UK - What is your choice of equity funds

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nirajn123
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UK - What is your choice of equity funds

Post by nirajn123 »

I have started consolidating my portfolio to a 3 fund portfolio but bit frustrated with the low volumes on LSE (and hence resulting spread impact).

Initially I zeroed on -
1. Developed world - VEVE &
2. Emerging Market - EIMI

But the VEVE volumes are paltry and while it shouldn't matter as far as long term returns, its not great for the monthly auto investment due to likely larger spread.

So I looked at two other popular alternatives to VEVE, which aren't exactly the same but I can make them work - VWRD & SWDA, SWDA have better volumes (nearly 2.5 times that of VWRD) but is less diversified as it uses MSCI Index so there is that.

What do people prefer when it comes to All World Equity?
actuallyxy
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Re: UK - What is your choice of equity funds

Post by actuallyxy »

I hold VEVE and I've not found spreads to be a problem.

Looking it up in HL right now, the prices are £53.40 and £53.47, which is a spread of 0.13%.
Topic Author
nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
Genghis
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Re: UK - What is your choice of equity funds

Post by Genghis »

Vanguard publish the latest spreads on ETFs

https://www.vanguardinvestor.co.uk/cont ... harges.pdf

Remember that with VEVE and EIMI, you’re mixing and matching FTSE and MSCI indices. In this case, doubling up on South Korea.
minimalistmarc
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Re: UK - What is your choice of equity funds

Post by minimalistmarc »

I use VWRL in general accounts and VWRP or VWRL in ISA/SIPP.

I am 100% equities with VWRL/VWRP one fund portfolio
Topic Author
nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Genghis wrote: Sat Aug 22, 2020 7:35 am Vanguard publish the latest spreads on ETFs

https://www.vanguardinvestor.co.uk/cont ... harges.pdf

Remember that with VEVE and EIMI, you’re mixing and matching FTSE and MSCI indices. In this case, doubling up on South Korea.
The costs are likely to be in addition to the spread experienced on the market but a useful guide nevertheless.

Also, good point about the separate indices, I wouldn't mind doubling down South Korea, it is one of the cheapest market atm, but will have a look at differences.
Genghis
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Re: UK - What is your choice of equity funds

Post by Genghis »

The one off costs on the table are the 30 day average spread. This is only a “two off” cost, in and out, remember, whereas the OCF is an annual charge. I use VEVE and VFEM.
Topic Author
nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Genghis wrote: Sat Aug 22, 2020 9:37 am The one off costs on the table are the 30 day average spread. This is only a “two off” cost, in and out, remember, whereas the OCF is an annual charge. I use VEVE and VFEM.
The average spreads are the ones I mentioned earlier, this is a spread related cost that is incurred by the provider (authorised participant) in buying and selling the funds from investors. In any case, it does appear that there is some spread but not significant and not directly related to the volume traded on the particular exchange.

I'll consider VFEM in the future, for now happy with EIMI as I won't mind higher S.Korea and lower China allocation for now.
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Tourne
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Re: UK - What is your choice of equity funds

Post by Tourne »

nirajn123 wrote: Sat Aug 22, 2020 6:52 am Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
So does the spread offset the difference in Ongoing Charges/Expense Ratio? VEVE is 0.12%, VWRL is 0.22%, and SWDA is 0.20%

Is it all just a wash, and doesn't matter too much which of the three you choose, since you will pay roughly the same, just in spread costs for VEVE and in OCF costs for VWRL and SWDA?
Plans are nothing; planning is everything - Dwight D. Eisenhower
actuallyxy
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Re: UK - What is your choice of equity funds

Post by actuallyxy »

Spreads are paid once. OCF costs are paid once a year. In principle, it seems better to choose vehicles with low OCF costs.
Topic Author
nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Tourne wrote: Sat Aug 22, 2020 12:05 pm
nirajn123 wrote: Sat Aug 22, 2020 6:52 am Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
So does the spread offset the difference in Ongoing Charges/Expense Ratio? VEVE is 0.12%, VWRL is 0.22%, and SWDA is 0.20%

Is it all just a wash, and doesn't matter too much which of the three you choose, since you will pay roughly the same, just in spread costs for VEVE and in OCF costs for VWRL and SWDA?
Simple answer is yes, they are all the same - you will experience fees that are made of OCF + one-off costs no matter what you buy of these three (or other similar ETFs).

