Which and why: Vanguard S&P ETF vs OEIC

hoc

I have narrowed down to following 2 products to be my SIPP's main tracker. Which of these would you choose and why for a long term (10-15 year) investment?

Vanguard Funds Vanguard S&P 500 UCITS ETF (VUSA)

Vanguard US Equity Index Acc

The OEIC fund has a slightly higher admin fee (0.10% vs 0.7%) but tracks slightly greater in SPTMI (vs S&P 500 of the ETF).

Thank you

george4064

Personally I would go for the ETF, just remember that the ETF may not have a platform admin charge whereas a fund might, so need to factor that into the total cost (TER).

MoneyGeoff

Check your platform charges. For me the fund would be 0.45% so I'd go for the ETF.

masonic

Another factor is how much you plan to invest and whether you plan to make regular contributions. The ETF will carry trading charges (typically £5-10), whereas funds can be bought and sold at no cost on several platforms, making buying small quantities of ETF relatively expensive.

bigfreddiel

hoc wrote: »

I have narrowed down to following 2 products to be my SIPP's main tracker. Which of these would you choose and why for a long term (10-15 year) investment?

Vanguard Funds Vanguard S&P 500 UCITS ETF (VUSA)

Vanguard US Equity Index Acc

The OEIC fund has a slightly higher admin fee (0.10% vs 0.7%) but tracks slightly greater in SPTMI (vs S&P 500 of the ETF).

Thank you

You should check the currency these funds are traded in, I think it may be USD, in which case you expose yourself to an exchange rate risk and all that entails, may even have tax implications.

Even if you have a choice of which currency the funds trade in there will always be a exchange rate risk

Cheers fj

hoc

Both products are in GBP. I am with Halifax, here are the details from their site listing details:

https://www.halifaxmarketwatch.co.uk/security.cgi?csi=2701271

https://www.halifaxfundscentre.co.uk/index.php?section=sheet&idShareclass=F000003YD7

As you may notice the ETF can also be purchased using "Sharebuilder" (£2 deals), the fund is only available at the regular £12.50 per deal. I will make 2-3 contributions a year, so a £20-30 a year difference.

Vanguard has 0.7% AMC on the ETF and 0.10% on the fund, Halifax doesn't charge fund custody fees so the OCF remains 0.10%. So, the fund is an additional 0.3% in annual fees, potentially more if I move away to platform that charges for funds.

The main appeal of the fund is the broader coverage in SPTMI whereas the ETF is only the S&P 50. I don't know if that is worth the additional fees.

Also, as part of my learning I had read the monevator guide here (http://monevator.com/etfs-vs-index-funds-differences/) which suggested OEIC over ETF where possible due to better foundation.

For those suggesting ETF, can you please provide reasons along with this choice? Is it purely admin fee optimisation?

Thank you

Vortigern

Note that VUSA pays a quarterly dividend which you may wish to re-invest or withdraw. If I'm not mistaken, the divi is declared in dollars and converted to sterling before payment. See the thread below (post #94 onwards)

https://forums.moneysavingexpert.com/discussion/4613539

The OEIC accumulates the dividends.

See also Vanguard Funds to Vanguard ETFs

Glen_Clark

Vortigern wrote: »

Note that VUSA pays a quarterly dividend which you may wish to re-invest or withdraw. If I'm not mistaken, the divi is declared in dollars and converted to sterling before payment. See the thread below (post #94 onwards)

https://forums.moneysavingexpert.com/discussion/4613539

The OEIC accumulates the dividends.

See also Vanguard Funds to Vanguard ETFs

Good point. The broker will charge a commission to convert your dollar dividends to sterling, then another to re invest in more units. You can do all this cheaper with an accumulator S&P 500 ETF like this one (run by Black Rock the worlds biggest fund manager) http://funds.ft.com/uk/Tearsheet/Summary?s=CSP1:LSE:GBX

First_Time_Saver

hoc wrote: »

As you may notice the ETF can also be purchased using "Sharebuilder" (£2 deals), the fund is only available at the regular £12.50 per deal. I will make 2-3 contributions a year, so a £20-30 a year difference.

Hello. This fund appears to set up on the Halifax £2 Sharebuilder regular investment deals successfully.

Can you tell me where you saw the restriction that this fund is only available on the regular £12.50 deals?

Many thanks.