Which S&P500 tracker

dont_use_vistaprint

Within ii there’s the Vanguard S&P500 UCITS ETF and the UBS S&P500 Index C 

in terms of SIPP & Trading accounts is one of these better , what do the different letters in the names mean for the purpose of investing ,  I can google the terms but pretty meaningless still when would you choose one verses the other ?

thanks

ColdIron

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

dont_use_vistaprint

ColdIron said:

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

Thanks yes I read up on the terms but tbh doesn’t really help make decisions because it doesn’t give any context or guidance on when you would choose each or why 

If you were tracking s&p500 Which would you choose and why ? 

If it was my only investment would that make a difference which one I should pick ? Or does one aim to make more money or  is is one more suitable for ‘experts’ ? 

AlanP_2

dont_use_vistaprint said:

ColdIron said:

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

Thanks yes I read up on the terms but tbh doesn’t really help make decisions because it doesn’t give any context or guidance on when you would choose each or why 

If you were tracking s&p500 Which would you choose and why ? 

If it was my only investment would that make a difference which one I should pick ? Or does one aim to make more money or  is is one more suitable for ‘experts’ ? 

They both aim to track the same index so are both aiming to make the same amount of money (give or take the respective fund charges).

I would choose the ETF version sometimes and the OEIC sometimes - It all depends on the platform charging structure and the amount being invested.

On my platform (Fidelity) the charge is 0.35% of fund value per year but there is a capped annual charge for exchange traded investments (such as an ETF) at £90, they do however charge £7.50 to trade an ETF.

I already have ETFs  and ITs to a high enough value that I am at the £90 cap therefore holding an additional S&P ETF would only cost me £7.50 (the trade fee).

If I was investing a few thousand then great, but if I was doing a £25 per month DD then paying £7.50 each time wouldn't be sensible so I would go for the OEIC version which, on Fidelity , has no trade fee but attracts the 0.35% ongoing platform fee.

In essence "it all depends" on your platform and it's charging structure, trading frequency, amounts involved etc.


The other consideration is that the ETF can be sold instantly (at market price) whilst the LSE  is open, the OEIC on the other hand is priced once per day after the market closes so you get "tomorrows" price effectively when your sell order goes through. Again "it all depends" if that matters to you.


As to whether it was your only investment - the point being alluded to is that invested in just 1 market in just 1 country is a high risk / high volatility approach that I for one wouldn't consider (I like to sleep comfortably at night).

dont_use_vistaprint

AlanP_2 said:

dont_use_vistaprint said:

ColdIron said:

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

Thanks yes I read up on the terms but tbh doesn’t really help make decisions because it doesn’t give any context or guidance on when you would choose each or why 

If you were tracking s&p500 Which would you choose and why ? 

If it was my only investment would that make a difference which one I should pick ? Or does one aim to make more money or  is is one more suitable for ‘experts’ ? 

They both aim to track the same index so are both aiming to make the same amount of money (give or take the respective fund charges).

I would choose the ETF version sometimes and the OEIC sometimes - It all depends on the platform charging structure and the amount being invested.

On my platform (Fidelity) the charge is 0.35% of fund value per year but there is a capped annual charge for exchange traded investments (such as an ETF) at £90, they do however charge £7.50 to trade an ETF.

I already have ETFs  and ITs to a high enough value that I am at the £90 cap therefore holding an additional S&P ETF would only cost me £7.50 (the trade fee).

If I was investing a few thousand then great, but if I was doing a £25 per month DD then paying £7.50 each time wouldn't be sensible so I would go for the OEIC version which, on Fidelity , has no trade fee but attracts the 0.35% ongoing platform fee.

In essence "it all depends" on your platform and it's charging structure, trading frequency, amounts involved etc.


The other consideration is that the ETF can be sold instantly (at market price) whilst the LSE  is open, the OEIC on the other hand is priced once per day after the market closes so you get "tomorrows" price effectively when your sell order goes through. Again "it all depends" if that matters to you.


As to whether it was your only investment - the point being alluded to is that invested in just 1 market in just 1 country is a high risk / high volatility approach that I for one wouldn't consider (I like to sleep comfortably at night).

Thanks that’s very helpful. On interactive investor I pay a flat fee of £11.99 a month & all trades cost £3.99 so I think both are equal in terms of costs. Being able to sell in real time is important though, but is this truly the case for ii customers - if you sell an ETF during LSE trading you get the price that  is on the screen or is that just for brokers and you get the price when they process your request  ? 

