Fund vs ETF

Pat38493

I'm not sure whether to post this on the savings/investment board or here.

I have read a lot of material about funds and ETFs over the last months and I think I understand, at least at a high level, the theoretically differences.

However I'm still not totally clear why I would choose to pick an ETF over a fund unless the charges are lower if the investments are pretty much the same.  What difference does it make to me as a DIY investor who is probably going to leave the investment in place for multiple years at a time, maybe just selling a portion to cash every so often in retirement?

For example these two Vanguard funds:

https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0001I3RZ&tab=1&InvestmentType=FE


and this one

https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000XXVV

They look like they are very similar and one is kind of the ETF equivalent of the fund.  It's not identical but it's a very similar mix by the looks of it.

Is there any other practical reason to pick one over another other than that the ETF has slightly lower charges and slightly lower 3 year trailing returns for example?

Also - what is the difference between the Vanguard ETF I quote above, and the one available on Vanguard's UK web site with almost the same name?

https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing/overview

Is it something to do with currency or is it income vs ACC?

Prism

Of those two Vanguard funds, the first is accumulation and the second income - otherwise they are both identical.

In general I am agnostic between ETFs and funds, however I do find that there are lots more passive choices with ETFs. Funds tend to be a mix of active and passive. The ETF charges can be slightly lower and the platform charges can also be lower for holding ETFs in some cases.

I currently use ETFs for emerging markets, gold and index linked global bonds. Of the three, I could get an emerging market fund (OEIC) if I wanted.

HeyYeah

Here's a good comparison: https://www.schwab.com/etfs/mutual-funds-vs-etfs

I'm currently invested in funds but intend to move to ETFs because of the lower fees.

leosayer

If the fund you want is available in both ETF and mutual fund form then the decision generally comes down to the difference in fund charges (if any) and the charges on your platform for holding, buying and selling.

dunstonh

One of the main attractions in the past was that ETFs were cheaper than OEICs/UTs.   However, as that is no longer the case, with many OEICs now being the same or cheaper as ETFs, that is not the issue it used to be.

OEICs/UTs get FSCS protection.   ETFs do not.

ETFs have a few issues to be aware of that do not apply to OEICs/UTs, which can significantly increase their risk.  So, you need to be a little more careful in your research to avoid those.

Albermarle

Some people prefer ETF's as you know exactly at what price you are buying or selling, rather than having to wait 24/36 hours. In reality though for a long term investor it will make no difference.
If you want to passively track a market, that is not the usual global stock market tracker, or similar, then there is often an ETF for that, but not an OEIC. Some though are rather exotic/not for the average investor, like these.
All ETFs (Exchange Traded Funds) | WisdomTree

kinger101

My SIPP and ISA at the moment are solely global index trackers, and I've gone the ETF route mainly for lower platform charges (i.e ETFs have annual cap).