Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

ETF's GBP vs USD
Paul Gulbrandsen
Posted: 02 March 2017 07:30:43(UTC)
#1

Joined: 20/10/2015(UTC)
Posts: 3

I'm thinking about putting some money into an equity dividend ETF & came across the SPDR S&P Global Dividend Aristocrats which comes in a GBP version (GBDV) & a USD one (GLDV). What are the pros & cons of the 2 versions or doesn't it make any difference?
Thanks
Julian Wang
Posted: 21 April 2017 07:45:50(UTC)
#2

Joined: 11/01/2013(UTC)
Posts: 12

Was thanked: 4 time(s) in 3 post(s)
You buy the £ version unless your broker allow you to hold foreign currency in your account!

Otherwise every time you buy and sell, you pay a foreign currency exchange rate charge to your broker, 1-2%, which help make your broker rich!

Only broker I know which allow you to keep foreign currency in your account is interactive brokers, do not confuse with interactive investor III.

Julian
Paul Gulbrandsen
Posted: 21 April 2017 08:01:57(UTC)
#3

Joined: 20/10/2015(UTC)
Posts: 3

GLDV is quoted on the LSE in US$ & so I can certainly trade it through my broker (Charles Stanley Direct). They only charge their standard £11.50 transaction fee although there is a currency translation & I don't know if their rate is worse than the prevailing one.
Julian Wang
Posted: 21 April 2017 10:55:11(UTC)
#4

Joined: 11/01/2013(UTC)
Posts: 12

Was thanked: 4 time(s) in 3 post(s)
If you buy GLDV instead of GBDV, you will cost you extra at least 2% in currency charge!

1% when you buy.
1% when you sell.

Copied from charles stanley charges:
All trades placed online which are denominated in a foreign currency are subject to Foreign Exchange rates. You will be quoted a rate at the time you place your order. This will normally be the previous day’s closing spot rate, less 1%, but we reserve the right to amend it intra-day.

Assuming Charles Stanley offer you the same spot rate as available to SPDR. If I was a betting man, I will assume SPDR will be able to get a tighter currency bid offer spread than Charles Stanley offer to you. SPDR will be dealing in much larger sums than you/Charles Stanley.

Futhermore, GLDV will pay you dividend in US dollar which you will pay Charles Stanley 1% exchange rate charge to convert to £.

Buying GLDV is only sensible/viable if your broker allow you to keep foreign currency in your account. Only one I know is Interactive Brokers. Interactivebrokers offer NO ISA, NO Sipp. Minimum 10 US dollar charge per month if account less than 100000 US $ equivalent. No monthly charge if > than 100000 US $.

Julian
Julian Wang
Posted: 21 April 2017 11:20:18(UTC)
#5

Joined: 11/01/2013(UTC)
Posts: 12

Was thanked: 4 time(s) in 3 post(s)
Also be ware of:

http://www.morningstar.c...-british-investors.aspx

US listed ETFs generally have lower charges, but tax complication make it NO go for me.

Julian
Paul Gulbrandsen
Posted: 21 April 2017 11:37:50(UTC)
#6

Joined: 20/10/2015(UTC)
Posts: 3

Thanks for the info Julian, much appreciated. Wasn't aware of CSD's 1% charge before, will stick to £ denominated stocks in future.

Regards

Paul
+ Reply to discussion

Markets

Other markets