Low-cost index funds UK

Scary hidden charges on ETFs? Check the KIID!

Looking at “World equity”, you list one ETF: “HSBC MSCI World ETF (HMWO) OCF 0.15%”

I am looking at ETFs only because my platform AJ Bell Youinvest does not charge for ETFs but does for OEIC funds. At first sight the 0.15% compares favourably with Vanguards similar ETF “Vanguard FTSE Developed World UCITS ETF” which charges 0.18% but lets have a glance at the KIID like we are supposed to eh?

“One-off charges taken before or after you invest: Entry charge 3.00% Exit charge 3.00%”
OUCH! WTF!

Seriously! This is HSBCs own KIID for this ETF! (The Vanguard ETF KIID says 0% and 0% entry and exit)

So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the morning star’s fees page for this HSBC ETF?
http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000RYLW&tab=5&InvestmentType=FE

So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the FT fees page for the for this HSBC ETF?:
https://markets.ft.com/data/etfs/tearsheet/summary?s=HMWO:LSE:GBX

So why does this MASSIVE THREE PERCENT INITIAL CHARGE not appear on the Hargreaves Landsdown page for for this HSBC ETF?:
https://www.hl.co.uk/shares/shares-search-results/h/hsbc-etf-plc-msci-world-etf-gbp/costs

So if the FT, Hargreaves Landsdown and Morning star are all saying “initial charge 0%” but HSBCs KIID for the fund is saying a MASSIVE THREE PERCENT INITIAL CHARGE. What the F is going on? How is this 3% being taken??????????????????????????????????????????????????????????????????????????????????
As an ETF is traded like a stock, perhaps it comes from the bid offer spread from the market maker?
No apparently not. HL reports HSBC ETFS PLC MSCI WORLD ETF GBP (HMWO) Sell:1,515.50p Buy:1,517.00p for Prices as at close on 17 January 2019 .
So what is obliging HSBC to report 3% entry and exit in there own KIID that is so widely being ignored by FT HL and morning*? I’m sure HSBC would much rather leave it out.

You can get the KIID direct from HSBC here: https://www.etf.hsbc.com/etf/uk/professional?fundid=HETF017

Anybody know whats going on here?

Hi
Thanks for this great post!
You say
“A high-yielding fund is a distant cousin of value and not always a pretty one at that”
Could you please explain it more in detail? The meaning of value, high yielding, and why they are non equivalent investment tools. Or simply, share some sources where this is already explained (I couldn’t find any myself)
Thanks again and keep up the great work.

Morning everyone
I’m interested to understand fully the difference between L&G International Index and HSBC Ftse All World Index – I’ve looked at the fund fact sheets and Google but am still a bit confused!
Q:- Does L&G contain small cap and emerging markets?
Q:- Is the only difference that L&G doesn’t include the UK?
Current investments:-
L&G Int index 0.08% chg, L&G Uk index fund 0.04% chg & Ishares emerging markets equity index 0.24% chg- all with Hargreaves Lansdown. Split – 6% in UK 10% EM & rest in Int Index
Aim:-
World coverage including Emerging Markets with the cheapest funds possible. I would prefer one fund that does everything but not at the expense of charges. Would the HSBC fund be better even though fund chg is more expensive @ 0.16% with HL? Currently I’m guessing at the correct % split allocations in my 3 funds hence being curious in the HSBC fund?

Thanks

Hi,

For the Vangaurd All World ETF, you’ve given it the Lyxor ticker (LCWL) instead of VWRL.

I’ve been pondering currency risk recently, and wanted to understand why many global bond funds are currency hedged, unlike most equity funds. Specifically the Vanguard Lifestrategy funds bond element comprises currency hedged global bonds, and I therefore hold rather a lot of this kind of asset.
Are there any Monevator articles that cover this?
My own gut feeling is that I don’t really feel comfortable with a mix of global bonds which are currency hedged, because it’s the sort of complication that I don’t fully understand. I’d rather hold mainly UK government bond funds, which I think I do understand, and allocate a small portion of my bonds to unhedged euro and dollar government bonds to diversify currency risk. This doesn’t seem to be an easy or low cost thing to do – I’ve had a quick look for unhedged euro and dollar bond funds – plus I wonder what charges I might be incurring converting back to sterling. What am I missing here? Is my idea misguided?

@vanguardfan. That’s odd, I would have said it is harder to find hedged than unhedged bonds, eg
https://www.ishares.com/uk/individual/en/products/251736/ishares-euro-government-bond-35yr-ucits-etf
However, isn’t using unhedged bond funds mixing bond allocation with currency speculation? If you think the pound is overvalued now then ok I guess. Hedging with equity funds I have seen discussed much.

Edit – sorry I meant buying high, ie when the pound is weak.

