Trading US ETFs in a SIPP

[Deleted User]

Finally succeeded in opening Jarvis SIPP with an account provided by X-O.co.uk

Noticed they allow you to buy US traded USD ETFs, such as VTI (which they seem to give access to under symbol VTI.XXX). Can these be traded in a cost efficient manner? NYSE gives a lot more options and they are a bit cheaper... I am just not sure if GBP can be efficiently exchanged for USD within a SIPP account. 

[Deleted User]

I trade US stocks within a SIPP at spot rate.

[Deleted User]

ZingPowZing said:

I trade US stocks within a SIPP at spot rate.

And no fee? That’s good. How about when you need to sell, do they deposit pounds in your account at spot rate? 

[Deleted User]

They do.

[Deleted User]

Wow. That’s better than Canadian brokerages. Also weird - there has to be some cost to exchange. 

bowlhead99

@ZingPowZing , you mentioned on one of your threads that you were using Rowan Dartington as your broker and they were charging you 0.5% commission on your trades. Are you using them for your Sipp brokerage too? If so, I guess if you're paying for a minimum annual level of transactions and they're taking £50-100 on a £10-20k trade, perhaps they can afford to convert your GBP without any loading to the rate they get in the hope that you keep giving them the business.

Still, 0% load on both the bid and offer currency transaction would be outstanding for execution-only trading. When you say 'spot rate' you mean literally within a few pips of the mid-market rate, or are they buying the currency from a bank or currency brokerage that loads the rate accordingly for deal sizes less than a few million?

If it's someone other than RD offering the trades at spot rate, please share as FX costs are a bit of a gripe with a lot of brokers or platforms. I use AJ Bell's Youinvest for my SIPP, and the FX loading to the spot rate can cost half a percent to a percent depending on deal size (reducing below that for large trades), so the currency exchange can cost you a percent or more for the round trip of a purchase and a later sale, unless you're doing over about £60k per trade. 

For those of us paying typical levels of FX commissions on most SIPP platforms it can be more efficient to buy UK listed funds or ETFs which have GBP share classes but the same underlying index assets, rather than dollar-denominated ETFs; then the FX translation is wholly within the fund product and would be much less than a percent for a round trip due to economies of scale.

EdSwippet

Deleted_User said:

Noticed they allow you to buy US traded USD ETFs, such as VTI (which they seem to give access to under symbol VTI.XXX). 

Not restricted by PRIIPs?

[Deleted User]

EdSwippet said:

Deleted_User said:

Noticed they allow you to buy US traded USD ETFs, such as VTI (which they seem to give access to under symbol VTI.XXX). 

Not restricted by PRIIPs?

I will contact the broker to understand their rules and withholding tax position. P.S. PRIIPs is dumb. 

[Deleted User]

To quote:
"When we deal in US stocks, the trade is conducted in USD and we immediately do currency exchange in order to settle in sterling. We have banking arrangements with Lloyds to deal with our foreign exchange and the exchange rate we get is what you get. We are supposed to charge a commission for the foreign exchange, but for you, I do not charge. To give you an idea, when we deal in USD the spread between the buy and sell price is around $0.002."

OTOH my stockbroker, Rowan Dartington, charges 0,5% commission on buying and selling, including my SIPP, so it's swings and roundabouts really.