Can You Buy Vanguard ETF's in the UK?
August 18, 2016 5:57 PM Subscribe
My dad (in the UK) has a list of Vanguard ETF's he would like to buy using his youinvest account. The list includes the symbol for each ETF, but he's sometimes getting multiple returns when he searches his account using the symbol, and so he's confused as to which one to buy. In addition, if he searches using the ETF name, sometimes he gets returns and sometimes not. Please help me help him work this out.
Example:
In his list, the Vanguard S&P 500 ETF has the symbol "VOO" - when he searches his youinvest account for this symbol, these are the returns:
BF2GMJ3 VANGUARD INDEX FDS S&P 500 ETF SHS NEW (SEDOL:BF2GMJ3) Other
B6ZY9W3 VANGUARD INDEX FDS S&P 500 ETF SHS (SEDOL:B6ZY9W3) Share
B63B2B6 VANGUARD ADMIRAL F S&P 500 VALUE INDEX FD ETF (SEDOL:B63B2B6) Share
B67S0L9 VANGUARD ADMIRAL F S&P 500 GROWTH INDEX FD ETF (SEDOL:B67S0L9) Share
B7N38L1 VOODOOVOX INC 12% CNV BDS 02/03/15 CAD100 (SEDOL:B7N38L1) Share
B8DLF11 LYXOR ASST MGM LUX LYXOR ETF DSVIX (EUR) (SEDOL:B8DLF11) Share
B8Q66Q5 LYXOR ASST MGM LUX LYXOR ETF DLVIX (EUR) (SEDOL:B8Q66Q5) Share
B9655W8 LYXOR ASST MGM LUX S&P 500 VIX FUTURES ENH ROL (SEDOL:B9655W8) Share
Also, he says that when he searches his other fund symbols, sometimes he only gets one return (denoted "Other"), sometimes he only gets one return (denoted "Share") and sometimes he gets two returns, with the same name, but one will be denoted "Other" and one will be denoted "Share" - eg
Vanguard Short-Term Government Bond - symbol "VGSH" - returns:
B4KTR92 VANGUARD SCOTTSDAL VANGUARD SHORT-TERM GOVT BD (SEDOL:B4KTR92) Other
B4M6GC7 VANGUARD SCOTTSDAL VANGUARD SHORT-TERM GOVT BD (SEDOL:B4M6GC7) Share
In addition, if he searches using the ETF name, for "Vanguard S&P 500" he gets:
VUSD Vanguard S&P 500 ETF (LSE:VUSD) ETF
VUSA Vanguard S&P 500 ETF GBP (LSE:VUSA) ETF
but if he searches for "Vanguard Short-Term Government Bond" he doesn't get any returns.
I'm suspecting here that the list he has is a US list and that it doesn't carry over to the UK, or maybe you're not able to buy Vanguard US ETF's in the UK?
Here's his full list if that helps (advice on his investment choices not required :-)
Vanguard S&P 500 - VOO
Vanguard Russell 1000 Value Index - VONV
Vanguard S&P Small–Cap 600 Index - VIOO
Vanguard S&P Small-Cap 600 Value - VIOV
Vanguard FTSE Developed Markets - VEA
Vanguard FTSE All-Wld ex-US SmCp Index - VSS
Vanguard FTSE Emerging Markets - VWO
Vanguard Short-Term Government Bond - VGSH
Vanguard Intermediate-Term Govt Bond - VGIT
Vanguard Short-Term Infl. Prot. Securities - VTIP
Thanks!
