Vanguard FTSE Global All Cap Index versus VWRP

Aidanmc

GeoffTF said:

alanyau88 said:

There won't be much difference in the funds although the key is to have the lowest OCF, is accumulating, make sure it doesn't have any hidden charges, and the currency exchange fees and spreads of your platform if applicable.

Accumulating funds are not a good idea outside a tax shelter. The tax treatment is less favourable, and the accounting is more complicated.

Just wondering, in what way is tax treatment less favourable and accounting more complicated?

[Deleted User]

I have my funds with Iweb and put my ISA allowance in Vanguard Ftse Global All Cap Index.

GeoffTF

Aidanmc said:

GeoffTF said:

alanyau88 said:

There won't be much difference in the funds although the key is to have the lowest OCF, is accumulating, make sure it doesn't have any hidden charges, and the currency exchange fees and spreads of your platform if applicable.

Accumulating funds are not a good idea outside a tax shelter. The tax treatment is less favourable, and the accounting is more complicated.

Just wondering, in what way is tax treatment less favourable and accounting more complicated?

I full and clear answer would be complicated. Here is a quick answer. If you already have a capital gain on your holding and you add a dividend to that and then sell enough shares to recover the dividend, you will have a capital gain on the proceeds and pay CGT on it. You can best understand that by working out the numbers for an example. The problem is that the dividend joins the same Section 104 pool as the rest of your holding. As far as accounting is concerned, you have to pay tax on the dividends, and add all the dividends that were reinvested within the fund to your capital gains tax base cost. N.B. My comment was for OEICs and Unit Trusts. ETFs are a different matter.

Aidanmc

GeoffTF said:

Aidanmc said:

GeoffTF said:

alanyau88 said:

There won't be much difference in the funds although the key is to have the lowest OCF, is accumulating, make sure it doesn't have any hidden charges, and the currency exchange fees and spreads of your platform if applicable.

Accumulating funds are not a good idea outside a tax shelter. The tax treatment is less favourable, and the accounting is more complicated.

Just wondering, in what way is tax treatment less favourable and accounting more complicated?

I full and clear answer would be complicated. Here is a quick answer. If you already have a capital gain on your holding and you add a dividend to that and then sell enough shares to recover the dividend, you will have a capital gain on the proceeds and pay CGT on it. You can best understand that by working out the numbers for an example. The problem is that the dividend joins the same Section 104 pool as the rest of your holding. As far as accounting is concerned, you have to pay tax on the dividends, and add all the dividends that were reinvested within the fund to your capital gains tax base cost. N.B. My comment was for OEICs and Unit Trusts. ETFs are a different matter.

Lets see if i understand this correctly.

In a distribution fund, the dividend income through the year is declared as income. If the dividends are then reinvested this is added to the base cost.

With an accumulation fund the ERI is declared as income and can also be added to base cost.

So with the distribution fund you will be decreasing the cgt by increasing the base cost ?

GeoffTF

Aidanmc said:

GeoffTF said:

Aidanmc said:

GeoffTF said:

alanyau88 said:

There won't be much difference in the funds although the key is to have the lowest OCF, is accumulating, make sure it doesn't have any hidden charges, and the currency exchange fees and spreads of your platform if applicable.

Accumulating funds are not a good idea outside a tax shelter. The tax treatment is less favourable, and the accounting is more complicated.

Just wondering, in what way is tax treatment less favourable and accounting more complicated?

I full and clear answer would be complicated. Here is a quick answer. If you already have a capital gain on your holding and you add a dividend to that and then sell enough shares to recover the dividend, you will have a capital gain on the proceeds and pay CGT on it. You can best understand that by working out the numbers for an example. The problem is that the dividend joins the same Section 104 pool as the rest of your holding. As far as accounting is concerned, you have to pay tax on the dividends, and add all the dividends that were reinvested within the fund to your capital gains tax base cost. N.B. My comment was for OEICs and Unit Trusts. ETFs are a different matter.