From the Vanguard link above, this is what I see the total costs are for VEVE -
Ongoing cost - 0.12%
Transactional costs [Cost for Vanguard to buy and sell the underlaying stocks] - 0.02%
One-off costs - 0.08% [Costs incurred due to spreads - this is only shown as average and may differ slightly from month to month]

Total - 0.22% at the beginning and then 0.12% pa.

My initial point was about volumes affecting the spreads experienced by an investor especially when you buy it via Auto investing, there is tiny difference here VEVE is 0.08% as above but VWRL is 0.05% and SWDA also appears to be similar but not significant enough for me to drop VEVE.
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Tourne
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Re: UK - What is your choice of equity funds

Post by Tourne »

nirajn123 wrote: Sat Aug 22, 2020 1:52 pm
Tourne wrote: Sat Aug 22, 2020 12:05 pm
nirajn123 wrote: Sat Aug 22, 2020 6:52 am Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
So does the spread offset the difference in Ongoing Charges/Expense Ratio? VEVE is 0.12%, VWRL is 0.22%, and SWDA is 0.20%

Is it all just a wash, and doesn't matter too much which of the three you choose, since you will pay roughly the same, just in spread costs for VEVE and in OCF costs for VWRL and SWDA?
Simple answer is yes, they are all the same - you will experience fees that are made of OCF + one-off costs no matter what you buy of these three (or other similar ETFs).

From the Vanguard link above, this is what I see the total costs are for VEVE -
Ongoing cost - 0.12%
Transactional costs [Cost for Vanguard to buy and sell the underlaying stocks] - 0.02%
One-off costs - 0.08% [Costs incurred due to spreads - this is only shown as average and may differ slightly from month to month]

Total - 0.22% at the beginning and then 0.12% pa.

My initial point was about volumes affecting the spreads experienced by an investor especially when you buy it via Auto investing, there is tiny difference here VEVE is 0.08% as above but VWRL is 0.05% and SWDA also appears to be similar but not significant enough for me to drop VEVE.
@nirajn123, sorry to take a couple of weeks to come back to this, but am hoping you have this topic tagged. One other challenge I have run into with VEVE is that the distributions in the investment account are in US$. So in addition to the spread, I'm also getting hosed on the exchange rate by Interactive Investor whenever the fund distributes dividends. I was following advice from others here that one should avoid accumulating funds in an investment account (no problem for this in an ISA obviously) because it makes for difficult capital gains calculations. Have you run into this issue with VEVE as well? Sorry for the very basic question - I'm mostly a US-based investor, but am helping manage an older relative's account in the UK, so have had to learn a lot about UK investing in a very short period of time.
Plans are nothing; planning is everything - Dwight D. Eisenhower
TedSwippet
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Re: UK - What is your choice of equity funds

Post by TedSwippet »

Tourne wrote: Tue Sep 01, 2020 4:35 am One other challenge I have run into with VEVE is that the distributions in the investment account are in US$. So in addition to the spread, I'm also getting hosed on the exchange rate by Interactive Investor whenever the fund distributes dividends. I was following advice from others here that one should avoid accumulating funds in an investment account (no problem for this in an ISA obviously) because it makes for difficult capital gains calculations.
This is definitely an annoyance for UK investors, and it occurs with quite a few of Vanguard's ETFs. Perhaps other providers too. ETFs offered to UK investors often seem to use USD as their base currency, which is I suspect why this occurs. If you can find an equivalent unit trust or OEIC -- UK terminology for 'mutual fund' -- then this would get round the issue, since as far as I'm aware these vehicles always pay dividends in Sterling.

