I can see in the app that at least VUSA is offered. Despite the information saying it has āa base currency of USDā, there are no FX fees to pay for this, because itās a UK-listed ETF?
When Freetrade ISAs come out, I want to make the decision on who to move to: Freetrade or Vanguardās own platform. If Iām only interested in holding VUSA, will Freetrade end up costing less in fees?
The flat Ā£3/month platform fee means it will be Ā£36 no matter how much money Iāve invested, while Vanguard charge 0.15%, so the fee after I have Ā£40k will be Ā£60. Being the same ETF, the fees related to that will be identical. Neither platform charges any other fees. Is that all correct?
The major difference and issue that I see is that via Vanguardās platform itās āaccumulationā by default, as I understand it. So dividends are automatically reinvested. In the Freetrade app, the information just says āincome will be distributed as cashā, which I presume means I have to manually reinvest? (And to confirm, thereās no fee by Freetrade for receiving this cash or reinvesting it?)
Is an automated solution for that going to appear? If manual, will I in theory lose money in the delay between receiving dividends and reinvesting?
These are interesting questions, thanks for asking. I will look forward to seeing the Freetrade answer about the fees, itās often hard to compare different providers, and all the different fees involved can be confusing.
In this case, I think it depends if the ETF goes up or down in the short term while your dividends are cash. Probably doesnāt matter much long term and might even give you an opportunity to build cash and get it in at an opportune moment. I imagine they will look at Dividend Reinvestment plans at some point but itās not on the short term roadmap, so for now itās manual reinvestment only.
Definitely not Freetrade. You can see their pricing structure here.
Whilst DRIP is not yet a benefit Freetrade offers, you can still manually reinvest for free. Once DRIPs are available, then you could avoid doing it manually.
Another big advantage of Freetrade over Vanguard is that you can invest in any other funds and shares if you would like at some point. Whilst I understand you go fully for S&P 500, it is always better to have an option to go for a variety of funds or even individual shares if you will one day wish so
You have a few questions here, so I have broken them down which will hopefully allow me to answer them best.
Are there any FX fees for VUSA? As VUSA is traded on the LSE in GBP there are no FX charges for trading. The only FX to bear in mind is in relation to dividends as the income for this ETF is paid in USD, Freetrade donāt charge any FX fee for this but Crest will convert it to GBP.
What are the fees? The ETF charge a 0.07% ongoing fee which is inbuilt in the price. Freetrade wonāt charge any additional fees aside from the ISA fee that you have already mentioned.
Are dividend reinvestments available? This ETF pays income, so if you wanted to reinvest the money into it then this would need to be done manually as at present we do not have a dividend reinvestment option.
By āNeither platform charges any other feesā I meant in this context of just investing in this ETF every month and doing nothing else other than a final withdrawal.
Definitely no other fees from Freetrade. I am not sure if Vanguard charges normal transaction fees on its own funds. If no, then they will be similar except the Ā£3 vs 0.15% ISA charge.
Thanks for the info. Letās imagine that one day Freetrade had an automatic reinvestment feature, making the end-user experience of investing in this ETF the same between Freetrade and Vanguard.
But could it be that Vanguard manage to work with their own ETF differently, in that reinvestment does not require dividends being made out to cash and converted from USD to GBP, rather it just automagically buys up more of the ETF? Or would regulations and such mean that Vanguard would be operating in the same way as Freetrade, just another broker forced to receive dividends after a USD to GBP conversion, then buying more in GBP?
Hi @anon287192, this is an income paying ETF not an accumulating ETF, but I canāt really speak on behalf of Vanguard and how they manage their own dividend reinvestment functionality.
Yes, the Vangaurd fee will be Ā£60 in year 1, but as your portfolio grows so will your fees. Goldman Sachsā base case is the S&P hitting 3000 at the end of 2019 (+12%) so your year 2 fees would be Ā£67 (slightly more if you include reinvested dividends), these would grow again in year 3 if the index gained and so onā¦ This is a massive benefit of Freetrade - very low and flat fees.
This is so important and ethical. It doesnāt cost freetrade any more to hold a million pound account than it does a 10 pound account. Itās just a number on a ledger.
Percentage fees are a scam perpetrated on an unknowing public by the incumbent finance industry for too long.
Iāve been trying to withdraw all my money from my vanguard isa for over 2 weeks in readiness for my Freetrade ISA in April. Itās proved very frustrating. Never had a problem before but it took a few days for the investments sales to show withdrawal funds and now still not available as I was told i needed money in my GIA for fees before it could be released (fair enough, fully accepted) and 5 days after putting that money in still being told I need to wait for the funds to release also the website always crashes and have to log in so many times.
Iām a Vanguard fan as well as a Freetrade fan but it has felt like pulling teeth out on this occasion.
