A newbie question - I see that VUSA is currently being offered as a way to track the S&P 500. I have previously invested in VOO. What’s the difference between the two?
Yes, essentially the same in terms of their objective. VUSA is traded on the LSE in GBP, VOO is traded on the NYSE ARCA in USD.
According to Morningstar VOO also has a much lower annual fee (0.03% vs 0.07%), which may explain why it has historically performed better.
Hence, it would make sense to include this in the Freetrade universe as well.
I agree it would be good to have the lowest cost ETFs but I couldn’t find this ETF on Vanguard’s UK site, and couldn’t find any KID ( Key Information Document ) for VOO. It might be this ETF isn’t available in the UK? In any event VOO would need a KID before it can be offered by Freetrade.
Could you clarify the following -
- Can Freetrade not offer ETF’s available outside of the UK?
- When you say that - “VOO will need a KID”, am I right in assuming that Freetrade will need to put together general information for this fund before its made readily accessible?
If it is possible for Freetrade to make ETF’s like SPY, VOO & IVV accessible, is the next step to post it on their Stock Requests channel?
I was saying, Vanguard doesn’t offer this to UK customers on their own platform VanguardInvestor.co.uk, so it might not be available in the UK.
The ETF provider needs to create a KID for pagackaged retail investments like ETFs. This is due to regulation that came into effect in January 2018.
Good idea, if it is possible then Freetrade can add it.
I agree that its crucial that Freetrade focus on lowest fees for ETFs. We talked about it little bit in this thread Gold holding in portfolio.
Fees around 0.03-0.07% is really low, so try to aim those ETFs if they are available. Most investors neglect the impact fees on long-terms investment.
The highter the fees are or the less annual yield you have per year the more you have to pay for the ETF. Check this table. Lets say an average annual yield for specific ETF is 5-8% per year then then a annual fee of 0.25% will cost you between 5.25-3.38 of YOUR ANNUAL YIELD. Then add how much you invest times years you keep them.
That said, according to Morningstar, the average ETF expense ratio in 2016 was 0.23%, compared with the average expense ratio of 0.73% for index mutual funds and 1.45% for actively managed mutual funds.
Freetrade currently only offer UK shares and ETFs. US ones are due soon (this month?).
Vanguard US and UK offer different ETFs and funds. Some are equivalent in both regions (like VUSA and VOO), some have no equivalents.
Unfortunately we can’t offer ETFs that’re listed on US exchanges because the providers don’t produce KIDs
There’s more details here -
it would be good to see this alongside the Vanguard one, although it’s pricey at £354 per/share compared to around £37 per/share for the Vanguard one.
Is the lack of KIDs the only reason? In another thread about VOO, @Freetrade_Team1 was pointing to “listed in the US and priced in USD” as the problem. So it makes me wonder what about any other US stock that we’re already able to buy?
If it’s oanly about KIDs though, it’s a fairly new thing (the requirement I mean), so hopefully in the future. Or can we reach out to Vanguard?
To me personally, it only makes sense to buy into VOO/SPY kind of ETF rather than VUSA. A quick look at the respective charts explains why. The former track S&P500 much closer.
And a simple investment strategy like a low cost S&P500 ETF is what most everyday investors want.
There must be something that can be done.
The issue only affects ETFs and other packaged investments that are related to PRIIPs identified by the EU commission.
Considering that I haven’t seen any huge US SPDR/Vanguard ETFs being offered in the UK in USD (only UCITIS versions), it seems as there is more to it than a simple 3-page paper. Otherwise, why would they limit themselves from the second largest investment market in the world?
Oh, I see. Thank you for the clarification. Hopefully the situation will change soon. Just wondering if there’s something the can be done proactively. But will familiarise myself further with packaged investments, though.
Buffett says investors would be served equally well by S&P 500 or Berkshire
Packaged investments is essentially a fancy name for ETFs for the most part
4 posts were split to a new topic: What’s the difference between the S&P 500 ETFs?
Overseas collective investment schemes (which ETFs are a type of) must also be “recognised” by the Financial Conduct Authority to be promoted to retail investors in the UK:
For non-EEA UCITSs (for which the rules are slightly different, at least until the UK hard Brexits), this is under section 272 of the Financial Services and Markets Act 2000.