Also I just thought of another question something I was reading on a while back about this index being dominated by the Mag7 due to size. do either of these trackers do anything to balance that out and would you be able to tell from the name / codes of an S&P 500 tracker if this was being done or would you have to read up in detail

AlanP_2

dont_use_vistaprint said:

AlanP_2 said:

dont_use_vistaprint said:

ColdIron said:

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

Thanks yes I read up on the terms but tbh doesn’t really help make decisions because it doesn’t give any context or guidance on when you would choose each or why 

If you were tracking s&p500 Which would you choose and why ? 

If it was my only investment would that make a difference which one I should pick ? Or does one aim to make more money or  is is one more suitable for ‘experts’ ? 

They both aim to track the same index so are both aiming to make the same amount of money (give or take the respective fund charges).

I would choose the ETF version sometimes and the OEIC sometimes - It all depends on the platform charging structure and the amount being invested.

On my platform (Fidelity) the charge is 0.35% of fund value per year but there is a capped annual charge for exchange traded investments (such as an ETF) at £90, they do however charge £7.50 to trade an ETF.

I already have ETFs  and ITs to a high enough value that I am at the £90 cap therefore holding an additional S&P ETF would only cost me £7.50 (the trade fee).

If I was investing a few thousand then great, but if I was doing a £25 per month DD then paying £7.50 each time wouldn't be sensible so I would go for the OEIC version which, on Fidelity , has no trade fee but attracts the 0.35% ongoing platform fee.

In essence "it all depends" on your platform and it's charging structure, trading frequency, amounts involved etc.


The other consideration is that the ETF can be sold instantly (at market price) whilst the LSE  is open, the OEIC on the other hand is priced once per day after the market closes so you get "tomorrows" price effectively when your sell order goes through. Again "it all depends" if that matters to you.


As to whether it was your only investment - the point being alluded to is that invested in just 1 market in just 1 country is a high risk / high volatility approach that I for one wouldn't consider (I like to sleep comfortably at night).

Thanks that’s very helpful. On interactive investor I pay a flat fee of £11.99 a month & all trades cost £3.99 so I think both are equal in terms of costs. Being able to sell in real time is important though, but is this truly the case for ii customers - if you sell an ETF during LSE trading you get the price that  is on the screen or is that just for brokers and you get the price when they process your request  ? 

Also I just thought of another question something I was reading on a while back about this index being dominated by the Mag7 due to size. do either of these trackers do anything to balance that out and would you be able to tell from the name / codes of an S&P 500 tracker if this was being done or would you have to read up in detail

The quote you are offered on ii will be the price you buy / sell at if you accept the quote and proceed.

A tracker fund if the type you are looking at is just that it passively "tracks" the relevant index with no active management involved. 

The only exceptions are equal weighted trackers which, fir the S&P 500 would allocate 0.2% to each stock listed but these are not as common as the market-cap weighted ones you are looking at. 

dont_use_vistaprint

AlanP_2 said:

dont_use_vistaprint said:

AlanP_2 said:

dont_use_vistaprint said:

ColdIron said:

One is an ETF and the other an OEIC, read up on the differences in detail. Some platforms have different charging structures for each but I don't believe that applies to ii. The Vanguard fund is by far the larger

They track the same index so performance should be near as dammit identical before the fund fee which is very cheap for both

OEICs have different classes (that 'C') with different fund fees (institutional/retail investors) but you will usually only be offered one

I hope that will not be your only investment

Thanks yes I read up on the terms but tbh doesn’t really help make decisions because it doesn’t give any context or guidance on when you would choose each or why 

If you were tracking s&p500 Which would you choose and why ? 

If it was my only investment would that make a difference which one I should pick ? Or does one aim to make more money or  is is one more suitable for ‘experts’ ? 

They both aim to track the same index so are both aiming to make the same amount of money (give or take the respective fund charges).

I would choose the ETF version sometimes and the OEIC sometimes - It all depends on the platform charging structure and the amount being invested.

On my platform (Fidelity) the charge is 0.35% of fund value per year but there is a capped annual charge for exchange traded investments (such as an ETF) at £90, they do however charge £7.50 to trade an ETF.

I already have ETFs  and ITs to a high enough value that I am at the £90 cap therefore holding an additional S&P ETF would only cost me £7.50 (the trade fee).

If I was investing a few thousand then great, but if I was doing a £25 per month DD then paying £7.50 each time wouldn't be sensible so I would go for the OEIC version which, on Fidelity , has no trade fee but attracts the 0.35% ongoing platform fee.

In essence "it all depends" on your platform and it's charging structure, trading frequency, amounts involved etc.


The other consideration is that the ETF can be sold instantly (at market price) whilst the LSE  is open, the OEIC on the other hand is priced once per day after the market closes so you get "tomorrows" price effectively when your sell order goes through. Again "it all depends" if that matters to you.


