Low cost ETF S&P 500 trackers sans hedging sought

Dear everybody,

I looked at these iShares S&P tracker ETFs on FT.
These all use methods to hedge against currency loss. Mostly derivatives.

Here are the iShares S&P 500 low cost trackers with currency hedging:-

iShares S&P 500 GBP Hedged UCITS ETF Acc. (IGUS)
iShares S&P 500 UCITS ETF Dist (IUSA)
iShares Core S&P 500 UCITS ETF USD Acc (CSP1)
Shares Core S&P 500 UCITS ETF Dist (GSPX)

Like iShares, the Vanguard S&P 500 (VUAG) uses derivates.

I had thought that using derivatives could amplify losses as well as gains. Is this a good thing in a longer term ETF savings plan?

Did anybody see any iShares ETFs on FreeTrade that don’t hedge against currency?

I thank anybody taking their time to read this post, and appreciate every bodies thoughts and ideas.

Regards,
JK

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Obviously derivatives in general can do that but I think here it is literally just a hedge so if the pound falls in value, the derivative makes money and the value of the ETFs stay the same. So it shouldn’t matter. Essentially only go for unhedged if you think currency fluctuations will go in your favour.

Not an expert, I dropped economics at school because I thought it was boring🐥

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Oh I think many of us are kicking ourselves years later :slight_smile:

Only Currency Hedged share classes of the ETFs will use derivatives

IUSA, CSP1, VUAG, VUSA are not currency hedged versions of the underlying fund and therefore will not use derivatives.

GSPX and IGUS are the currency hedged versions of IUSA and CSP1. They use derivatives to offset changes between GBP to USD. If the pound strengthens vs dollar then the hedged ETF will outperform. The opposite is true if the pound weakens relative to the dollar. The use of these derivatives are relatively safe

Is this a good idea? If you plan to hold for a very long time then a popular method is to split hedge/unhedged 50/50. Many people ignore changes in currency over the long term and just go for the unhedged tracker.

I hope that makes sense.

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This is roughly what I thought this would be, but I lacked the understanding. Thank-you.

What is the difference between IUSA and CSP1?

IUSA/VUSA distributes a dividend
CSP1/VUAG accumulates the dividend.

With your help, I found and made sense of the details on HL.

IUSA
OCR: 0.07%
Leverage: n/a
Currency hedging: No
Dividends: Distributing
IGUS
OCR: 0.2%
Leverage: n/a
Currency hedging: Yes
Dividends: Accumulation
CSP1
OCR: 0.07%
Leverage: n/a
Currency hedging: No
Dividends: Accumulation
GSPX
OCR: 0.1%
Leverage: n/a
Currency hedging: yes
Dividends: Distributing
VUAG
OCR: 0.0701%
Leverage: n/a
Currency hedging: No
Dividends: Accumulation
VUSA
OCR: 0.0701%
Leverage: n/a
Currency hedging: Yes
Dividends: Distributing
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It’s a toss up between CSP1 and VUAG for me. Both track same index, are low costs 0.07%, and re-invest the divs. VUAG is newer, and has $7 Million less volume, and is in USD unlike CSP1 is in EUR.

Why would I want it demoninated in EUR when I’m mostly in GBP. Isn’t this an extra convertsion from my GBP to EUR to USD, and then back again on exit? This might be HL reporting it strangly, because their site also states that both are in GPX or GBP.

VUAG Size: $29,353.18M
CSP1 Size: €36,510.85M

HL are just quoting the fund size in Euro’s instead of Dollars it’s not an extra conversion just the fund size expressed in a different currency.
Bear in mind CSP1 shares are £306 each . Both funds are excellent choices for S&P 500 acc .

BTW GSPX is hedged (your list says n/a) and VUSA says not hedged online but if you read the prospectus, it talks about hedging for the cash it holds.

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Go to iShares and vanguard for information. Brokers don’t really quality check the data that they pull and so costs and other information may not be perfect

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