Confused beginner on Vanguard

[Deleted User]

Hi. I'm new here, and new to investing. I have recently opened a stocks and shares ISA with Vanguard and bought my first investments. What's confusing me is I paid £100 for a piece of the S&P 500. But it's showing as worth £54, having fallen a mere 0.33% since I bought in. According to my maths, if I paid £100 and lost 0.33% it should be worth £99.77. But here's the bit that confuses more. To make this purchase, I added £105 cash, with £100 for the purchase, and £5 to cover fees. About half that money is still showing as available. I didn't mistakenly only spend £50 on the purchase, because 1. Its a minimum order of £100 and 2. The transaction shows an 'estimated value' of £100.

Clearly I'm missing something. I just can't figure it out. 

eskbanker

What does the contract note for the purchase say?

underground99

Presumably what you decided to buy was their S&P500 exchange traded fund.
https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-distributing/overview?intcmpgn=equityusa_sp500ucitsetf_fund_link

Unlike their open ended funds, the ETFs are bought and sold on the stock exchange and so can only be bought and sold in whole number of units. One share costs about £54-55. So if you said you only wanted to spend £100 on that ETF, they would only be able to buy you  one share for £54-55 and there wouldn't be enough money left in the £100 to buy a second share. So you'd just get one, and have £45-46 left over.

Your portfolio summary is telling you that you own one share valued at about £54-55 which is worth 0.33% less than you paid for it. But you will also have some leftover cash.

Alexland

If it was this ETF a single unit is worth £54.70 and Vanguard Investor doesn't do fractional share units so you will find over £40 of your proposed £100 investment is probably still in the account cash balance uninvested.

https://www.vanguardinvestor.co.uk/investments/vanguard-s-and-p-500-ucits-etf-usd-distributing?intcmpgn=equityusa_sp500ucitsetf_fund_link

[Deleted User]

eskbanker said:

What does the contract note for the purchase say?

Hi. Sorry if this isn't the bit you mean, I'm still finding my way around.
Order type: AtBest
Status : completed
Estimated value: £100
Actual contract cost (3 headings under there) all say £54

Alexland

See above (bh)99 beat me to it by a few seconds

underground99

Beardybaldy said:

eskbanker said:

What does the contract note for the purchase say?

Hi. Sorry if this isn't the bit you mean, I'm still finding my way around.
Order type: AtBest
Status : completed
Estimated value: £100
Actual contract cost (3 headings under there) all say £54

Yes, so you placed an order for £100 which was the 'estimated transaction value' before the price is finalised and they can tell you how many shares you got. Your £100 could only buy one, because they cost ~£54 each. So the final actual contract cost is ~£54 and the rest of the cash gets returned to you and is available for future purchases.

If you'd placed the order for say, £6000, that would show as the estimated transaction value until they finalise it and buy you 109 shares at £54.70 each, with less than £40 unspent.  If you'd ordered £110-worth you'd have got two shares with very little left over.

[Deleted User]

Wow, what an awesome bunch you are. I only asked the question about half an hour ago and already you've answered it. Many thanks, I understand now. I think.

So I've also put £100 on their lifestrategy fund. That one is still pending. Will that be the same when it goes through? 

underground99

Beardybaldy said:

Wow, what an awesome bunch you are. I only asked the question about half an hour ago and already you've answered it. Many thanks, I understand now. I think.

So I've also put £100 on their lifestrategy fund. That one is still pending. Will that be the same when it goes through? 

No, only the 'ETFs' have to be bought and sold as whole units because that's how they trade on the London stock exchange. For Lifestrategy funds they will simply issue you fractional shares to several decimal places and pretty much use up all of the money you intended to spend.

eskbanker

I appreciate you're just getting your feet wet and playing with small amounts, but you do realise that a chunk of a LifeStrategy holding will be the S&P 500?  Nothing inherently wrong with overlaps but once you progress to more substantial investing you'll find it better to plan your portfolio more carefully....

dunstonh

Beardybaldy said:

Wow, what an awesome bunch you are. I only asked the question about half an hour ago and already you've answered it. Many thanks, I understand now. I think.

So I've also put £100 on their lifestrategy fund. That one is still pending. Will that be the same when it goes through? 

The VLS range is an OEIC.  Fractions are not a problem.   ETFs are a more sophisticated/advanced option.   Generally, you wouldn't hold an ETF in isolation but a range of ETFs with weightings appropriate for your chosen investment model (global ETFs excluded).
If you want to build your own portfolio then using a whole of market platform would be better.  However, there really isn't any point building a portfolio until you get closer to 6 digits.  Until then you should stick with multi-asset funds.