Very surprised that MINV doesn’t get a mention

I realise there’s a limit on how many sectors this guide should cover, but I’ve found these global aggregate bond trackers useful and cheap (‘aggregate’ here means it combines government and corporate bonds):

iShares Global Aggregate Bond UCITS ETF GBP Hedged (Dist) (ticker:AGBP) 0.10%
iShares Global Aggregate Bond UCITS ETF USD (Dist) GBP (ticker:SAGG) 0.10%
SPDR® Bloomberg Barclays Global Aggregate Bond UCITS ETF USD unhedged (GBP) (ticker:GLBL) 0.10%
SPDR® Bloomberg Barclays Global Aggregate Bond UCITS ETF GBP Hedged (GBP) (ticker:GLAB) 0.10%

Something like VWRL+AGBP or HMWO+EMIM+GLAB might be a reasonable ETF approximation of a LifeStrategy fund (albeit not automatically rebalancing). For some portfolio sizes, sticking to ETFs rather than funds can reduce broker fees.

Side note: I use Chrome browser on iPad and I’ve lost all styling on content again. I can clear cookies to fix but then I lose cookies for all sites which is inconvenient (no option to clear cookies for a single site on the iPad version of Chrome). This happened to me about month ago also.

I was looking at Unhedged Global Bond ETFs recently to use as a benchmark (as I’m a heretical Active Investor). The two I found were the iShares and SPDR ones that Charlie has helpfully mentioned a couple of comments above.

What I’m confused by is that in the past 9 months (when one of them started) the performance of the two has been unexpectedly different (iShares has done better) – I’d love to hear if anyone can explain this, as they’re tracking the same index.

There is an issue with ETFs denominated in US dollars paying dividends in dollars. The forex charge for converting back to GBP can make a modest difference to the cost of investing.

By way of example if you invest in VWRL (Vanguard World ETF) the current OCF is 0.25%, the current yield is 2.31% and the cost of a single forex transaction on my platform is 1.5%. If you run the figures the additional cost of exchanging dollar dividends to sterling is 0.035%. So the effective OCF is 0.285 not 0.25%.

@ vanguardfan – this is a Vanguard paper on the rationale for hedging international fixed income (in brief: you get same long-term return with lower volatility)

https://www.vanguard.co.uk/documents/adv/literature/going-global-with-bonds-tlor.pdf

@Fremantle. I wasn’t sure about that short duration but in any case my ISA and SIPP providers don’t offer it. I settled on the Royal London and L&G funds, the L&G fund being slightly cheaper. They are both GBP hedged as I recall, the L&G fund definitely so. The effective duration of the L&G fund is reported as 7.99 years ( love the precision).
In as much that I feel the duration should in some way align with the reason for choosing the asset and the associationed timescale, and I worry about value in 10 years time ( for my lucky widow in case if the SIPP 🙂 ), the duration of the fund seemed ok. The RL fund ( not the short duration one), was similar except it’s duration is about 11 years. Morningstar says it’s hedged.

https://fundcentres.lgim.com/uk/ad/fund-centre/Unit-Trust/Global-Inflation-Linked-Bond-Index-Fund
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000GVA4

Anyone aware of taxes being charged based on the domicile of the ETF despite it being held in an ISA wrapper?

Specifically, I hold VGOV in an ISA with AJ Bell Youinvest. In the last dividend payment I noticed they have taken 20% from the gross amount. When I contacted customer service they said it was because the ETF was domiciled in the Republc of Ireland. The strange thing is it’s the first time I see tax deducted on these dividends.

Was anyone aware of this? I thought having them in an ISA it meant not taxes charged at all!

Thanks for all the lovely research!
I may be wrong, but should EMIM actually be EIMI?
www(dot)ishares(dot)com/uk/individual/en/products/264659/ishares-msci-emerging-markets-imi-ucits-etf

@Charlie
Opps. Thanks!

@MrOptimistic
Thanks, but if I’ve understood the documentation for this fund correctly, it’s actively managed “using a combination of top-down analysis, based on our macroeconomic views overlaid with bottom-up security selection”. So I don’t think it’s a tracker.

I am new to this site but have been investing for a number of years now. I see recently a big push for passive investing as low charges etc but I wonder if I am missing something. I have investments in global funds and trusts- Fundsmith, lindsell train global fund, Scottish Mortgage investment trust are my main global holdings and all their returns easily beat the returns listed over 5 years on Hargreaves Lansdown research pages despite their higher charges. Is it that I am not looking over a long enough period?

Thanks for all your helpful tips and hints. I have set up a public watchlist on JustETF.com which summarises the LSE listed ETFs that track the FTSE All-World or MSCI World Indeces, along with their TERs and returns . Hopefully it will be useful to you too.

https://www.justetf.com/uk/watchlist.html?listId=4953c

If you want unhedged global sovereign bonds in OEIC form then iShares Overseas Government Bond Index Class H is worth a mention. Only 0.11% OCF. Arguably would do very well in a UK recession.