As to whether it was your only investment - the point being alluded to is that invested in just 1 market in just 1 country is a high risk / high volatility approach that I for one wouldn't consider (I like to sleep comfortably at night).

Thanks that’s very helpful. On interactive investor I pay a flat fee of £11.99 a month & all trades cost £3.99 so I think both are equal in terms of costs. Being able to sell in real time is important though, but is this truly the case for ii customers - if you sell an ETF during LSE trading you get the price that  is on the screen or is that just for brokers and you get the price when they process your request  ? 

Also I just thought of another question something I was reading on a while back about this index being dominated by the Mag7 due to size. do either of these trackers do anything to balance that out and would you be able to tell from the name / codes of an S&P 500 tracker if this was being done or would you have to read up in detail

The quote you are offered on ii will be the price you buy / sell at if you accept the quote and proceed.

A tracker fund if the type you are looking at is just that it passively "tracks" the relevant index with no active management involved. 

The only exceptions are equal weighted trackers which, fir the S&P 500 would allocate 0.2% to each stock listed but these are not as common as the market-cap weighted ones you are looking at. 

I thought I read that UBS attempts to add things in they think will shortly be in the S&P 500 ? If there is no management & they simply track them then why do they all perform differently?  

What are some of the equal weighted s&p500 trackers on ii ? Does the name indicate this 

dunstonh

 If there is no management & they simply track them then why do they all perform differently?  

Some use physical replication.  Some use sampled replication.  Some use synthetic replication.
Some will rebalance daily.  Some will rebalance at other frequencies.
Some use inflows/outflows to rebalance.  Some will do manual sales/purchases.
Some will be currency hedged.  Some will not.
Some will price at different points in the day from the others.

Secret2ndAccount

 Vanguard S&P500 UCITS ETF   is not a sufficient description to know exactly which fund you are buying. It's available in income or distributing forms, and can also be bought in £ or directly in $. I'm going to assume you are looking at VUAG which is an accumulating version, priced in £ and is therefore comparable to UBS S&P500 Index C
A simple search on the Vanguard site tells you that they use exact replication. When you buy the ETF, they go out and buy all 500 onstituents in the appropriate proportions. This should lead to accurate tracking of the index, but creates a lot of cost. You don't care as long as the charges to you are low.
The UBS fund says that the manager can use derivatives. Rather than sell a share today, which it expects to buy back tomorrow, the manager can hold on to the share, but purchase insurance against an unexpected outsize move in the share.
There is no way of knowing whether one method of replication will prove to be better than another. Any tracking error might work in your favour or against you. Over any decent length of time, the effect is tiny.

Over 5 years, the trajectory of both has been identical. Both have doubled your money, and are within .15%. That is down to the higher charges of the UBS fund - you can see it slowly falling behind.
So if you want my advice, buy the one with the lowest charges.

As to S&P500 as an investment, I think it's a great investment. Take 500 of the world's largest and most succesful companies. Almost all are profitable. The majority expect to increase profits year on year. Many have global reach, trading in multiple currencies and countries. ASML is a Dutch company, critical to the manufacture of semiconductors. They do business all over the world. Dutch, international, but listed on the S&P because America provides a positive tax and regulatory environment to allow businesses to grow.
I do not favour an equal - weight approach. Do you think you should invest just as much in the Cintas Uniform Co as you do in Microsoft? MSFT has moved to the top by making large profits, then continuing to make large profits. If they stop doing that, they will fall down the league table and eventually be overtaken by CINTAS. It's good to have some money in the smaller companies because they may exhibit greater growth, but I wouldn't want to risk the majority on them while ignoring the already huge succesful companies.
Perhaps your biggest risk going with S&P is currency, since nobody can say where $ vs £ is going to go. You could gain 20% on the S&P but see the $ fall 20% against the £, leaving you with no profit. Or you could see the £ fall, and end up with a 40% gain. If this is a concern for you, you can find a hedged version that will return the movements of the S&P but priced in £ with no currency effects. Probably can't do this for 0.07% though...

dont_use_vistaprint

Secret2ndAccount said:

 Vanguard S&P500 UCITS ETF   is not a sufficient description to know exactly which fund you are buying. It's available in income or distributing forms, and can also be bought in £ or directly in $. I'm going to assume you are looking at VUAG which is an accumulating version, priced in £ and is therefore comparable to UBS S&P500 Index C
A simple search on the Vanguard site tells you that they use exact replication. When you buy the ETF, they go out and buy all 500 onstituents in the appropriate proportions. This should lead to accurate tracking of the index, but creates a lot of cost. You don't care as long as the charges to you are low.
The UBS fund says that the manager can use derivatives. Rather than sell a share today, which it expects to buy back tomorrow, the manager can hold on to the share, but purchase insurance against an unexpected outsize move in the share.
There is no way of knowing whether one method of replication will prove to be better than another. Any tracking error might work in your favour or against you. Over any decent length of time, the effect is tiny.

