Which ETF tracks a global index in GBP terms?

chris98765432

I am familiar with VWRL, HMWO, SWDA.  We can buy them in pounds but they all track global benchmarks in USD.
If I want an ETF that tracks a global index in GBP terms, does one exist?  Something that tracks MSCI World, or MSCI ACWI, or the FTSE All World, in GBP.
Thanks.

pip895

iShares III plc (IWDG) Core MSCI World is hedged to £

chris98765432

Thanks, but I don’t think I am looking for a hedged ETF.  I am looking for an unhedged ETF that tracks a global index in GBP.  

MSCI world index was up 29% in GBP terms in 2016. Which ETF would have tracked that?

republic_of_china

chris98765432 said:

Thanks, but I don’t think I am looking for a hedged ETF.  I am looking for an unhedged ETF that tracks a global index in GBP.  

MSCI world index was up 29% in GBP terms in 2016. Which ETF would have tracked that?

VWRL, HMWO, SWDA.

They all track unhedged indexes.

That implies that if you look at the index in dollars and the ETF price in dollars, then the ETF matches the index.

And if you look at the index in pounds and the ETF price in pounds, the ETF still matches the index.

And the same goes for any other currency.

bowlhead99

chris98765432 said:

Thanks, but I don’t think I am looking for a hedged ETF.  I am looking for an unhedged ETF that tracks a global index in GBP.  

MSCI world index was up 29% in GBP terms in 2016. Which ETF would have tracked that?

The MSCI world index in a given year would have been up x% in GBP terms, y% in USD terms and z% in EUR terms.

If a dollar starts the year being worth 60p and ends the year bring worth 80p, a global index of stocks like Apple and Microsoft and HSBC and Shell might have gone up from being worth $50 trilion to $55 trillion (10%) but the exact same set of stocks have gone from being worth £30 trillion to £44 trillion (47%).

In that scenario if you buy a global index fund that publishes its price in dollars it will say it has gone up by 10%, while if you buy one that publishes its price in pounds it will say it has gone up by 47% and if you buy one that d publishes its price in euro it will say it has gone up by some other percentage. But all have gone up by 10% in dollars and all have gone up by 47% in pounds, because that's what's happened to the underlying assets, no matter what currency they use to keep score.

As long as the fund is not deliberately trying to hedge away the currency differences, you will get the same return whichever one you use. 

From a practical point of view it is generally better to buy a fund product that is traded in pounds because it saves your stockbroker or platform operator needing to exchange your pounds for some foreign currency to buy the investment product - which is something he will likely charge a fee for (explicitly or by building it into the exchange rate you get when buying or selling).

But once your money is inside the fund product, the fund operator will use his buying power to cheaply change it into whatever currencies he needs to buy the underlying investment portfolio (USD to buy Microsoft and Euros for Heineken and pounds for Lloyds and Francs for Nestle and Yen for Nintendo and HK dollars for Tencent etc etc.) The published price of the product in a particular currency is just a way of keeping score, but doesn't change the annual return you actually make in pounds. The amount of pounds you make is entirely determined by how many pounds the shares of Microsoft and Heineken and Nintendo and Lloyds etc are worth at the end of the year when their quoted prices are all converted to pounds.

chris98765432

Thanks for the useful answers so far, I am still trying to get my head around this....

Take SWDA (or VWRL).  Its listed in GBP. It’s Key Investor Information sheet says the fund was up 8% in 2016.  So if I had invested £100 in SWDA on 1 Jan 2016, would that investment  be worth £108 at the end of that year?  Or would it actually be worth £129?

Is that 8% figure shown on the KII a figure in USD, but the actual return for anyone who bought it was 29%?  

republic_of_china

chris98765432 said:

Take SWDA (or VWRL).  Its listed in GBP. It’s Key Investor Information sheet says the fund was up 8% in 2016.  So if I had invested £100 in SWDA on 1 Jan 2016, would that investment  be worth £108 at the end of that year?  Or would it actually be worth £129?

Is that 8% figure shown on the KII a figure in USD, but the actual return for anyone who bought it was 29%?  

8% is the return measured in USD, 29% is the return measured in GBP.

Start and end prices in GBP:

bigcharts.marketwatch.com/historical/default.asp?symb=UK%3ASWDA&closeDate=12%2F31%2F15

bigcharts.marketwatch.com/historical/default.asp?symb=UK%3ASWDA&closeDate=12%2F30%2F16

And those "links" say it went from 2783.5p to 3607p, a rise of c. 29%.

The KIID is telling you the return measured in USD.

chris98765432

Thanks for clarifying.
Thats a very confusing way for these ETFs to report performance!  If they are all only available in GBP, to me it doesn’t make much sense to report the performance in a different currency.  

republic_of_china

Many of these ETFs are available in multiple currencies. The tickers you've quoted are traded in GBP (and, as mentioned earlier, that will be the most efficient for you to buy, since you presumably have GBP to invest), but for instance SWDA can also be bought in USD, under a different ticket, IWDA.

Start and end prices for IWDA, in USD:

bigcharts.marketwatch.com/historical/default.asp?symb=UK%3AIWDA&closeDate=12%2F31%2F15

bigcharts.marketwatch.com/historical/default.asp?symb=UK%3AIWDA&closeDate=12%2F30%2F16

Which does show a rise of c. 8%.

It's still a bit confusing, though