Does anyone know which platforms actually carry L&G Global Small Cap Index Fund (IE00BG0VVG79)? I’ve looked on HL, AJ Bell, Fidelity, IWeb, II and can’t find it anywhere?

Thanks as ever for this information, what an amazing resource!
One quick update – L&G All Commodities ETF (BCOM) OCF 0.15% … now seems to have an OCF of 0.31 as quoted in KIIF … so probably not the most competitive anymore!
And one quick question – why can’t i hold Shares in L&G All Commodities ETF (BCOM) In my ISA? I use Charles Stanley Direct.
Many thanks!

I own just one etf, the vanguard all World VWRL, which charges 0.25% in fees. Since buying it a few years ago I have transferred platforms a couple of times to minimise platform fees and it has saved me money. VWRL fees have stayed the same but its now possible to get an all world tracker for about half the fee price (developed world but let’s ignore that for the time being). Obviously selling VWRL and buying a competitor will cost money. I feel fairly loyal to Vanguard but would be interested to hear if others think it’s worth swapping to a different etf for lower fees and if so by how much? (It seems pointless to switch from 0.25 to 0.23 but if it was 0.1 for example)

@Peter “re: L&G Global Small Cap Index Fund (IE00BG0VVG79)”
Reply from legal and general:
“The L&G Global Small Cap Equity Index Fund is an ICAV so domiciled in Ireland. I [=L&G] am not certain that all of these platforms can hold Irish funds. I know that Hargreaves Lansdown is able to offer Irish domiciled funds but Hargreaves Lansdown has not requested for us to add this fund. If you would like to have the fund added, the best way to do this is to approach the platforms and request for the fund to be added as they need to see customer demand before agreeing to add funds. When the platform approaches us we will be more than happy to help facilitate adding the fund to the various platforms.”

I would like to invest in this fund too, so I will get onto ATS and AJBell next week and see what happens. (iWeb have added two UK funds for me in the past on two occasions but I don’t have an ISA with iWeb and there is no way I am buying an offshore fund outside a tax wrapper for tax return reasons)

I agree that from the holder’s perspective the fund domicile doesn’t seem relevant. I hold Irish domiciled funds in a taxable account and there seems no issue apart from the income gets put in a different place in the tax return. (There may be nuances I’m not aware of, and i don’t know if brexit will be an issue, I assume not at present as I haven’t picked up any info about it). We’re not talking about foreign listed shares here, which I know do have more significant tax issues.

Ah yes, that could be an issue. Although as long as you have the data it’s not too difficult to add to the tax return? I use an accountant, so don’t have to worry too much about whether I’m missing tax details – equalisation is another little quirk that can trip up the unwary.

Are we sure Royal London Short Duration Global Index Linked Fund M (GB00BD050F05) OCF 0.25% is hedged back to sterling? I’m not sure it is.

Just had a letter from my platform:
“Vanguard have changed the index that the [Vanguard Global Short-Term Bond Index Fund] tracks from the Bloomberg Barclays Global Aggregate Ex US MBS 1-5 Year Float Adjusted Index to the Bloomberg Barclays Global Aggregate Ex US MBS 1-5 Year Float Adjusted and Scaled Index. They have explained that the percentage of the previous index represented by certain types of bonds issued in China was set to rise significantly in the next 20 months. In contrast, tracking the new index will allow the fund to keep the proportion of these bonds at its current, relatively low level. Vanguard believe this gives investors the benefit of diversification while limiting risk.”
The only difference I can see is that “and Scaled”. Should I care?

Hello there,

I was wondering if anyone could recommend the equivalent to the World equity – developed world and emerging markets (total world) suggestions below but from a US perspective as looks like I can’t invest in any of those from here, unless I’m missing something (highly likely)?

Cheapest
HSBC FTSE All-World Index Fund C (GB00BMJJJG09) OCF 0.18%

Next best
Vanguard Lifestrategy 100% Equity Fund (GB00B41XG308) OCF 0.22%
Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24%
Fidelity Allocator World Fund Y (GB00B9777B62) OCF 0.25%
Vanguard FTSE All-World ETF (VWRL) OCF 0.25%

Many thanks…

Has anyone bought any of : Amundi ETF Global Equity Multi Smart Allocation Scientific Beta ETF (SMRU) OCF 0.4%

I pretty much decided to use it as my property allocation but you can only telephone trade at AJ Bell – that caused me to worry about liquidity. Any thoughts / comments welcome. Thanks

I have the following all world etf VWRL with charges at 0.25%. I see the new Amundi Prime PRIW all developed world etf charges only 0.05% – a considerable saving. However I can’t find a platform that deals in it. I use AJBell, HL and iWeb. Anyone bought PRIW and on what platform please?

