Is there any downside to investing in VWRP from the UK (since it is ‘USD’) rather than a ‘GBP’ ETF (e.g., in terms of ‘conversion costs)?

[obinnanicholas]

I think I covered it in the title - are there added costs to investing in a USD ETF whilst in the UK compared to a GBP one?

I’ve been a long time lurker in this channel and seen VWRP recommended a number of times, so I’m optimistic that there is no difference.

I use HL S&S isa in case that has any bearing on the query.

Apologies for any naivety - I’m at an early stage with developing my financial literacy.

P.S. I have read all of the links associated with the wiki and couldn’t find the answer myself.

 

[jb21]

@obinnanicholas As always Monevator has an article for you. https://monevator.com/currency-risk-fund-denomination/

Fund domicile and base currency matters if you take dividends, i.e. VWRL, if the fund rolls up dividends, like VWRP, then not so much.

Where a fund's holdings are, and where the dividends the fund receives arise from, and whether those are taxed at source matters more.

 

[wael]

@jb21 Note that if it rolls up dividends then unless you’re holding exclusively in an ISA you still need to declare those on a self assessment as the dividends you would have received counts as income in the same way as actually receiving the dividends would. It can be a bit of a pain to figure out what these are.

I only mention this because every time accumulating funds are mentioned in this sub it seems to be news to at least one person!

 

[godsgirl9]

@obinnanicholas I'm interested in this as I think I would be in a similar position with the "HSBC FTSE All-World index fund".

I have just created a Dodl LISA (a little late to the party but getting in there before I turn 40 next week!) and funded it. Trying to decide which fund to invest in and have seen a number of people mentioning All-world index funds.

I am also just starting out with trying to understand the world of S&S investing and associate pitfalls / fees to be aware of

 

[godsgirl9]

@faithfullife Thanks for the clarification! I'll go off and read up more on the differences between ETF and Index Funds

 

[newchurch101]

@godsgirl9 The HSBC all world fund and Global All Cap are actually OEICs (open ended investment companies).

An index fund is one that follows an index - which all the funds mentioned do (the ETFs and the OEICs).

 

[godsgirl9]

@newchurch101 Thanks!

 

[samanddad3201]

@obinnanicholas No, no costs.

The only cost is if you use VWRL because the dividends are paid in USD

 

[carlsagan]

@obinnanicholas Can anyone advise where I’m supposed to see the dividends from these funds? Had VWRP for a year and a half now and I’ve not seen a notification about anything being paid out and reinvested. Held on Vanguard platform. Have I got the wrong end of the stick?

 

[rh37771]

@carlsagan VWRP is an accumulation fund so the dividends are automatically reinvested. VWRL is the income/distribution version and if u held this the dividends would be periodically deposited in ur brokerage account as cash.

 

[carlsagan]

@rh37771 Thanks for the explanation- I did understand that to be the case but was expecting some kind of notification, but I guess not maybe?

 

[julia736]

@carlsagan The amount of dividends per share / unit is published in the fund's documents somewhere. I saw a comment here within the last couple of days explaining exactly where, which you might be able to find if you have sharp Google skills.

 

[cathbeahm]

@carlsagan I have never had a notification for my acc ETFs

 

[carlsagan]

@cathbeahm Thanks for the confirmation!

 

[wael]

@carlsagan How have you been reporting the deemed dividends on your self assessment if you’ve been holding it for a year and a half (ie more than one tax year)? Or are these held exclusively in an ISA where none of that matters?

The answer is that you can either track down the annual report of your shares and figure it out from there, or there are some online services that might be able to help if you put in the ISIN. KPMG runs one called KPMG Reporting Funds.

 

[carlsagan]

@wael Exclusively in ISA but thanks for the heads up! Will give the KPMG tool a go

 

[parentof2boys]

@obinnanicholas No extra costs such as FX charges, this is because the base currency of the ETF is in USD however, it's traded in GBP.

On HL, you can tell this because the Buy & Sell prices show £