AJ Bell S&P 500 iShares Fund

bfgun

I want to open a SIPP to solely invest in the S&P500, and I am looking to do so via AJ Bell.

I contacted AJ Bell to establish the correct code for the iShares S&P but the code they gave me related to an EUR product which, as I am in the UK, I think is incorrect.

Furthermore, I searched the available funds and found this one:

iShares S&P 500 GBP Hedged UCITS ETF (Acc)
Is this the correct fund for the S&P 500, I'm not sure what "Hedged" relates to, but I want a product that reinvests the dividends.

Also, the charges applied for this product is 0.2% per annum. Is this competitive compared to other providers of this product?

Thanks for your help.

dunstonh

I want to open a SIPP to solely invest in the S&P500, and I am looking to do so via AJ Bell.

Thats brave and unusual.  Hopefully you will have other regions/countries in other places.

I contacted AJ Bell to establish the correct code for the iShares S&P but the code they gave me related to an EUR product which, as I am in the UK, I think is incorrect.

No.  You can invest in the main share class as well as the sub share classes.

Is this the correct fund for the S&P 500, I'm not sure what "Hedged" relates to, but I want a product that reinvests the dividends.

Its what you use when the pound is very low against the dollar and rising but not when it is falling.    Or if you want pure US performance and not performance affected by currency fluctuation.  UK investors don't get S&P500 performance in the same way as US investors unless you currency hedge.

Also, the charges applied for this product is 0.2% per annum. Is this competitive compared to other providers of this product?

Can I ask you, do you really know what you are doing?   100% into S&P500 is not good investing.   Its the sort of thing an inexperienced investor looking at short-medium term past performance would do (we have seen that on here before).   They wouldn't realise that the last cycle saw the US as best in part because it was so bloody awful the cycle before and frequently, it alternates between Global and US in cycles.  So, investing 100% in an area on the basis of past performance is usually a recipe for poor returns.

bfgun

Hi dunstonh,

Thanks for your reply.

I looked at the S&P 500 over the last 10 years, and it appeared to have very good returns, except for 2015 and 2018.

I know that past performance cannot be guaranteed, and I would have to review my investment as time progresses, but I do have other pensions which are more balanced, and as I am risk tolerant, I considered this fund for the next 10 years.

I didn't consider the currency effect, in fact, it is difficult to gauge where anything is going these days.

UrbanAchiever

dunstonh said:

I want to open a SIPP to solely invest in the S&P500, and I am looking to do so via AJ Bell.

Thats brave and unusual.  Hopefully you will have other regions/countries in other places.

I contacted AJ Bell to establish the correct code for the iShares S&P but the code they gave me related to an EUR product which, as I am in the UK, I think is incorrect.

No.  You can invest in the main share class as well as the sub share classes.

Is this the correct fund for the S&P 500, I'm not sure what "Hedged" relates to, but I want a product that reinvests the dividends.

Its what you use when the pound is very low against the dollar and rising but not when it is falling.    Or if you want pure US performance and not performance affected by currency fluctuation.  UK investors don't get S&P500 performance in the same way as US investors unless you currency hedge.

Also, the charges applied for this product is 0.2% per annum. Is this competitive compared to other providers of this product?

Can I ask you, do you really know what you are doing?   100% into S&P500 is not good investing.   Its the sort of thing an inexperienced investor looking at short-medium term past performance would do (we have seen that on here before).   They wouldn't realise that the last cycle saw the US as best in part because it was so bloody awful the cycle before and frequently, it alternates between Global and US in cycles.  So, investing 100% in an area on the basis of past performance is usually a recipe for poor returns.

I'm genuinely interested in your comments.   

I have read that Warren Buffett has told his wife that  when he dies to put her wealth into an S&P500 index fund (albeit Charlie Munger disagrees and believes returns from Berkshire Hathaway will outperform the S&P500).  I wonder why he wouldn't suggest a more globally diverse index fund?

Also, I looked at the performance of the S&P500 since 1983 and it has increased in value by 2587% which appears very strong.  I've tried to compare this to a global index fund over a similar period but I cannot find anything that goes back that far.  Is there a global index fund you're aware of that I can compare over this kind of period?