Reading the Key Investor Information for HMWO, page 2 Charges section suggests a 3% entry and 3% exit fee. But then just on from that ‘No entry or exit charge is payable where shares are purchased/sold on a stock exchange. Investors need only pay any relevant broker and stock exchange fees and commissions’. Seems a little confusing? 3% in and out is a hefty whack. You’d want to be absolutely crystal clear whether you were paying it or not.

Hi all.
In my research for my minimum risk asset I see this fund from iShares –

iShares UK Gilts All Stks Idx (UK) D Acc

It has a quoted OCF 0.11% on Interactive Investor though performance looks marginally poorer than:

Vanguard UK Gov Bond Index (IE00B1S75374) OCF 0.15%

If the lower charges are correct is this performance difference down to tracking error or am I not comparing apples with apples?

Thanks in advance.

Hi DB, the cost doc you’ve linked to assumes you’re investing in the fund through HSBC’s Global Investment Centre platform. That’s the 0.25% account fee bit. But you could invest in the fund using a different platform and then you’d pay their account fee instead. Platform fees are covered on our broker table, and we stick to fund Ongoing Charge Fees (OCFs) for this page.

The OCF for this fund is currently listed as 0.19% in the factsheet, which is within a gnat’s whisker of the 0.18% on our page – which I do need to update soon!

Hi – is it possible to get this updated for 2020? Appreciate your time!

Please can anyone advise on if there are S&P 500 index tracker funds in the UK that charge a fee of below 0.05% that can be held through and stocks and shares ISA?

I am new to investing, so unsure of the correct terms, but from watching education videos it is advised to find an index tracker fund with low expense ratio’s in the US.

I’ve looked at Vanguard and Fidelity, but they charge fees called ongoing charges and transaction costs, plus annual fees. Is this the same as an expense ratio fee, just different names here in the UK?

I am presuming you add all these fees to get your total fee amount from the investment, which will then be hard find a fund below 0.05%?

Any help for this novice investor would be greatly appreciated!

@John F
Yes, a developed world or total (developed + undeveloped) world fund would offer far more diversification than putting all your eggs in a US basket. Pick one of the funds under the “World equity – developed world and emerging markets (total world)” category.

You will struggle to find funds below 0.05%, that is very low. Be happy with 0.1x%

@John The ongoing charge fee IS the total cost for the fund. Maybe you’re talking about transaction costs and such?

If the pound drops, the value of your overseas investments is unaffected. Imagine USD:GBP rate is 1:1, you buy a unit of a fund for 100GBP (= 100 USD). Sterling then drops to half of USD. You’re still holding an asset worth 100 USD. If you sold it to a UK investor, they would have to pay you 200GBP for the unit now.

It’s different if you’re investing in a fund whose underlying assets are in GBP, rather than other currencies. For example, if you invest in a FTSE100 fund and Sterling plummets the result depends on these 2 cases:

1) If you live in the UK and use GBP you’re largely unaffected since everything that you buy (except what you import) will have cost the same before the GBP weakened against the dollar as after.
2) If you’re based outside the UK, and you don’t use GBP, if you decide to sell your shares, you now get far fewer of your host currency out of it. Therefore those shares provide less purchasing power should you sell them.

The Fidelity fund is good, but it’s developed world only: that’s less diversification. That said, I’m drip feeding into that fund over the coming months to profit on the short term. It’s my belief that undeveloped countries would be hit much harder by the virus than the undeveloped so I don’t want them dragging down shares. If if you’re horizon is long-term it shouldn’t matter: you should diversify total world.

IMHO IFA is for if you’re a millionaire or grossing 300k+ annually. Better to educate yourself than have some biased kook tell you to put money in some UK-biased fund.

I’m looking at “Fidelity Index Emerging Markets Fund P (GB00BHZK8D21) OCF” on the Fidelity website and although the ongoing charge is 0.2% as shown on this page, it says the transaction cost is 0.34%. Am I right in thinking that this should probably be removed from the list of best buys? The Vanguard Emerging Markets Stock Index Fund has a total charge of 0.24% on the other hand

Hi Monevator,

I have been thoroughly enjoying working through the various links and articles you have created over the years whilst I have been furloughed this last month. It is really appreciated for you to provide such thorough, honest and clear information and advice and I am sure you have set up many readers over the years by pointing them in the right direction and providing structure to their finances.

I have decided on my equity allocation to go into the Vanguard FTSE Global All Cap Index Fund (GB00BD3RZ582) OCF 0.24% (which you included above) simplicity, low tracking error were among the key factors for me.