Example:
In his list, the Vanguard S&P 500 ETF has the symbol "VOO" - when he searches his youinvest account for this symbol, these are the returns:
BF2GMJ3 VANGUARD INDEX FDS S&P 500 ETF SHS NEW (SEDOL:BF2GMJ3) Other
B6ZY9W3 VANGUARD INDEX FDS S&P 500 ETF SHS (SEDOL:B6ZY9W3) Share
B63B2B6 VANGUARD ADMIRAL F S&P 500 VALUE INDEX FD ETF (SEDOL:B63B2B6) Share
B67S0L9 VANGUARD ADMIRAL F S&P 500 GROWTH INDEX FD ETF (SEDOL:B67S0L9) Share
B7N38L1 VOODOOVOX INC 12% CNV BDS 02/03/15 CAD100 (SEDOL:B7N38L1) Share
B8DLF11 LYXOR ASST MGM LUX LYXOR ETF DSVIX (EUR) (SEDOL:B8DLF11) Share
B8Q66Q5 LYXOR ASST MGM LUX LYXOR ETF DLVIX (EUR) (SEDOL:B8Q66Q5) Share
B9655W8 LYXOR ASST MGM LUX S&P 500 VIX FUTURES ENH ROL (SEDOL:B9655W8) Share
Also, he says that when he searches his other fund symbols, sometimes he only gets one return (denoted "Other"), sometimes he only gets one return (denoted "Share") and sometimes he gets two returns, with the same name, but one will be denoted "Other" and one will be denoted "Share" - eg
Vanguard Short-Term Government Bond - symbol "VGSH" - returns:
B4KTR92 VANGUARD SCOTTSDAL VANGUARD SHORT-TERM GOVT BD (SEDOL:B4KTR92) Other
B4M6GC7 VANGUARD SCOTTSDAL VANGUARD SHORT-TERM GOVT BD (SEDOL:B4M6GC7) Share
In addition, if he searches using the ETF name, for "Vanguard S&P 500" he gets:
VUSD Vanguard S&P 500 ETF (LSE:VUSD) ETF
VUSA Vanguard S&P 500 ETF GBP (LSE:VUSA) ETF
but if he searches for "Vanguard Short-Term Government Bond" he doesn't get any returns.
I'm suspecting here that the list he has is a US list and that it doesn't carry over to the UK, or maybe you're not able to buy Vanguard US ETF's in the UK?
Here's his full list if that helps (advice on his investment choices not required :-)
Vanguard S&P 500 - VOO
Vanguard Russell 1000 Value Index - VONV
Vanguard S&P Small–Cap 600 Index - VIOO
Vanguard S&P Small-Cap 600 Value - VIOV
Vanguard FTSE Developed Markets - VEA
Vanguard FTSE All-Wld ex-US SmCp Index - VSS
Vanguard FTSE Emerging Markets - VWO
Vanguard Short-Term Government Bond - VGSH
Vanguard Intermediate-Term Govt Bond - VGIT
Vanguard Short-Term Infl. Prot. Securities - VTIP
Thanks!
Not exactly sure how it all works, but I have Vanguard funds in my portfolio. UK investors may be limited to only Dublin/ London domiciled funds, so they may appear as a different ticker.
Note that ISAs have further restrictions on what funds/ etfs they carry. I was looking at a particular iShares ETF that was listed in the US, but cannot be held in an ISA.
Youinvest platform may also restrict investing in US ETFs or certain funds.
posted by moiraine at 3:17 AM on August 19, 2016
Note that ISAs have further restrictions on what funds/ etfs they carry. I was looking at a particular iShares ETF that was listed in the US, but cannot be held in an ISA.
Youinvest platform may also restrict investing in US ETFs or certain funds.
posted by moiraine at 3:17 AM on August 19, 2016
Best answer: Some of the list of Vanguard ETFs in your list have direct equivalents under Vanguard UK (note that these are not technically the same funds – the Vanguard US ones are US-domiciled entities, the Vanguard UK ones are domiciled in Ireland). Where Vanguard UK does not offer a comparable ETF, other ETF providers may do so for their UK arm. For example, iShares UK has an inflation-linked Treasury ETF listed on LSE (ITPS), albeit this holds longer maturity TIPS (it has duration of 8.65 years, versus 2.8 years for VTIP, and hence is significantly more sensitive to changes in interest rates)
You should probably still be able to buy those US ETFs through Youinvest, but they may not be properly set up on its dealing system if customers have not routinely dealt in them before (or they may have been set up more than once and have redundant codes that can’t actually be traded but are still in the system). That’s why you will find no results when you search for some of them and duplicate entries when you search for others. You’d need to contact Youinvest customer service to establish what the correct entries are and ask them if they can set up any that are not currently available (they are usually quite good about this, unlike a lot of other UK brokers).
