Switching VEVE to VHVG in SIPP

MDMD

Looking to check something…..

I’ve got most (£275k) of my SIPP invested in VEVE through Fidelity with capped platform fees. But have to pay £1.50 a quarter to auto reinvest the distributions.

Not looking to draw down for at least 20 years, However I am looking to tidy up things and so I’m selling out of a small holding in SSON as it’s really going nowhere and looking to re invest the proceeds of £6k or so.

Considering moving them both into VHVG - as I’d have to pay fees to sell SSON and buy VHVG anyway so it’s an incremental £7.50 to sweep up the VEVE holding. I have a few queries to sense check before I do it:

• Is this just a waste of money? Could I get stung for a large buy sell spread on this?

• Or should I just invest the £6k and leave the VEVE holding where it is?

• Are these vanguard funds liquid enough or could I struggle to do the trade in one go anyway?

• Or is there another alternative to VHVG I could look at with similar pricing? I’ve got EM exposure through a separate workplace pension.

masonic

You will pay some spread, and this may be larger for a larger order. VHVG has been smaller and less liquid in the past, I don't know the current situation. You won't find out the buy spread until you've already sold. Weigh that against what you gain from the switch.

GeoffTF

You could get stung by the spread, but you will know that in advance if trade in real time. You could also get stung by a premium to NAV, and you will not know that in advance. The LSE shows at least one trade over £1 million. You may hit liquidity problems if you want to trade more than that. I have large holding of VEVE and I would not consider switching to VHVG, but I do not pay to trade.

Alexland

I hold nearly twice as much VEVE in my Fidelity SIPP and figure it's cheaper to pay the 1.50/qtr than the spread on switching.

VEVE is more liquid and I've still had problems getting a good unit price on large volumes and had to split into 100k orders but that was years ago it may be better now.

I like seeing the dividends being paid as it reminds me I am growing an income paying asset. Sure its a low % yield but when you have enough VEVE it starts feeling like the basis of a retirement income in future.

The other advantage of VEVE is each qtr there is a small cash surplus from the dividend, the leftover from buying whole units, which helps replenish the account for paying fees.

My account at Fidelity is otherwise pretty inactive (apart from a withdrawal for pension sharing) and the last time I added any money was 5 years ago. I'm trying to build up my workplace pension to a similar size which is an uphill struggle while markets are rising. I really need a prolonged crash or another divorce to make it happen. It gave me a new understanding of how a poor emotional decision damaged my investments.

gravel_2

Ignorant question - how are you all assessing liquidity of these two ETFs? Both funds seem to have similar sizes - is it just a behavioural thing that leads to one being more liquid on the exchange than the other or is there more to it? Any metrics to view/understand this?

Alexland

gravel_2 said:

Ignorant question - how are you all assessing liquidity of these two ETFs? Both funds seem to have similar sizes - is it just a behavioural thing that leads to one being more liquid on the exchange than the other or is there more to it? Any metrics to view/understand this?

VHVG was only launched in 2019 so would have been very small and illiquid when I chose VEVE which was launched in 2014 but yes it looks like VHVG is almost as big as VEVE and so now the Bid/Offer spread seems similar. At time of writing this the spread on VEVE is 4p and the spread on VHVG is 6p with both having a share price just over £80. That's now close enough it may reverse during the day and not matter for a new investment but for an existing £275k investment it's still going to cost a couple of hundred quid to switch unless you get lucky and do it while markets are going down.

https://www.londonstockexchange.com/stock/VEVE/vanguard/company-page

https://www.londonstockexchange.com/stock/VHVG/vanguard/company-page

coastline

Could use SWDA which is an accumulator . Decent sized fund and a reasonable spread.

iShares Core MSCI World UCITS ETF USD (Acc) | SWDA | IE00B4L5Y983 (justetf.com)

iShares III plc Share Price (SWDA) Core MSCI World UCITS ETF USD Acc (GBP) | SWDA (hl.co.uk)

World trackers..

Chart Tool | Trustnet

Alexland

coastline said:

Could use SWDA which is an accumulator . Decent sized fund and a reasonable spread.

SWDA is very liquid but tracks the MSCI World versus VEVE/VHVG which tracks the FTSE Developed World. This causes SWDA to have a slightly higher % allocation to the US which is probably why it has performed so well recently despite the higher ongoing charges.

I prefer holding VEVE and paying the £1.50 four times a year. Fidelity are still a bargain at a total of £96 pa. The wealth manager was very helpful in getting my pension sharing order reviewed and implemented. They gave me enough transfer cashback to last a decade or more. I've made hundreds of thousands on their platform. The free child ISA and SIPPs are also great. The protected pension access age of 55 on all 3 SIPPs was the icing on the cake. I can't begrudge them £6 pa for divi reinvestment they are welcome to it - it's the virtual equivalent of buying them a pint.

EthicsGradient

How do Fidelity handle the VEVE distributions being in dollars, but the reinvestment being in pounds? Do you lose anything there, or do they apply a fair market exchange rate with no added charge?

Alexland

EthicsGradient said:

How do Fidelity handle the VEVE distributions being in dollars, but the reinvestment being in pounds? Do you lose anything there, or do they apply a fair market exchange rate with no added charge?

I asked about this once and they sent me a secure message saying they were able to get it paid in GBP so no FX fees were applied.

GeoffTF

gravel_2 said:

Ignorant question - how are you all assessing liquidity of these two ETFs? Both funds seem to have similar sizes - is it just a behavioural thing that leads to one being more liquid on the exchange than the other or is there more to it? Any metrics to view/understand this?

Look at the past trades on the London Stock Exchange website.