Now before I make the step I wanted to ask if there is any disadvantage to holding just one Equity component. Aside from perhaps a lower average OCF from 2-4 funds combined to make up the global market is there any other benefit/ things I should be considering. It seems to be the case in all the example portfolios from yourself (that I have seen) that you have multiple funds making up the portions of the developed market and emerging markets (fragmented even further on multiple occasions). There doesn’t seem to be any articles that I can find from either yourself or other parties directly explaining this so would really appreciate your thoughts and guidance on this.

I have been reading up the last month on everything I can and am looking to make my first investment this week, with regular automated monthly investments from my salary going forward.

Thanks again and I look forward to hearing your thoughts.

All the best
Peter

Hi John,

Firstly the HSBC fund had a highly varying tracking difference between the fund and the index of 0.4% to around 1.4% if I recall (if not read yet I would read through Monevators articles of tracking error, tracking difference and how to read a fund fact sheet). The Vanguard fund I am going for was within 0.12%-0.35%, so the extra 0.05% cost per year is significantly less than the 1% you could lose per year going with the HSBC one. Also my confidence in the fund given the fact this gap was so large is undermined as there is no reasoning given.

Also the Vanguard fund I am going for holds considerably more holdings as is based on the FTSE Global All Cap vs the FTSE All World index and thus more diversified as covers not just large and mid cap but small cap as well across the world. On the negatives side it is much smaller in asset size as is newer so there are potential risks on that side but offset with the pros this for me is the strong favourite and also I expect the fund to grow in size considerably the next 5 or so years so stability should be found in that.

Regarding who through, I am likely to be going via Lloyds as already have a share dealing account and ISA there and they offer competitive rates and the regular investing automation etc that fit within my current needs.

All the best

Hi Peter

Thanks for the reply, and explanation.
I now see the Vanguard LifeStyle 100% has more UK weighting, which I’ve been told has caused it to underperform against other world trackers. Is this fund also based on large and mid cap?

I’ll read up them articles you mention.

Thanks

John

Hi Peter
Thanks. One of my concerns of going with a total world fund at present is that the emerging markets may struggle more with Covid-19 as they do not have healthcare systems in place – though this too could be said for some parts of Europe. As such, they may have a negative effect on the fund.

Two very interesting BBC doc I listened to last night kind of reflect this:

https://www.bbc.co.uk/sounds/play/m000hvtj

https://www.bbc.co.uk/sounds/play/m000hvtl

Thanks

Thanks again for you thoughts Peter – much appreciated.

Thank you for providing such a valuable resource.

From what I can see, Vanguard UK Investment Grade Bond Index (IE00B1S74Q32) OCF has an annual charge of 0.12% not 0.15%. Also has the advantage of zero bid/offer spread.

Is there a reason Vanguard FTSE Developed World UCITS ETF (VEVE/IE00BKX55T58) is not listed under “World equity – developed world only”? It has an OCF of 0.12% if I understand correctly. In particular, VEVE and HMWO are nice as they do not reinvest dividends, which helps for the self-assessment when investing outside of a wrapper (ISA/SIPP). This may be something worth noting in these listings.

Hi @Accumulator,

Would it be worth including an unhedged global bonds category?
For investors concerned about the future of Sterling, it seems like a legitimate passive investing class?

@ZXSpectrum – Wow! So gald I’m in VAGP(S) instead of ABGP 🙂
Is it an unwritten rule that unhedged bonds are not to be part of passive investing? If that’s the case, wouldn’t the same be so for foreign stocks?

Hi all, rereading past comments, I am struck by posts between John Answorth and Peter in May, concerning the home bias of the Life Strategy funds. I would be very grateful for some opinion. I should add I invested in LS60 after finding this great resource back in 2015 and am very glad I did.

Great piece of work
Much appreciated
xxd09

@Squirrel – sorry of that was for me, yes I just checked 0.20%, lord knows why I have 0.17 in my costs spreadsheet. In hindsight the difference between this, mymap6 and VLS100 is that they are risk managed, so therefore not a good candidate for a truly passive portfolio. Currently the fund is 3.44% in the UK.

The Accumulator – Great work, much appreciated! Interesting that you’ve replaced the Value categories. At least for Global Value, there were a few ETFs to choose from. A sign of times, perhaps even a contrarian signal? 😉

Hello,

Unless I have not fully understood all charges but it appears that you can get the HSBC FTSE All-World Index fund from AJ Bell with an OCF of 0.13 rather than the 0.18 you have above.. Making even cheaper.

https://www.youinvest.co.uk/market-research/FUND%3ABMJJJF9

iShares have ETF versions of their Emerging Markets fund. EMIM is the accumulating ETF, IEEM is the income paying ETF. Both have a TER of 0.18%, same as the iShares Emerging Markets Equity Index Fund, but they make around 5bps from stock lending each year, which makes the iShares ETFs and OEIC cheaper than your best buy.