Also, which years did the US stock market suffer terribly compared to other countries/global markets?  When I compare the S&P500 to say the FTSE100 (which does go back as far as 1983) their performances are broadly in line until the mid 90s, when the S&P500 starts to accelerate and leaves the FTSE100 for dead, no doubt driven by technology stocks.  As I said, I'm genuinely interested and am looking to learn more about this.

Thanks.

FIREDreamer

VUSA is the income ETF from Vanguard.

IUSA is the income ETF from iShares.

Dividend on S&P500 is quite low (under 1.5%) and accumulated dividends can be used to pay platform charges.

i prefer Global so you could use VWRL or IWRD / IDWR for those.

bfgun

FIREDreamer said:

VUSA is the income ETF from Vanguard.

IUSA is the income ETF from iShares.

Dividend on S&P500 is quite low (under 1.5%) and accumulated dividends can be used to pay platform charges.

i prefer Global so you could use VWRL or IWRD / IDWR for those.

Thank you.

You mention Income ETF, is this the same as ACC? 

JohnWinder

I’d say you’re on the right track. Northern Petroleum, your choice in 2014 became Cabot Energy which is now worth £1m (in total, not per share); INRG clean energy fund lured people with recency bias in 2021 after a big run up, only to fall away again; and now SP500. It’s not a bad index, in its place for the right people, but better diversification is easy to get. Strongly advise reading Tim Hale’s book Smarter Investing to help complete the journey quickly.

JohnWinder

I wonder why he wouldn't suggest a more globally diverse index fund?

I doubt my speculating about Buffet will help you much, but I sense he’s very USA-centric and doesn’t trust anyone else to be as ‘get up and go’ and well regulated (!) as US businesses are. He’s the ‘sage’ etc, but he won’t be right about everything. He disowned one of his family because they joined the 1% movement.

I cannot find anything that goes back that far. ..which years did the US stock market suffer terribly compared to other countries/global markets?

You need portfoliovisualizer.com, back to 1972, to answer some of your questions. I doubt there was global index fund in 1983, but you just mentioned comparing an index with a fund; be careful, you need to compare indexes with indexes, and funds with funds (unless you want to see how a fund underperforms and index because of frictional losses).
For years during which the SP500 disappointed, you’re best to look at a ‘tell tale’ chart. They’re hard to find but you can create your own with data from portfoliovisualizer.
And….the SP500 has outperformed BH since 2009. Will Munger live long enough drinking coke to see a reversal?

gm0

For a UK investor the Warren Buffett S&P recommendation cannot be taken at face value only.  It refers to a US investor not a UK one. 

It needs the issue of the long term and structural decline of sterling to be taken into account.  And the future of GBP/USD FX rates.  Whether you believe the travails of the UK are near any kind of corner.  And whether fiat currency in general or the £ in particular is due a further beating or some level of recovery.

There is a lot of analysis and speculation around whether over the medium and long term the cost of hedging is appropriate to equity and bond investments as a general topic.  But in this instance whether to pick a hedged US equities fund or an unhedged fund is of even greater significance than in a more balanced and international global portfolio.

bfgun

gm0 said:

For a UK investor the Warren Buffett S&P recommendation cannot be taken at face value only.  It refers to a US investor not a UK one. 

It needs the issue of the long term and structural decline of sterling to be taken into account.  And the future of GBP/USD FX rates.  Whether you believe the travails of the UK are near any kind of corner.  And whether fiat currency in general or the £ in particular is due a further beating or some level of recovery.

There is a lot of analysis and speculation around whether over the medium and long term the cost of hedging is appropriate to equity and bond investments as a general topic.  But in this instance whether to pick a hedged US equities fund or an unhedged fund is of even greater significance than in a more balanced and international global portfolio.

I don’t profess to understand this, but if a UK investor invested in the S&P500 using the fund I mentioned in my opening post, the iShares S&P 500 GBP Hedged UCITS ETF (Acc), does the hedging aspect protect against currency fluctuations?

I must admit, my post is posing me more questions than answers. 

JohnWinder

 Seems one can't post a three character reply, so, yes.