usual candidate for a one-fund portfolio.<\/p>\n<p>So if the alternative is managing a portfolio of multiple funds, we need to price this in.<\/p>\n<p>For example, in my post\u00a0<strong><a href=\"https:\/\/dpetkovski.com\/replicating-vwce-optimize-for-cost-and-performance\/\">Replicating VWCE<\/a><\/strong>, I gave an example portfolio that has\u00a0<strong>the exact\u00a0<\/strong>same allocation as $VWCE, but is twice as cheap. I also give ideas on how to decrease the <a href=\"https:\/\/dpetkovski.com\/total-expense-ratio-the-importance-of-keeping-it-low\/\">TER<\/a> even further, for some sacrifices in diversification. And this can get the expense even lower than those of the Northern Trust Funds.<\/p>\n<p>Also, if an investor isn&#8217;t married with the internal allocation of $VWCE, he can check the examples at the <a href=\"https:\/\/dpetkovski.com\/core-stock-portfolio-for-eu-investors-etf-selection-tips\"><strong>Core Portfolio for EU Investors<\/strong><\/a> &#8211; which lower the costs even further. Most such portfolios (i.e. those that have <a href=\"https:\/\/dpetkovski.com\/cspx-vs-vusa-vs-iusa-my-thoughts\/\">$CSPX as a core component<\/a>) are cheaper alternatives even after the dividend leakage.<\/p>\n<p><strong>My point: different portfolios would have different dividend leaks, so these need to be considered independently.<\/strong><\/p>\n<p>Also&#8230;<\/p>\n<p><strong>The dividend yield is not fixed.<\/strong><\/p>\n<p>It is basically the amount paid out per share divided by the price per share.<\/p>\n<p>So, if a company&#8217;s share price falls, the <a href=\"https:\/\/dpetkovski.com\/dividend-investing-is-for-suckers\/\">dividend yield<\/a> would be higher. If a company&#8217;s share price rises, the dividend yield would be lower. The latter would make the costs of ETFs more favorable.<\/p>\n<p>It&#8217;s simple:<\/p>\n<ol>\n<li>Lower <em>dividend yield<\/em> leads to lower <em>dividend leakage<\/em>.<\/li>\n<li>Lower <em>dividend leakage<\/em> leads to <em><strong>lower total cost<\/strong><\/em>.<\/li>\n<\/ol>\n<p>So realistically:<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion_20\"><\/span>Conclusion 2.0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>It depends.<\/strong><\/p>\n<p>VWCE\/VWRL is not the only alternative to the NT Funds.<\/p>\n<p><strong>Actually, I think that investing in both $VWCE and\u00a0the Northern Trust Funds is unnecessarily expensive and should be avoided.<\/strong><\/p>\n<p>Check out my <a href=\"https:\/\/dpetkovski.com\/core-stock-portfolio-for-eu-investors-etf-selection-tips\/\">Core Portfolio<\/a> recommendations to get some preferable ideas.<\/p>\n<p>But if we strictly compare Northern Trust Funds vs $VWCE, the NT funds through a bank <em>should <\/em>remain favorable. There&#8217;s a reason why the banks can charge such amounts &#8211; if it made no sense, every long-term investor would switch to DeGiro or IBKR.<\/p>\n<p><strong>Every portfolio deserves a dedicated evaluation.<\/strong><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Your_Turn\"><\/span>Your Turn<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Have you thought if <a href=\"https:\/\/dpetkovski.com\/index-investing-index-funds-a-gentle-introduction\/\">index funds<\/a> are a better fit for your portfolio than <a href=\"https:\/\/dpetkovski.com\/etfs-exchange-traded-funds\/\">exchange traded funds<\/a>?<\/p>\n<p>What did you end up with?<\/p>\n<p>Let me know in the comments below!<\/p>\n<hr \/>\n<p><em>For more thorough posts on investing from Europe, visit: <a href=\"https:\/\/dpetkovski.com\/eu-investors-handbook\/\"><strong>EU Investors Handbook<\/strong><\/a>.<\/em><\/p>\n<p><em>For a comprehensive, beginner-friendly, and <strong>free resource<\/strong> on stock market investing, visit: <\/em><strong><a href=\"https:\/\/dpetkovski.com\/how-to-start-investing-a-complete-beginner-series\/\"><em>How to Start Investing: A Complete Beginner Series<\/em><\/a>.<\/strong><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Northern Trust index funds are quite popular with Dutch investors. Due to their low costs, tax optimization, and availability at the local banks, many investors from the Netherlands prefer the Northern Trust (NT) funds over ETFs. In this post, I&rsquo;ll compare the total cost of a portfolio of NT funds with the alternatives. Northern&nbsp;&hellip;<\/p>\n","protected":false},"author":1,"featured_media":2898,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,21,17],"tags":[],"ppma_author":[4],"class_list":["post-2801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","category-netherlands","category-stocks-etfs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Northern Trust Funds vs ETFs: Full Comparison - D. Petkovski<\/title>\n<meta name=\"description\" content=\"The dilemma between Northern Trust Funds and ETFs is common with investors in the Netherlands. This post resolves all uncertainties around it.