My preference is to stick with the big providers iShares and Vanguard, followed by Fidelity and HSBC for some of there OEICs, even if they are not the cheapest. Comstage, Amundi and L&G ETFs may work out ok, but their funds are much smaller and they don’t yet have sufficient track record to show whether their lower fees actually translate into improved performance and lower tracking error. I welcome the competition though.

This would be more complete if you included trackers for Europe, Japan and Developed Asia Pacific ex Japan.

Hi @Accumulator,
It’s a great compilation, and this and many other posts by yourself & @TI have helped me so much since I was FI awakened by this site.
This update is helping me choose the right Gold ETF; I had been considering to purchase SGLN, but now I see there are cheaper options to take note of.
Although @ZXSpectrum48k suggests that querying about what exactly is passive investing was damaging the thread, I’m not so sure that it is. I’ve been thinking to change some of my GBP hedged bonds into Gold / unhedged bonds to diversify away Sterling risk; Gold is in your list but unhedged bonds are not, which is what led me to question my understanding of what passive investing is.

Algernond. If you want aggregate bond trackers with a foreign currency overlay use the USD unhedged equivalents:
AGBP LN (GBP hedged Dist) -> AGGG LN (US$ Unhedged Dist). Both 0.1%
SPDR’s GLAB LN (GBP Hedged Dist) -> GLAG LN (US$ Unhedged Dist). Both 0.1%

The Vanguard VAGP/VAGS LN do not have a USD unhedged version as far as I know (this may change as they just need to add another sub-feeder). If you can access BNDX US that would be an alternative. There is also VAGU LN (US Hedged Acc) but remember the only exposure you get with that is short GBP/USD overlay.

If something is “half as cheap” does it cost more, or less? 😉

This really is a superb piece of work. Somewhat related to the comment thread above and the link…..I wanted last week to utilise the annual £12k CGT exemption, so I sold sufficient ITPS (Ishares $TIPS) and bought sufficient TIPG (Luxor $TIPS) to lock it in. Both track the same asset class and both appear to be highly correlated. It seems a successful way to bypass the 30 day CGT buy back rule. I accept they may not be 100% correlated. Anyway I mention it as they are the two $TIPS ETF’s I’ve used. I agree it’s active not passive bien sur. I am also open to being told that was sub-optimal for some reason. Thanks again for your efforts here.

@ZXSpectrum48k: I switched to VAGP from AGBP once iWeb made it available (though I have failed to persuade them to add VAGS) and have been pleased to see the improved results. I have since been wondering whether iShares have greater GBPUSD hedging costs than Vanguard which could account for the performance differential between AGBP and VAGP.
In 2016 I swapped VUSA for IGUS (S&P 500 unhedged distributing for £hedged accumulating) when the £ dropped below $1.2 and reversed when it hit $1.3+. I did the same again this year under the same circumstances this time using the newer GSPX (S&P 500 £hedged distributing). I saw that there was next to no tracking error with IGUS, but no dividend, and around 1.5% tracking error for IGUS. Fortunately the gain outweighed the hedging costs by a useful margin on both occasions and I will probably follow the same (timing?) course again.

@ZX – thanks for that. Unless I can be guaranteed the 0.24% every year, looks like a crap shoot to me. I already hold SWLD in my SIPP and also FIIAGM in my ISA. Not quite sure why or how that happened.

I do have this years glide-path rebalance to invest in Dev World Equities. I’ll stick to SWLD for my SIPP otherwise I’ll end up with dozens of small holdings and when I look at my portfolio IT WON”T LOOK NEAT AND TIDY!!!

Thanks for the hard work TA. This is my first port of call when I change into my super-asset allocator mode and decide to invest more pennies.

@ZX – interesting. So, all other things being equal, I’d be better off in HMWO as it should consistently have the tax advantage and therefore consistently outperform? Again, all other things being equal.

@Naeclue. That’s odd since for 30Sep15 to 29Sep20 I’m seeing SWDA LN at a total return of 94.47% (14.22%/annualized) and HMWO LN at 95.87% (14.38%/annualized). Both beat the index (93.10%). I’m just extracting those numbers direct from the Bloomberg terminal but those are normally accurate (better be for $24k/annum). Obviously one is acc and dist so the compounding of the dist may be the difference.

@Brod. Some funds will have better capabilities than others in different areas. Some are better at stock lending say. Given their global network, tax arb is something HSBC is quite good at … just ask the Russians!

“That’s odd since for 30Sep15 to 29Sep20 I’m seeing SWDA LN at a total return of 94.47% (14.22%/annualized) and HMWO LN at 95.87% (14.38%/annualized).”