You might however find that higher TERs on them could cancel out any forex saving. A 1.5% forex loss on a 2% yield is effectively equivalent to a 0.03% TER increase. Describing this as "getting hosed" seems a trifle excessive.
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Tourne
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Re: UK - What is your choice of equity funds

Post by Tourne »

Thank you TedSwippet. As always, sound advice and good experience coming from you. Your posts have really helped me as I have tried to get up to speed on UK investing, so many thanks to you.
Plans are nothing; planning is everything - Dwight D. Eisenhower
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nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Tourne wrote: Tue Sep 01, 2020 4:35 am
nirajn123 wrote: Sat Aug 22, 2020 1:52 pm
Tourne wrote: Sat Aug 22, 2020 12:05 pm
nirajn123 wrote: Sat Aug 22, 2020 6:52 am Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
So does the spread offset the difference in Ongoing Charges/Expense Ratio? VEVE is 0.12%, VWRL is 0.22%, and SWDA is 0.20%

Is it all just a wash, and doesn't matter too much which of the three you choose, since you will pay roughly the same, just in spread costs for VEVE and in OCF costs for VWRL and SWDA?
Simple answer is yes, they are all the same - you will experience fees that are made of OCF + one-off costs no matter what you buy of these three (or other similar ETFs).

From the Vanguard link above, this is what I see the total costs are for VEVE -
Ongoing cost - 0.12%
Transactional costs [Cost for Vanguard to buy and sell the underlaying stocks] - 0.02%
One-off costs - 0.08% [Costs incurred due to spreads - this is only shown as average and may differ slightly from month to month]

Total - 0.22% at the beginning and then 0.12% pa.

My initial point was about volumes affecting the spreads experienced by an investor especially when you buy it via Auto investing, there is tiny difference here VEVE is 0.08% as above but VWRL is 0.05% and SWDA also appears to be similar but not significant enough for me to drop VEVE.
@nirajn123, sorry to take a couple of weeks to come back to this, but am hoping you have this topic tagged. One other challenge I have run into with VEVE is that the distributions in the investment account are in US$. So in addition to the spread, I'm also getting hosed on the exchange rate by Interactive Investor whenever the fund distributes dividends. I was following advice from others here that one should avoid accumulating funds in an investment account (no problem for this in an ISA obviously) because it makes for difficult capital gains calculations. Have you run into this issue with VEVE as well? Sorry for the very basic question - I'm mostly a US-based investor, but am helping manage an older relative's account in the UK, so have had to learn a lot about UK investing in a very short period of time.
I use Interactive Investor too and at least with SIPP, I am able to hold foreign currencies in the account, so I can use it to buy US Stocks - something I was doing so far but not keen on doing in future. The only alternative is to use accumulation funds (IWDA/SWDA) rather than VEVE or VWRL. EMIM would be the Emerging Mkt equivalent - which I already use. IWDA or SWDA with EMIM is better combination as they both use MSCI Index.
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Tourne
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Re: UK - What is your choice of equity funds

Post by Tourne »

@nirajn123, many thanks for the advice. I may switch to the accumulating funds in the ISA, just because there will be no capital gains calculations there. But I can certainly see the logic of keeping the distributing funds in the investment account. Thanks for the reply :beer
Plans are nothing; planning is everything - Dwight D. Eisenhower
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Forester
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Re: UK - What is your choice of equity funds

Post by Forester »

Tourne wrote: Tue Sep 01, 2020 4:35 am
nirajn123 wrote: Sat Aug 22, 2020 1:52 pm
Tourne wrote: Sat Aug 22, 2020 12:05 pm
nirajn123 wrote: Sat Aug 22, 2020 6:52 am Thanks, here is what I found in terms of time weighted spreads.
VEVE - 0.17%
VWRL - 0.12%
SWDA - 0.09%

Average volumes for VEVE on LSE are 512!! whereas for SWDA is 125K.