Whether the ETF is quoted in GBP or USD doesn’t matter to your eventual returns (unless the fund is currency hedged). It’s the currency of the underlying assets and how that moves against your home currency that matters, not the quoted currency of the fund – whether you use a LSE-listed GBP-quoted ETF or a NYSE-listed US-quoted ETF, you still have underlying GBP-USD exposure. However, be aware that, like most UK stockbrokers, Youinvest charges commission on currency conversion (1% in its case), so you incur an extra cost in buying US-listed ETFs. Obviously, if the US-listed ETF is one where there is not a UK-listed equivalent, that doesn’t make any difference, since you don't have a choice if you want to hold it, but under other circumstances, it usually makes more sense to buy the UK-listed one.
In tax terms, if you buy a US-listed ETF as a UK investor, you will have withholding tax at 15% deducted from dividends paid by the ETF (assuming you have given your broker a valid W-8BEN form, but Youinvest will insist on that before allowing you to trade US shares – if not, tax is deducted at 30%). If you buy a UK-listed ETF, there is no withholding tax on the ETF dividends, but tax will usually have been withheld from the dividends paid by the underlying companies to the ETF before it’s then paid on to you.
However, if the US-listed ETF is to be held in a SIPP, Youinvest is one of the all-too-few brokers that is set up to get full withholding tax relief on US dividends (pension plans are entitled to full WHT relief under the UK-US tax agreement), so there should* be a small additional tax saving from holding US-listed ETFs within a SIPP versus holding equivalent UK-listed ones (you end up with dividends gross rather than net of 15% WHT). Whether that offsets the additional transaction costs in term of FX commission depends on how large the dividend is, the planned holding period for the ETF and so on. Perhaps, if you are a very long-term buy-and-hold investor, but dividend yields are low today.
*Should because I have not used these specific ETFs and odd things sometimes happen with cross-border tax issues.
US-listed ETFs typically still have lower expense ratios than UK ones, but the difference is relatively small on Vanguard products.
To address specific things about the example results you give.
For VOO, the only two potentially relevant entries are the first ones, and you would need to check with Youinvest customer service to see which is the correct line to use. The others are results for different funds that in some way contain “voo” in their tickers or names or are otherwise confusing Youinvest’s search function.
For VGSH, again both are potentially relevant and you need to check with customer service which is the correct line.
For Vanguard S&P 500, the results given are for the UK-listed ETF, which has two versions – one is quoted in GBP and one in USD. You’d want to trade the GBP version (VUSA), since trading VUSD incurs the added FX conversion costs mentioned above for no benefit.
For Vanguard Short-Term Government Bond, the lack of results is because it seems to be set up on Youinvest’s system as “VANGUARD SHORT-TERM GOVT BD” instead, per the results for VGSH, and the system is not capable of doing a fuzzy match.
posted by Temagami at 3:18 AM on August 19, 2016 [2 favorites]
You should probably still be able to buy those US ETFs through Youinvest, but they may not be properly set up on its dealing system if customers have not routinely dealt in them before (or they may have been set up more than once and have redundant codes that can’t actually be traded but are still in the system). That’s why you will find no results when you search for some of them and duplicate entries when you search for others. You’d need to contact Youinvest customer service to establish what the correct entries are and ask them if they can set up any that are not currently available (they are usually quite good about this, unlike a lot of other UK brokers).
Whether the ETF is quoted in GBP or USD doesn’t matter to your eventual returns (unless the fund is currency hedged). It’s the currency of the underlying assets and how that moves against your home currency that matters, not the quoted currency of the fund – whether you use a LSE-listed GBP-quoted ETF or a NYSE-listed US-quoted ETF, you still have underlying GBP-USD exposure. However, be aware that, like most UK stockbrokers, Youinvest charges commission on currency conversion (1% in its case), so you incur an extra cost in buying US-listed ETFs. Obviously, if the US-listed ETF is one where there is not a UK-listed equivalent, that doesn’t make any difference, since you don't have a choice if you want to hold it, but under other circumstances, it usually makes more sense to buy the UK-listed one.
In tax terms, if you buy a US-listed ETF as a UK investor, you will have withholding tax at 15% deducted from dividends paid by the ETF (assuming you have given your broker a valid W-8BEN form, but Youinvest will insist on that before allowing you to trade US shares – if not, tax is deducted at 30%). If you buy a UK-listed ETF, there is no withholding tax on the ETF dividends, but tax will usually have been withheld from the dividends paid by the underlying companies to the ETF before it’s then paid on to you.