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Northern Trust Funds vs ETFs: Full Comparison - D. Petkovski","description":"The dilemma between Northern Trust Funds and ETFs is common with investors in the Netherlands. This post resolves all uncertainties around it.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/","schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/#article","isPartOf":{"@id":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/"},"author":{"name":"D. Petkovski","@id":"http:\/\/localhost\/dpetkovski\/#\/schema\/person\/ce4d9bf1ba43635723c9d1b513b58049"},"headline":"Northern Trust Funds vs ETFs: Full Comparison","datePublished":"2024-05-26T10:50:42+00:00","dateModified":"2024-07-03T18:39:29+00:00","mainEntityOfPage":{"@id":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/"},"wordCount":1274,"publisher":{"@id":"http:\/\/localhost\/dpetkovski\/#\/schema\/person\/ce4d9bf1ba43635723c9d1b513b58049"},"articleSection":["Investing","Netherlands","Stocks &amp; ETFs"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/","url":"http:\/\/localhost\/dpetkovski\/northern-trust-funds-vs-etfs-full-comparison\/","name":"Northern Trust Funds vs ETFs: Full Comparison - D. 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Petkovski \ud83d\udcd3 The Author\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Husband &amp; Father Software Engineer\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0StrengthCentric \u20bfitcoin Hodler\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0Long-Term Investor\u00a0 \ud83c\udf0d Everything Enthusiast \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\ud83d\udd25 Optimist READ MORE","sameAs":["https:\/\/facebook.com\/dpetkovski","https:\/\/www.instagram.com\/strengthcentric\/","https:\/\/twitter.com\/petkovskix"],"url":"http:\/\/localhost\/dpetkovski\/author\/petkovski\/"}]}},"authors":[{"term_id":4,"user_id":1,"is_guest":0,"slug":"petkovski","display_name":"D. Petkovski","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","user_url":"","last_name":"","first_name":"","description":"<span style=\"font-size: 23px\">D. Petkovski<\/span> <br> <br>\r\n\r\n\ud83d\udcd3 The Author\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0  \u00a0 \u00a0 \u00a0 \u00a0<span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\"><img class=\"emoji\" role=\"img\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/14.0.0\/svg\/1f46a.svg\" alt=\"\ud83d\udc6a\" \/> Husband &amp; Father <\/span>\r\n<br>\r\n<span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\"><img class=\"emoji\" role=\"img\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/14.0.0\/svg\/1f5a5.svg\" alt=\"\ud83d\udda5\ufe0f\" \/> Software Engineer\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span><span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\"><img class=\"emoji\" role=\"img\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/14.0.0\/svg\/1f4aa.svg\" alt=\"\ud83d\udcaa\" \/><\/span><span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\">\u00a0StrengthCentric <\/span>\r\n<br>\r\n<span class=\"r-18u37iz\"><img class=\"r-4qtqp9 r-dflpy8 r-zw8f10 r-10akycc r-h9hxbl r-9cviqr\" src=\"https:\/\/assets.coingecko.com\/coins\/images\/1\/large\/bitcoin.png?1696501400\" alt=\"\u20bf\" width=\"20\" height=\"20\" \/><\/span> \u20bfitcoin <span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\">Hodler\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0   \u00a0                            \u00a0 \u00a0 \u00a0<\/span><span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\"><img class=\"emoji\" role=\"img\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/14.0.0\/svg\/1f4c8.svg\" alt=\"\ud83d\udcc8\" \/><\/span>\u00a0<span class=\"r-18u37iz\">Long-Term Investor<\/span><span class=\"css-1qaijid r-bcqeeo r-qvutc0 r-poiln3\">\u00a0<\/span>\r\n<br>\r\n\ud83c\udf0d Everything Enthusiast              \u00a0 \u00a0 \u00a0 \u00a0   \u00a0 \u00a0 \u00a0              \u00a0   \u00a0\ud83d\udd25 Optimist <br>\r\n\r\n<p style=\"text-align: left;margin-top:35px\"><a href=\"https:\/\/dpetkovski.com\/about\"><span style=\"background: #15d798;border-radius: 11px;padding: 13px 27px;color: #ffffff;font-weight: bold;font-size: 20px\">READ MORE<\/span><\/a><p>"}],"_links":{"self":[{"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/posts\/2801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/comments?post=2801"}],"version-history":[{"count":14,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/posts\/2801\/revisions"}],"predecessor-version":[{"id":3440,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/posts\/2801\/revisions\/3440"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/media\/2898"}],"wp:attachment":[{"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/media?parent=2801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/categories?post=2801"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/tags?post=2801"},{"taxonomy":"author","embeddable":true,"href":"http:\/\/localhost\/dpetkovski\/wp-json\/wp\/v2\/ppma_author?post=2801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}