Lets see if i understand this correctly.

In a distribution fund, the dividend income through the year is declared as income. If the dividends are then reinvested this is added to the base cost.

With an accumulation fund the ERI is declared as income and can also be added to base cost.

So with the distribution fund you will be decreasing the cgt by increasing the base cost ?

No, you do not understand. This is complicated. I do not have time to explain it all right now.

ericlered7

GeoffTF said:

ericlered7 said:

GeoffTF said:

ericlered7 said:

Hi all.
I currently have a Vanguard S&S ISA made up of VLS100 only.

Considering transferring this to IWEB.

At some point I'd like to move the holding from VLS100 to a Global Tracker. 

If I switch funds within my VG ISA first, will it make any difference when I transfer to IWEB if I convert to the ETF or Fund being compared in this thread? 

And going forwards, if I then want to then switch the holding in IWEB to HSBC FTSE ALL WORLD (MDAABG) would it be better if I was invested in the ETF or Fund?

Hope that makes some sense!

Those funds are all similar. Nobody knows which fund will do best, but it is not likely to make much difference. You could lose money whenever you switch, because of swing pricing with the OEICs and the spread and premium/discount of the ETF. It is probably best to do nothing.

Hi Geoff, thanks for your comment. I am a bit worried about losing money when I switch from VLS100, is there anyway mitigate this problem you know of? Apart from sticking with the UK bias! Cheers

You have not said how much money we are talking about, but for large holdings where the transaction costs are negligible as a percentage, you can switch in stages. The UK market has done badly over the last ten years, but it did well previously. It is now cheap and may do well over the next ten years, particularly as you do not pay withholding tax on UK dividends. It probably is not a good time to be dumping a UK bias.

Interesting take on the UK bias of VLS100 thanks. 

Putting that aside if I did want to move say £10k of it to VG Global All Cap from VLS100, can I offset time out of the market by placing the exact opposite buy & sell orders in a VG general account? 

GeoffTF

ericlered7 said:

GeoffTF said:

ericlered7 said:

GeoffTF said:

ericlered7 said:

Hi all.
I currently have a Vanguard S&S ISA made up of VLS100 only.

Considering transferring this to IWEB.

At some point I'd like to move the holding from VLS100 to a Global Tracker. 

If I switch funds within my VG ISA first, will it make any difference when I transfer to IWEB if I convert to the ETF or Fund being compared in this thread? 

And going forwards, if I then want to then switch the holding in IWEB to HSBC FTSE ALL WORLD (MDAABG) would it be better if I was invested in the ETF or Fund?

Hope that makes some sense!

Those funds are all similar. Nobody knows which fund will do best, but it is not likely to make much difference. You could lose money whenever you switch, because of swing pricing with the OEICs and the spread and premium/discount of the ETF. It is probably best to do nothing.

Hi Geoff, thanks for your comment. I am a bit worried about losing money when I switch from VLS100, is there anyway mitigate this problem you know of? Apart from sticking with the UK bias! Cheers

You have not said how much money we are talking about, but for large holdings where the transaction costs are negligible as a percentage, you can switch in stages. The UK market has done badly over the last ten years, but it did well previously. It is now cheap and may do well over the next ten years, particularly as you do not pay withholding tax on UK dividends. It probably is not a good time to be dumping a UK bias.

Interesting take on the UK bias of VLS100 thanks. 

Putting that aside if I did want to move say £10k of it to VG Global All Cap from VLS100, can I offset time out of the market by placing the exact opposite buy & sell orders in a VG general account?

Yes, that is what I do when I bed and ISA. Since I am buying and selling the same single priced OEIC, the buy and sell both occur at the same price. If they were different OEICs, the price of the OEIC that I am selling could swing down from the NAV (if there an excess of unit redemptions), the price of the OEIC that I am buying could swing up from the NAV (if there is an excess of unit creations). The price swings pay the fund's cost of creating and redeeming units.