S&P 500 in ZAR vs USD on EE

[padams2001]

I'll cut the the chase.

I know anything could happen but lets say the rand is going to continue to decrease in value compared to the USD.

Lets say I invest in an ETF like the S&P 500 on the ZAR account on easy equities. If I do that would I still be able to get the growth of the Rand - dollar exchange rate like I would if I used the USD account?

I am wondering because an ETF like the S&P 500 still has offshore exposure. So would I see similar growth on the ZAR and USD account given what I said about the rand dollar exchange rate to be true?

 

[frankyb]

@padams2001 You should in theory see similar growth as both EFT would need to own the underlying USD stock, so their worth would be determined by the value of the stock which should in theory be similar. However it could be that the cost between the two differ, Syngia SYG500 has a ter of 0.2%, while vanguard VOO has a ter of 0.03%.

Also from a tax perspective USD one is also better, lets say you buy R1000 now @ say 20 ZAR USD, and then in USD terms the index double over say 5 years, so then your value in 5 years would be (1000/20402) so ZAR4000, but from tax perspective it would be different, if you invested in a ZAR EFT your capital gain would be R4000-R1000 so 3k capital gain, if you invested in the US one your profit would be (100 USD less your original cost of 50 USD (1000/20)), so a 50 USD capital gain, that you would then convert back at the exchange rate of 40, so (40*50) so only 2k capital gains, so your original 50 dollars that was worth 1k then and now 2k @40 is not capital gains if the USD asset was bought, whereas if you bought and sold an ZAR asset the amount is part of the capital gains.

However keep in mind that the US has estate taxes on US asset held by foreigners where the value exceed 60,000 USD, from my understanding you can get around that by for example buy a SP500 EFT domicled in for example Ireland since then you don't own US asset although you then still have exposure to the US market. But I don't think you can buy that on EE, which is why I opened an IBKR account in addition to my EE USD account.

 

[appycatholic]

@frankyb You sound clued up. I dont understand stand half what you said.

But bottom line USD IBKR > USD EE > ZAR EE.

 

[pandu_dh]

@frankyb You're speaking about UCITS investments, right?

For example, you want to invest in the S&P500, go search for that on justetf:

https://www.justetf.com/en/

IBKR allows you to buy them on LSE as long as the ETF currency is USD based (or whatever your account is). The same UCITS investment is available in different currencies and on different exchanges.

 

[janicedale]

@frankyb Hi! I have just come across the sytus tax you mentioned for US domiciled assets on death.

I already have an EE USD account, is there any Way to transfer to IBKR ( my existing position) or should I just start investing on IBKR?

I hold VOO and SCHD, do they give you an option to hold these in Irish domiciled etf’s or are there other etfs with different tickers that I should invest in?