Vanguard extend ETF range

westy22

VUSA dividends paid 26/09/14 at a conversion rate of 0.605517 (X-O ISA)

LearningToBePassive

Hargreaves Lansdown

VWRL 18.99024p per share paid today.

SnowMan

LearningToBePassive wrote: »

Hargreaves Lansdown

VWRL 18.99024p per share paid today.

Dollar dividend rate for VWRL is 0.31396 $ per share

So the conversion rate is 0.1899024/0.31396 = 0.60486

The inter-bank exchange rate is roughly 0.6156.

So HL charge estimated at 1-(0.60486/0.6156) = 1.7%

LearningToBePassive wrote: »

I'm with Hargreaves Lansdown and went back to them to clarify their "1.7%" charge. According to their website, their charges are tiered, starting at 1.7% for sums up to £9,999 and falling to 0.35% for sums over £350,000.

So that suggests HL are taking the full 1.7% for VWRL in your case :eek:
LearningToBePassive, it might be interesting if you went back to HL and asked why they appeared to have taken the full 1.7%.

bowlhead99

SnowMan wrote: »

So that suggests HL are taking the full 1.7% for VWRL in your case :eek:
LearningToBePassive, it might be interesting if you went back to HL and asked why they appeared to have taken the full 1.7%.

19p on the ~£43.3 share price when they went ex div is about one 228th of the total amount. So for the div received to be over £350k and get the best FX rate from the market maker, HL would have had to have over ~£80m of VWRL in their nominee account. And they will have separate nominee accounts for the SIPPs vs ISAs etc and likely for institutions vs retail customers.

So, as HL are not famous as an ETF platform (at the low levels they even charge a % fee for simply holding them) it is quite feasible that they simply didn't have £80m of VWRL in the nominee account that LearningToBePassive was invested through, to receive >£350k of dividends and qualify for the lowest rates. They are a pretty big platform but £80m is getting on for 0.2% of their AUM: is it expected / likely that they would have that much altogether, let alone once you you break the platform down into different product buckets with SIPP vs ISA etc?

We can speculate that they have a couple of million pounds or more of VWRL in the nominee account and so the amounts received would probably be more than the amount that qualifies for the worst rate of 1.7%, but I would be interested to hear if they will tell you that. Hopefully they will if they have previously been helpful to explain the theory of how it works.

Also one could consider that the official Vanguard timetable is for them to distribute to shareholders/ brokers on the 26th so if HL are not allocating to the accounts until Monday we don't know whether they did the FX trade on the Friday or the Monday, so grabbing one mid-market rate to calculate the implied spread may be misleading (though I accept the rate didn't move a whole lot over Friday and Monday, so it's likely you got the 1.7 or 1.5 rate rather than anything better)

Vortigern

VUSA and VJPN dividends paid 26/09/14 at a conversion rate of 0.605427 (X-O unwrapped, not ISA or SIPP)

bowlhead99

Vortigern wrote: »

VUSA and VJPN dividends paid 26/09/14 at a conversion rate of 0.605427 (X-O unwrapped, not ISA or SIPP)

So as the midmarket fx rate that day was around about 0.6127 at 9am and ended at 0.615 ish, looks like you've effectively suffered about 1.2-1.6% as an exchange loading, depending when in the day they did the translation.

Looks very marginally better than the rate Westy got on the x-o ISA account (but that could probably be the other way around next time) and slightly better than HL.

Seems like Youinvest with Westy's example have delivered best results this time - which is not surprising: they quote an FX loading of 1% when you're buying foreign stocks, but their charge to convert foreign currency dividends received is only 0.5%. I've had good rates from them before receiving foreign currency divs/ redemptions.

SnowMan

I've updated the google spreadsheet with the latest figures.

First Direct seem to be the clear leader again in their foreign currency conversion treatment.

Of course the foreign currency conversion charges shouldn't be looked at in isolation, custody charges for holding the ETFs on the platform, and buying and selling costs need to be allowed for also.

Glen_Clark

SnowMan wrote: »

I've updated the google spreadsheet with the latest figures.

First Direct seem to be the clear leader again in their foreign currency conversion treatment.

Of course the foreign currency conversion charges shouldn't be looked at in isolation, custody charges for holding the ETFs on the platform, and buying and selling costs need to be allowed for also.

Good point. X-O makes no custody or administrative charges, and only £5.95 per trade. Do First Direct make charges?

SnowMan

Glen_Clark wrote: »

Good point. X-O makes no custody or administrative charges, and only £5.95 per trade. Do First Direct make charges?

£11 for buying and selling (vs £5.95 for x-o)
No custody charge (as per x-o)

The approximate effect of the dollar dividend currency conversion charge expressed as an effective additional percentage custody charge is shown on the third sheet of the google spreadsheet.

SnowMan

Vanguard are extending their ETF range further. These ETFs now appear in their product list showing with an 'inception date' of 30th September 2014. Listed on the London Stock Exchange with sterling classes available in each case, although dividends I expect will be paid in $ for VEVE and VNRT, and euros for VERX.

VMID - FTSE 250 index: 0.1% TER
VERX - FTSE Developed Europe exc UK: 0.12% TER
VEVE - FTSE Developed (World) Index: 0.18% TER
VNRT - FTSE North America index: 0.1% TER

Information on the Vanguard news section of their website here.