VUSA - Vanguard UCITS ETF S&P 500 in Euros, loss more than index

[veilmenacex]

@trixiefire With a simple google search you can find that the fund currency of VUSA is USD. Meaning they're holding shares in USD. And I now you're not acually holding USD, but are holding shares denominated in USD. But that is besides the point. I don't understand how you're unable to grasp that if US stocks appreciate in value lets say 10% and the USD depriciates against EUR by 10%, you haven't made profit.
P.S.
Apple trades on NASDAQ, not NYSE.

EDIT:

a very simple explanation of the concept

 

[trixiefire]

@veilmenacex Denomination only says in which currency the price tag on the label of a fund is. Denomination has zero effect on the shares in the fund, they are dictated by the index. And two funds containing the same shares have the same currency risk. Denomination has zero bearing on currency risk.

Apple trades on NASDAQ, not NYSE.

Apple trades on virtually all markets. It's registered on NASDAQ.

if US stocks appreciate in value lets say 10% and the USD depriciates against EUR by 10%, you haven't made profit

I agree with that. I'm saying in the scenario where fund/usd rises by 10% and eur/usd falls 10%, you will end up at 99% no matter if you buy a USD or an EUR fund. Because you need the money in EUR. That's why denomination doesn't matter. It's just a price tag.

Also, when you say "US stocks appreciate in value lets say 10%", you are talking about the fund rising compared to USD, because that's what people give you as a number. But the USD is not special in that regard. You simply cannot quantify the value of an asset in isolation. You need to compare it to another asset, usually currency. For obvious reasons, people choose USD for US stocks. But the fund/USD rate isn't the "true value" or anything like that. In fact, for an EU investor who needs the money in EUR, it's largely irrelevant: You need the fund/EUR price.

If you want an example, if the FED now announced that they won't increase rates at all and high inflation is OK for them, the dollar would fall. all fund/USD would rise, because the dollar falls. In this case, I would consider fund/EUR a better indicator of the value of the fund, because it's the dollar that moved, not the fund value.

 

[glitterpig]

@trixiefire Hehe this guy, the super troll of sarcasm

 

[trixiefire]

@glitterpig I am not being sarcastic, I am explaining very basic concepts here. Fking herd mentality. Use your brains people.

 

[veilmenacex]

@trixiefire You buy fund shares in EUR, but the funds usually convert into USD before investing it in shares. This exposes you to risk of stocks and also currency risks. If shares yield 0% returns and the exchange rate drops, you lose money. To protect yourself against curreny risk, you can buy currency hedged funds, but there isn't any evidence of benefits of hedging. If you want to do it, I recommend going half hedged half unhedged but in the longterm it probably won't make a huge difference, if you just leave it unhedged.

EDIT: grammar

 

[glitterpig]

@trixiefire This is LITERALLY from the Key Investor Information of OPs etf:

• The base currency of the Fund is USD.
• The Fund invests in securities which are denominated in currencies other than the listing currency. Movements in currency exchange rates can affect the return of investments.

Dude its common sense

 

[glitterpig]

@trixiefire You are trolling again? Seriously do you want me to send you the link of the Investor Information from the etfs fund? They explain it quite clear.

 

[trixiefire]

@glitterpig You are misunderstanding the document. It's apparently not clear enough for your stupid ass. I'm done explaining it to learn-resistant ignorant folk like you. Go read my comments in this thread, they explain how it works.

And for fucks sake stop acting all high and mighty when you're clearly an absolute beginner and have no idea what you're talking about. All you're doing is spreading misinformation and behaving like an asshole.

 

[bible_boy]

@niaa The S&P500 is valued in USD. Are you valuing your portfolio (or your ETF) in EUR?

 

[niaa]

@bible_boy yes, i have purchased the EUR version of the ETF.

 

[bible_boy]

@niaa Your money is now in USD, but valued in EUR.

The S&P500 is in USD, and valued in USD.

 

[vespertinus]

@niaa Does no one in this thread understand that the currency a fund is denominated in does not matter at all except for conversion fees?

If the euro strengthens relative to the dollar, the returns of the fund in euro will be lower because the euros are worth more compared to dollars. Imagine it was denominated Argentine Peso which deflates by like 40% a year. The value of the same fund in ARS would go up that much more per year, but that doesn't mean you gained/lost anything compared to someone who bought it in a USD or EUR which are more stable.

 

[willumg]

@vespertinus So what's the reason for the discrepancy?

 

[vespertinus]

@willumg there is no discrepancy

Think of Euro as the opposite of the ARS over the period OP mentioned.

the exposure is to assets in the fund, not to the currency it's denominated in

 

[trixiefire]

@willumg one is labelled in USD, one is labelled in EUR. If you convert the USD label to EUR, you get exactly the same -2.6% as the fund that is already denominated in EUR. The only difference is that you have to do the conversion yourself for the USD fund/index.

 

[dan521]

@niaa Do you mean your ETF is down 2,6% for the last month, while the index is only down 0,5% for the last month? Those numbers don't sound right, they sound a lot more like the daily moves. S&P 500 is down 4,35% MTD, down 1,12% last month, down 9,33% YTD. So if you are actually referring to daily moves with the 2,6% and 0,5%, the discrepancy might be justified by different exchange hours:

VUAA is traded in London, Frankfurt and Milan, which all close at 5.30pm CET (London closes at 4.30pm BST which is the same thing). The S&P 500 index trading hours are 9.30am to 4.30pm EST (New York time). Which means VUAA's closing price only roughly reflects the S&P 500 index's midday value. So if it is down over 2% today, that's because the index was down last Friday and todays move has to somehow reflect that.

 

[niaa]

@dan521 yes, but that has been taken into account. That's why i was talking about monthly, i did the calculation during the weekend. It's still puzzling and because i don't have the time or the mood to figure it out (although my 1st job was algo trading few years ago!) , i will sell all my positions today. Given the escalation with Ukraine. No profit but peace of mind from now on. Turbulent times for NYSE.

Thank you all.

 

[julie888]

@niaa The usual answer for such discrepancies is that the two funds are denominated in different currencies and so the performance is the mirror of the currency moves (the underlying assets are identical save perhaps for tiny differences in fees).

However in this particular case the discrepancy is explained by the different opening/closing times for the two funds. You mentioned 1-month return. Exactly 1-month ago (21st of Jan) S&P 500 had a big move down after European markets closed. The 1-month performance for VUSA reflects the price change since the European market close of 21/1. The S&P index 1-month performance reflects the price change from the US markets close of 21/1. In the latter case the starting point was about 2% lower, hence you see correspondingly higher 1-month performance. On the 24th you will see the opposite, because on 24/1 US markets rallied after the European close.

The important thing is that there is no hidden cost or anything else to worry about, the fund does exactly what is supposed to do.

 

[ineedyougod]

@niaa Haven't look at it, but it can be caused by a rise in the USD/Euro value. SP500 is in USD, so if the USD rises while the SP500 goes down, your EUR based losses will be multiplied.

 

[win2888bet]

@niaa After reading the comments, and thanks everyone, let me explain.

It is a shortcoming of your and most people's broker dashboard:

The dashboard shows the value at the time of purchase in EUR, and today's value in EUR and then calculates a percentage based on that and colors it red or green.

The shown percentage value is a result of the conversion to EUR and the actual stock's performance.

You can get a USD denominated account or broker and transfer the stock if you like or hedge against the USD/EUR.