Well on Bloomberg I am seeing 97.49% (14.58%) for SWDA and 98.79% (14.73%) for HMWO. Morningstar are giving 14.60% for SWDA and 14.75% for HMWO, which is consistent. Trustnet are giving 98.6% for SWDA and 99.7% for HMWO. So all say HMWO is ahead, but Hargreaves Lansdown is giving 97.62% for SWDA and only 97.00% for HMWO.

The factsheets from iShares/HSBC web sites give 5 year NAV USD performance to 31/08 of 64.97% (10.53%) for SWDA and 64.82% (10.51%) for HMWO, putting SWDA slightly ahead.

Make of that lot what you will!

@ Naeclue – thanks for following up on that. Re: OCFs – I personally use them to establish a shortlist (oranges vs oranges, ideally) and then check performance to see whether one or two nudge consistently ahead, or whether anything odd is going on. Ideally I’ll plot them against the index too but I don’t have a Bloomberg terminal so cobble it together using public sources. I find Trustnet usable but it gives me the willies that the sources generally differ and I’ve uncovered a clear cut case of unreliability with Trustnet in the past.

I’d want to compare at least 3 years of data and ideally more like 5, so like you I prefer early adopters to road test new products for me. Unlike ZX, I’m not agile enough to respond to market changes that favours a particular product for a year or so, I’m looking to be in the right ballpark rather than top of the league. I sense you have a large portfolio which probably makes it profitable for you to be highly sensitive to cost differentials?

Interesting that you pick out L&G as reliable – I’ll need to take a closer look. Generally I’ve found that Vanguard trackers have pretty low tracking difference but I haven’t surveyed the field systematically.

I’m curious as to why you don’t like swap-based ETFs but sound sanguine about stock-lending?

None of the above is meant to discount the importance of other factors e.g. the composition of the index.

@ C-Strong – agreed, I try to avoid listing products that aren’t typically available or are platform exclusives but no-one stocks everything. Where do you go for your small cap value exposure?

@TA, getting good historical data is key to any analysis, as is comparing oranges to oranges. I consider the Key Investor Information Documents (kiid) to be reliable as they are regulated and the historic performance comes from audited information. Still not without difficulty though as ETFs report past performance in the ETF base currency, usually dollars and OEICs report in pounds!

As an example for developed world trackers, I just looked at the kiids for the HSBC ETF HMWO, iShares ETF SWDA and the Fidelity OEIC (class P accumulating). They all track MSCI World so oranges are being compared. I used Bank of England spot rates to convert the Fidelity returns to dollars. The 5 year performance to end 2019 compounds up to 52.6% for iShares, 52.1% for HSBC and 51.6% for Fidelity. You can also get comparative figures for tracking errors by taking the standard deviation of each years tracking difference. That works out as 0.1 for iShares, 0.5 for HSBC and 0.6 for Fidelity.

For me that makes iShares the winner, but it becomes trickier to decide when you see outperformance, but with higher tracking error, which sometimes happens.

I would still probably choose Vanguard’s VEVE (or the accumulating version VHVE if you can get it) for a developed world tracker as it is more diversified than SWDA, including more small caps and South Korean shares. By a fluke, the 5 year performance to end 2019 comes out identical to that of iShares SWDA, as does the tracking error.

@ Naeclue – thank you for taking the time to walkthrough your process. That’s very helpful. From [unreliable] memory when the synthetic ETF scare broke several years ago, iShares had very few synthetic ETFs in the range so could loudly trumpet their physical credentials. DB and the French banks had brochures full of synthetics and had to scramble to reinvent themselves. I imagine that Blackrock think the fuss has died down now?

@ C-Strong – well played, and what a shame you haven’t been rewarded (yet) for your efforts. I use FSWD to gain some exposure to value, size, quality and momentum. UK small value through ASL (eek!) and some global small value through a DFA loophole that existed for a short time (could invest without an advisor) but has since been closed. One day it will all prove worth it. One day…

Great piece of work, I did some detailed research looking to cover the Canadian market a few years back, the iShares product was more expensive than rival ETFs but the performance was markedly better…. yes I did a very careful comparison, but the tracking errors were negative and far larger than the difference in OCF.

The leading providers eg Vanguard, iShars, State Street etc do seem to do the job very efficiently.

@Chris. I’m not sure what you are asking since VHVG (dist) and VEVE (acc) are essentially the same. Both Vanguard FTSE Developed World UCITS ETFs. Same index ticker TAWNT04U. Same total return (ok 1bp difference but that could be rounding). Both are FX unhedged and quoted in USD base currency. VHVG LN and VEVE LN are the GBP share classes, while VHVE LN and VDEV LN are the USD share classes. All four on the LSE.

Chris, VHVG is available to trade but it only launched a year ago.
See: https://www.youinvest.co.uk/market-research/LSE%3AVHVG

In a rare misstep by ZX, it’s VHVG that’s accumulating and VEVE that distributes, like you say.