Over 5 years, the trajectory of both has been identical. Both have doubled your money, and are within .15%. That is down to the higher charges of the UBS fund - you can see it slowly falling behind.
So if you want my advice, buy the one with the lowest charges.

As to S&P500 as an investment, I think it's a great investment. Take 500 of the world's largest and most succesful companies. Almost all are profitable. The majority expect to increase profits year on year. Many have global reach, trading in multiple currencies and countries. ASML is a Dutch company, critical to the manufacture of semiconductors. They do business all over the world. Dutch, international, but listed on the S&P because America provides a positive tax and regulatory environment to allow businesses to grow.
I do not favour an equal - weight approach. Do you think you should invest just as much in the Cintas Uniform Co as you do in Microsoft? MSFT has moved to the top by making large profits, then continuing to make large profits. If they stop doing that, they will fall down the league table and eventually be overtaken by CINTAS. It's good to have some money in the smaller companies because they may exhibit greater growth, but I wouldn't want to risk the majority on them while ignoring the already huge succesful companies.
Perhaps your biggest risk going with S&P is currency, since nobody can say where $ vs £ is going to go. You could gain 20% on the S&P but see the $ fall 20% against the £, leaving you with no profit. Or you could see the £ fall, and end up with a 40% gain. If this is a concern for you, you can find a hedged version that will return the movements of the S&P but priced in £ with no currency effects. Probably can't do this for 0.07% though...

I guess an equal weighted approach allows you to reduce some risk of big losses when the AI bubble bursts while still backing the worlds largest companies 

Cus

dont_use_vistaprint said:

Secret2ndAccount said:

 Vanguard S&P500 UCITS ETF   is not a sufficient description to know exactly which fund you are buying. It's available in income or distributing forms, and can also be bought in £ or directly in $. I'm going to assume you are looking at VUAG which is an accumulating version, priced in £ and is therefore comparable to UBS S&P500 Index C
A simple search on the Vanguard site tells you that they use exact replication. When you buy the ETF, they go out and buy all 500 onstituents in the appropriate proportions. This should lead to accurate tracking of the index, but creates a lot of cost. You don't care as long as the charges to you are low.
The UBS fund says that the manager can use derivatives. Rather than sell a share today, which it expects to buy back tomorrow, the manager can hold on to the share, but purchase insurance against an unexpected outsize move in the share.
There is no way of knowing whether one method of replication will prove to be better than another. Any tracking error might work in your favour or against you. Over any decent length of time, the effect is tiny.

Over 5 years, the trajectory of both has been identical. Both have doubled your money, and are within .15%. That is down to the higher charges of the UBS fund - you can see it slowly falling behind.
So if you want my advice, buy the one with the lowest charges.

As to S&P500 as an investment, I think it's a great investment. Take 500 of the world's largest and most succesful companies. Almost all are profitable. The majority expect to increase profits year on year. Many have global reach, trading in multiple currencies and countries. ASML is a Dutch company, critical to the manufacture of semiconductors. They do business all over the world. Dutch, international, but listed on the S&P because America provides a positive tax and regulatory environment to allow businesses to grow.
I do not favour an equal - weight approach. Do you think you should invest just as much in the Cintas Uniform Co as you do in Microsoft? MSFT has moved to the top by making large profits, then continuing to make large profits. If they stop doing that, they will fall down the league table and eventually be overtaken by CINTAS. It's good to have some money in the smaller companies because they may exhibit greater growth, but I wouldn't want to risk the majority on them while ignoring the already huge succesful companies.
Perhaps your biggest risk going with S&P is currency, since nobody can say where $ vs £ is going to go. You could gain 20% on the S&P but see the $ fall 20% against the £, leaving you with no profit. Or you could see the £ fall, and end up with a 40% gain. If this is a concern for you, you can find a hedged version that will return the movements of the S&P but priced in £ with no currency effects. Probably can't do this for 0.07% though...

I guess an equal weighted approach allows you to reduce some risk of big losses when the AI bubble bursts while still backing the worlds largest companies 

It's a valid thought. I can't identify why a company like Samsung, based on earnings, revenue, market share and the like, as a ratio to Apple's numbers is a lot more than compared to the ratio of their market caps.  My concern is that if a large reason is just due to location of the exchange they trade on,  then how long does that last?