However, if the US-listed ETF is to be held in a SIPP, Youinvest is one of the all-too-few brokers that is set up to get full withholding tax relief on US dividends (pension plans are entitled to full WHT relief under the UK-US tax agreement), so there should* be a small additional tax saving from holding US-listed ETFs within a SIPP versus holding equivalent UK-listed ones (you end up with dividends gross rather than net of 15% WHT). Whether that offsets the additional transaction costs in term of FX commission depends on how large the dividend is, the planned holding period for the ETF and so on. Perhaps, if you are a very long-term buy-and-hold investor, but dividend yields are low today.
*Should because I have not used these specific ETFs and odd things sometimes happen with cross-border tax issues.
US-listed ETFs typically still have lower expense ratios than UK ones, but the difference is relatively small on Vanguard products.
To address specific things about the example results you give.
For VOO, the only two potentially relevant entries are the first ones, and you would need to check with Youinvest customer service to see which is the correct line to use. The others are results for different funds that in some way contain “voo” in their tickers or names or are otherwise confusing Youinvest’s search function.
For VGSH, again both are potentially relevant and you need to check with customer service which is the correct line.
For Vanguard S&P 500, the results given are for the UK-listed ETF, which has two versions – one is quoted in GBP and one in USD. You’d want to trade the GBP version (VUSA), since trading VUSD incurs the added FX conversion costs mentioned above for no benefit.
For Vanguard Short-Term Government Bond, the lack of results is because it seems to be set up on Youinvest’s system as “VANGUARD SHORT-TERM GOVT BD” instead, per the results for VGSH, and the system is not capable of doing a fuzzy match.
posted by Temagami at 3:18 AM on August 19, 2016 [2 favorites]
This thread is closed to new comments.
The list of ETFs he has are US ticker symbols, which trade on US stock exchanges. Some (generally more advanced) brokerages will allow you to trade on stock exchanges from around the world; this introduces a whole host of issues (currencies, taxes, etc.) and isn't appropriate for most individual investors looking for something basic.
Luckily, Vanguard has a Ireland/UK operation, and offers some ETFs on the London Stock Exchange. These are technically different ETFs, but they would hold the same underlying stocks (e.g. the Vanguard S&P 500 ETF will hold the same stocks, whether it's the ETF trading in New York or the ETF trading on the London Stock Exchange).
The list of ETFs offered is somewhat different; fewer specialty targeted funds at subsectors of the US market, such as small cap value. Each fund has a fact sheet, and the very first thing on the fact sheet is the Key ETF Facts, listing the exchanges the fund trades on, and the currencies it trades in. It looks like most of the ETFs trade in both GBP and USD; for instance, the S&P 500 ETF trades in London as ticker symbol VUSA in pounds and VUSD in US dollars. (Note the search result you posted above for "Vanguard S&P 500" - these are the actual LSE ETF shares.)
These two tickers will both buy the same thing, just in different currencies. So if the pound is currently worth $1.31, and you invest £100 in VUSA and $131 in VUSD, you've bought the same thing for the same amount of money. If the S&P 500 doubles, then the VUSA investment will be worth £200 and the VUSD investment will be worth $262. But say the pound rises 20% versus the dollar to be worth $1.57. In that case, the VUSA investment will still be worth £200, but in USD, that will be worth £200*1.57=$314. Meanwhile, the VUSD investment will still be worth $262 in dollars, but that will only be worth $262/1.57=£167. It can get pretty complicated pretty quickly. Personally, I invest in my home currency of Canadian dollars where possible to avoid the headaches (since I earn and spend Canadian dollars, that's really what's important to me).
I'm not going to offer advice on his investment choices, but I sure wish that someone had offered me advice on my investment choices when I bought a whole bunch of specialty targeted shit like small cap value and inflation protected securities, which have only complicated what should be a simple portfolio (the point of buying some Vanguard ETFs after all), and have been a monument to my hubris and an obstacle to keeping my portfolio management simple. I probably wouldn't have listened to the advice, but if I had, I wouldn't be trying to figure out the tax implications unwind a bunch of positions in European Emerging (that were only ever worth like 2% of my portfolio but are as much effort as something worth 25% or 50%) to simplify back to a basic 4 ETF Developed/Emerging/US/Bond portfolio.
posted by Homeboy Trouble at 11:11 PM on August 18, 2016