Google the ISIN to track down the factsheet: IE00BK5BQV03

Algernond: Could SGLO be what you are looking for? Its huge, global government, unhedged and only slightly pricey at OCF .20%. It looks like a sweet spot between VAGP and IBTM and rose nicely on March 23. Just a thought.

Hello
Thank you for updating the list. Is there a site somewhere that tells you for each fund/ETF which platforms carry them ?
I realized I can search on some providers such as AJBell or Fidelity but not on every site.
Thank you

@ The Accumulator, C-Strong – Why not just go for VVAL? It looks pretty small-ish to me.

Thanks for this updated list. Is there an obvious difference between accumulating and distributing ETFs? I’m looking to invest for retirement (>15-20yrs) so would accumulating make more sense? Not sure if hedging, taxes make a difference long term with either one.

Thanks @Accumulator – I think I fit 4/6 of those descriptions.
Anyway, I’ll buy some Gold coins just in case..

For Commodities, I’d been put off the ETCs from reading the Monevator articles on them.
There’s an interesting ETF from VanEck though (ticker: HAP) which is Commodity / Resource equities at a not too bad TER (0.5%)
(noticed it when I purchased their global mining ETF)

I’m new to this site, and find the advice absolutely invaluable. Being a complete auto-didact when it comes to investing, I have learnt so much from this site. I am a big fan of passive investing as well, however, some reasearch into passive funds vs ETFs has left me dubious.
For instance, I hold a HSBC fund on HL – HSBC FTSE 250 INDEX CLASS S – INCOME, with an OCF of 0.07%. I also hold an ETF on FreeTrade – VMID which tracks the same FTSE 250 index at an OCF of 0.10%. Holding the HSBC one on HL makes it 0.45%+0.07% = 0.52% charges, which tips the balance in VMID’s favour. But the fund has performed better than the ETF has, despite the fact that they both have nearly-identical holdings (until very recently where the fund added a different one right at the top). So, for the extra charges, I get a better return too. I did similar comparisons with FTSE 100 funds, and FTSE 100 trackers, and the returns were better, even if marginally. So this has me doubting my faith in passive investing, and if funds are still “actively” managed even though they are a passive index tracker fund?. Any thoughts/experiences on similar comparisons?

Given so many types listed here it would be good to have a list of the cheapest US only index trackers

Any anyone explain the difference between VHVG and VEVE?

The “total world” list is missing SSAC (iShares MSCI ACWI Accumulating ETF) which has an 0.2% OCF.

@Chris B: No need to be such a penny pincher. Choose 1 and go with it. Find a new one and funnel new money to that instead. No need to go all in depth. According to Morningstar both LGGG and SSAC underperform PRIW in the limited life of each

Focus on making more $$ to throw towards whichever fund you go with

Maybe. The one thing we do know is 0.05% is better than 0.2% and so far the performance doesn’t show otherwise

great homework, guys – extremely useful for new investors and a good update for the rest of us. my only comment is that I think the UK bias of lifestrategy funds should be highlighted in the listings.

Very helpful article – thank you.
Just wondering if there any reason you list the $ version of the Vanguard FTSE All World ETF (VWRP) and not the GBP one (VWRL) ?

As a newbee I’m wondering if i’m missing something.

VWRP is priced in GBP not USD https://www.londonstockexchange.com/stock/VWRP/vanguard/company-page “Price (GBP)”

The only difference between VWRL and VWRP is that VWRL pays out dividends. Both use USD as the base currency, and both are traded on the London Stock Exchange priced in GBP. For VWRL, dividends will be paid in USD and converted to GBP by your broker, who will charge an FX fee. If you would just reinvest the dividends anyway then VWRP is the more efficient choice.

@ The Accumulator

Thanks, replying to all these comments must be like a full time job!

@ Norman – sorry I missed your comment. Thanks for this. I’ve added it to the list.

Personally I don’t worry much about fund size unless it’s abnormally small after a year, or trading volume unless the spread is ridiculously high. Even then the spread would only matter to me if I traded often.

justETF cite a fund size of £100 million as being viable and V3AB is beyond that threshold.

https://www.justetf.com/uk/news/etf/size-matters-when-it-comes-to-etfs.html

@ The Accumulator
It’s great that you’ve changed to total costs, this makes much more sense to me now. I spent ages earlier in the year trying to work out why you were ignoring transaction costs!

Hello and thank you for this excellent resource (among many others on this site). A question about the transaction fees though. When I look at Morningstar for the FTSE All Share tracker category, under “Investment Fees (estimated)” it shows the Vanguard fund has 0.06% OCF and a 0.06% AMC, no transaction fees. Whereas the Fidelity P fund has the same OCF and AMC, but with a 0.03% transaction fee. Which is not what you report above – am I misreading something? Does your list include AMC charges?