Why would anyone buy a fund in USD rather than GBP?

[Deleted User]

Looking to buy a simple ETF fund.

Offered in GBP, EUR also USD

Slightly confused why would anyone buy in USD or EUR? Would that not just incur currency exchange fees by the platform (eg Hargreaves Lansdown)? And also, they are all listed on the FTSE, how can a foreign currency asset be listed on the British stock market? Your opinion?

System

UK retail consumers would buy the GBP version, but London is one of the largest capital markets in the world and serves investors throughout the world who might want to buy in US Dollars or Euros. The ETF are listed on the London Stock Exchange, but that does not mean that they are included in the FTSE, and the FTSE100 includes many foreign firms and multinationals. You seems to have a very insular view of the world.

tin586

Yes it would incur currency exchange fees.
And it’s really for institutional investors.


Hopefully, this from Investors Chronicle summarises it:

“...if you are buying an S&P 500 ETF, the underlying assets you are investing in will be valued in dollars, even if you buy a share class denominated in sterling. Whether you buy iShares Core S&P 500 UCITS ETF USD (CSPX) or iShares Core S&P 500 UCITS ETF GBP (CSP1) will not make any difference to your total return.

— Different currency share classes were designed for institutional investors and are not a way for private investors to take currency views —

However, it could make a big difference to your trading cost due to the commission your broker will likely charge you to convert your dollar share class returns back to sterling. For this reason, it is always best to buy the sterling share class of an ETF as a UK retail investor. Broker charges vary, but tend to cost between 1 and 1.5 per cent of a deal transaction added on to any other dealing charge.”


Disclosure: I hold CSP1 on HL.