ETFs

GeoffTF

https://forums.moneysavingexpert.com/discussion/comment/81964872#Comment_81964872

OEICs do not have higher holding charges with some platforms. You should be able to do £million trades with OEICs, but will hit problems with ETFs (in the UK at least). Institutions mostly use OEICs.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81964872#Comment_81964872

I would immediately stop reading whatever source that quote is from and make sure not to touch them for anything related to investments - many ETFs are index funds. Whether you go for an OIEC index fund or an ETF index fund is largely irrelevant for the long term investor - as is an extra day here or there if you don't make cut-off. Pick the type of fund that has the investments you want and is cheapest for your platform.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81965047#Comment_81965047

But the choice between an ETF and an OEIC is highly relevant to someone who is holding them outside a tax wrapper (i.e. not in a SIPP or ISA) for two reasons:

For ETFs you need to remember that the income - or notional income for accumulating ETFs - needs to be declared as foreign income, and the relevant foreign income additional pages need to be completed in self assessment if that income is over £2k, which can easily be avoided by choosing UK domiciled OEICs. None of the currently available index ETFs are uk domiciled and using UK domiciled OEICs means you never have to bother with foreign income pages.

Outside a tax wrapper the excess reportable income retained in the ETF - both for accumulating and income ETFs) - needs to be declared on tax returns and this figure can be fiendishly difficult to find out. There is no excess reportable income with OEICs.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81965357#Comment_81965357

Yes, very good point, however OP had mentioned using ISA allowance for this.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81965385#Comment_81965385

Thanks. 🙂 I just wanted to make the point for anyone else reading the thread that while what you said about ETFs and OEICs is spot on for ISA investments, there are other considerations relating to ETFs if you're using a GIA.

My SIPP and my ISA have only ETF investments, but my GIA is all OEICs due to the reasons I outlined, especially the excess reportable income which seems like a nightmare issue although the sums involved are small.

I just wish someone would bring out a UK domiciled world-ex-US OEIC for my GIA ……

EthicsGradient

https://forums.moneysavingexpert.com/discussion/comment/81965357#Comment_81965357

You do use "UK domiciled OEICs" nearly all the way through, and it's worth remembering that a few OEICs are not UK domiciled, and thus potentially with excess reportable income - eg

Vanguard Global Small-Cap Index Institutional Inc GBP Fund factsheet | Trustnet

which is domiciled in Ireland, and which has declared a tiny amount of ERI in the past 2 years.

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81965447#Comment_81965447

Good point. I've always had to be careful with Vanguard because of this. When I started out using OEICs I was nearly caught out by the fact that some of theirs are Ireland domiciled.

I've just checked and Vanguard has 22 of Irish OEICs in its mixed list of Irish index funds and ETFs:

https://www.vanguardinvestor.co.uk/what-we-offer/index-products

7685

https://forums.moneysavingexpert.com/discussion/comment/81965401#Comment_81965401

@Enzo_L appreciate you sharing the information, I did say it is for S&S ISA, that is because I have already allocated all my S&S ISA allowance. I did not mention I have some cash (unwrapped) to invest, and plan to invest in bonds, as it will be CGT free and does not have as much tax to report than an unwrapped ETF or OEIC and it will not be 20/80 weighting due to the amount of unwrapped cash.

I feel I am only investing if I have S&S ISA allowance. Even then I will invest in OEIC funds (ACC) in the UK. I am still looking for OEIC funds but they seem to have less choice. Otherwise, I will be overwhelmed with (all) the reinvestment reporting if invest in unwrapped ETFs.

.

UncleTomCobley

https://forums.moneysavingexpert.com/discussion/comment/81965647#Comment_81965647

I guess these Ireland fidelity offering helps illustrate that in our UK world of retail collective investment schemes, ETFs, rather than being separate beasts from "OEICS" (well, investment companies with variable capital), are just subset of such "OEICS" that have - in technical terms - some clever jiggery pokery that allow them to be bought/sold on stock exchanges.

This exchange route can greatly ease buying and selling fund for some fund managers (though it is not without a cost to investors) and it does mean that the fund’s price can move though the day. However, in terms of investment objectives, fund manager changes, regulation etc – these are independent of whether the “OEIC” fund is a normal one or a member of the ETF subset - though not all funds can manage, or want, the jiggery pokery.

And as pointed out, the excess reportable income aspect is not a feature of ETFs per se but of non-UK domicile “OEIC” funds.

Perhaps this view helps.