ii - selling part of a fund and buying other funds

7685

I am using ii and will transfer my cash ISA into the S&S ISA account first. As I am looking to purchase over £20,000, so will need to do more than one purchase/ transaction, do I wait to the bought fund is showing in my account before I make more transactions of the same fund?

On another note, if I am buying ETFs within my ISA wrapper, is it just the UK and Ireland domicile will be tax free? And I will require to pay tax and related matters for other countries?

EthicsGradient

There won't be any tax to pay on anything you are able to buy in an ISA. If it doesn't qualify for the ISA tax treatment, it won't be offered for sale (very rarely, a change in an investment, such as stopping being tradable in London, and only in some overseas exchange, would mean it had to be removed from the ISA. This has never happened to me, nor to the vast majority of people, I think). Many European-focussed ETFs are domiciled in Luxembourg, and those are fine inside an ISA.

7685

https://forums.moneysavingexpert.com/discussion/comment/81970393#Comment_81970393

That's really helpful to know, as I had thought that the ISA wrapper / ' the tax free' only applies to the UK and Ireland domiciled investments. So ETF with USD currency within the wrapper - is still tax free but has a currency risk.

I am thinking to use my S&S ISA to buy ETFs for long term 'higher' growth (equities) and use my cash (unwrapped) to buy OEIC funds such as commodities funds. Use the wrapper higher growth investment to shelter the growth from tax.

EthicsGradient

https://forums.moneysavingexpert.com/discussion/comment/81970420#Comment_81970420

You can only hold GBP as cash in an ISA, so to buy something, it must be on sale in GBP too. The underlying currency may be USD (which means the dividends are paid in USD, and in an ISA, automatically converted to GBP). For instance, I hold

iShares S&P SmallCap 600 UCITS ETF (GBP) share price | ISP6

which is buyable in GBP, but the "share class currency" is USD; the dividends are declared in USD, but appear in my ISA as GBP, having already been converted.

7685

https://forums.moneysavingexpert.com/discussion/comment/81970431#Comment_81970431

can one of the reasons why some people choose to buy say 'iShares S&P SmallCap 600 UCITS ETF (GBP) share price | ISP6' is because there are no alternative in GBP?

Despite the fund is displayed in USD on ii, I am guessing I can buy any of them (otherwise, they will not be listed)? appreciate (and other posters) replies as there are a lot to understand and just as I feel I am ready to BUY.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/81970636#Comment_81970636

You can buy financial securities denominated in other currencies you just cannot hold any currency other than sterling as cash in an Isa. The downside to this versus a GIA is that you'll probably have to pay FX fess every time you buy and sell if the security isn't denominated in sterling.

EthicsGradient

Actually, I suspect what I said earlier is not quite correct. I said, for an ii ISA, "to buy something, it must be on sale in GBP too". So I checked with an ETF for which the price is displayed in dollars - State Street SPDR All Country World Investable Market (IMID) - and for that, ii says "You can hold this ETF in a SIPP, ISA, JISA and Trading Account", while still displaying the price in dollars. So I suspect you could buy it because ii would do a conversion of your GBP cash to USD to buy it, and then automatically do the same when you sell it. But I've never wanted to do that, so I've never checked, let alone used that.

Can anyone confirm this is what happens with such an ETF?

That "you can hold this in" phrase is what you need to look for - see for instance (which you shouldn't need to be logged in to be able to see)

https://www.ii.co.uk/etfs/stt-strtspdrmsciallcountryworldinvmktetf/LSE:IMID

(In the case of ISP6, ii displays the price in pence. I doubt any ETF that invests purely in the US, like ISP6, would have its underlying currency, and pay dividends, in anything other than USD).

wmb194

https://forums.moneysavingexpert.com/discussion/comment/81970701#Comment_81970701

"Can anyone confirm this is what happens with such an ETF?"

Yes. Not with ii but I do this regularly with T212 and that is how it works. T212 isn't so bad though as its FX fee is just 0.15%.

masonic

ii's fx fees are not as bad as they used to be. They can be found on the website. Previously they were undisclosed and a few of us were tracking them relative to other platforms based on our actual dividend credited in GBP. ii was one of the worst, though I don't recall the exact numbers.