But reading about this a bit more, I think I have got this wrong, there are authorised participants who provide sufficient liquidity as needed so the actual liquidity is as of the underlaying stocks rather than LSE volumes. I'll stick with VEVE.
So does the spread offset the difference in Ongoing Charges/Expense Ratio? VEVE is 0.12%, VWRL is 0.22%, and SWDA is 0.20%

Is it all just a wash, and doesn't matter too much which of the three you choose, since you will pay roughly the same, just in spread costs for VEVE and in OCF costs for VWRL and SWDA?
Simple answer is yes, they are all the same - you will experience fees that are made of OCF + one-off costs no matter what you buy of these three (or other similar ETFs).

From the Vanguard link above, this is what I see the total costs are for VEVE -
Ongoing cost - 0.12%
Transactional costs [Cost for Vanguard to buy and sell the underlaying stocks] - 0.02%
One-off costs - 0.08% [Costs incurred due to spreads - this is only shown as average and may differ slightly from month to month]

Total - 0.22% at the beginning and then 0.12% pa.

My initial point was about volumes affecting the spreads experienced by an investor especially when you buy it via Auto investing, there is tiny difference here VEVE is 0.08% as above but VWRL is 0.05% and SWDA also appears to be similar but not significant enough for me to drop VEVE.
@nirajn123, sorry to take a couple of weeks to come back to this, but am hoping you have this topic tagged. One other challenge I have run into with VEVE is that the distributions in the investment account are in US$. So in addition to the spread, I'm also getting hosed on the exchange rate by Interactive Investor whenever the fund distributes dividends. I was following advice from others here that one should avoid accumulating funds in an investment account (no problem for this in an ISA obviously) because it makes for difficult capital gains calculations. Have you run into this issue with VEVE as well? Sorry for the very basic question - I'm mostly a US-based investor, but am helping manage an older relative's account in the UK, so have had to learn a lot about UK investing in a very short period of time.
I find it hard to believe you cannot buy the GBP version on your platform. It's possible to buy the wrong USD fund in error, I did this with an iShares gold fund.

I used these for my mother's SIPP; VWRL global equity, VVAL global value, SPGP gold producers, SGLN physical gold, IGLS 0-5yr UK gilts.
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nirajn123
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Re: UK - What is your choice of equity funds

Post by nirajn123 »

Forester wrote: Tue Sep 01, 2020 10:06 am
I find it hard to believe you cannot buy the GBP version on your platform. It's possible to buy the wrong USD fund in error, I did this with an iShares gold fund.

I used these for my mother's SIPP; VWRL global equity, VVAL global value, SPGP gold producers, SGLN physical gold, IGLS 0-5yr UK gilts.
These are all GBP denominated, his point is that most of these pay dividends in USD - which is subject to 1.5% commission on ii - gets applied automatically for ISA. In SIPP accounts it shows up as USD which one has to convert before withdrawal.
TedSwippet
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Re: UK - What is your choice of equity funds

Post by TedSwippet »

Forester wrote: Tue Sep 01, 2020 10:06 am I used these for my mother's SIPP; VWRL global equity, VVAL global value, SPGP gold producers, SGLN physical gold, IGLS 0-5yr UK gilts.
Not familiar with the others, but VWRL pays dividends in USD, even though it is traded in GBP. A platform may convert these seamlessly, so that there's no visibility to account holders -- some do, some don't.
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Forester
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Re: UK - What is your choice of equity funds

Post by Forester »

nirajn123 wrote: Tue Sep 01, 2020 10:16 am
Forester wrote: Tue Sep 01, 2020 10:06 am
I find it hard to believe you cannot buy the GBP version on your platform. It's possible to buy the wrong USD fund in error, I did this with an iShares gold fund.

I used these for my mother's SIPP; VWRL global equity, VVAL global value, SPGP gold producers, SGLN physical gold, IGLS 0-5yr UK gilts.
These are all GBP denominated, his point is that most of these pay dividends in USD - which is subject to 1.5% commission on ii - gets applied automatically for ISA. In SIPP accounts it shows up as USD which one has to convert before withdrawal.
Ah I see. I only buy accumulating versions.
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