OEIC or ETF for S&P500?

Linton

Wont going for a hedged US fund mean you are paying higher charges in order to reduce your diversification? Seems totally counter productive. And if you were to be a market timer now seems an odd time to hedge your overseas investments.

aroominyork

I discussed hedging on this thread. When Sterling is weak it seems a good rather than bad time to hedge and the extra 0.13% charge does not concern me. Right now I see hedging as reducing currency gamble, not adding to it.

Simon.Edmunds

Neither. Funds are unwieldy and pricey and ETFs are cheap for a reason.

Buy investment trusts. Would recommend SMT and ATT if you want to track the US markets.

coyrls

Economic wrote: »

Full replication should more accurately track the index as it includes all the shares, but sampling should be reasonably accurate. Another consideration is does the ETF engage in stock lending, and is this a concern to you. Also, why do you want a hedged ETF?

The point was not about sampling replication it was about synthetic replication, which is different from sampling.

System

aroominyork wrote: »

Thanks. Next question... in physically replicated ETFs, should I be concerned whether it is full replication or optimised sampling? I am veering towards a hedged S&P ETF and am comparing IGUS and XDPG.

coyrls wrote: »

The point was not about sampling replication it was about synthetic replication, which is different from sampling.

The question was about sampling. Learn to read!

aroominyork

coyrls wrote: »

The point was not about sampling replication it was about synthetic replication, which is different from sampling.

Dunston preferred physical over synthetic replication. IGUS and XDPG are both physical, but the former is optimised sampling and the latter full replication.

masonic

Simon.Edmunds wrote: »

Neither. Funds are unwieldy and pricey and ETFs are cheap for a reason.

Buy investment trusts. Would recommend SMT and ATT if you want to track the US markets.

SMT is a global trust having less than 50% exposure to the US
ATT is more US-centric, but is a single sector (technology) fund

Neither will "track" the US markets.

masonic

aroominyork wrote: »

Dunston preferred physical over synthetic replication. IGUS and XPDG are both physical, but the former is optimised sampling and the latter full replication.

Full replication leads to lower tracking error, but can be more costly. Tracking error can either work in your favour or against you (like currency hedging) depending on what is included and what is not.

aroominyork

masonic wrote: »

Full replication leads to lower tracking error, but can be more costly. Tracking error can either work in your favour or against you (like currency hedging) depending on what is included and what is not.

Why would an S&P ETF not fully replicate? This article makes me ask.

masonic

aroominyork wrote: »

Why would an S&P ETF not fully replicate? This article makes me ask.

It does seem strange for an S&P500 tracker not to fully replicate. With only 500 companies to buy, it isn't particularly costly or challenging to buy them all.

It was IGUS you suggested was not fully replicating the index wasn't it? This page suggests IGUS does fully replicate (scroll down to 'Key Facts', Methodology: Replicated).