mc2fool wrote:The reason is to avoid forex. VWRL introduces forex drag. With VWRL you are using GBP to buy a US$ assets, hence there is forex, even though it's opaque to you.
VWRL in and of itself will not introduce forex drag. VWRD and VWRL are both denominated in USD, but it does not necessarily follow that trading VWRL in GBP generates a forex drag. Both are facets of a single basket of global holdings, but with different trading currencies.
A fund's denomination currency is simply an accounting device. You could denominate it in anything -- USD, JPY, Zimbabwean Dollars, Mars Bars, buttons -- and the only currency effect that matters is the one between the investor's home currency, GBP in this case, and the currency of the assets that the ETF holds internally. When you buy VWRL (or VWRD) you are are not buying "a US$ asset", you are buying a whole heap of JPY, EUR, GBP, USD, and so on assets, and whose aggregate current yardstick just happens to be the USD.
mc2fool wrote:You are making a big assumption, that UK investors always trade in £££s, but that's just not necessarily so. ...
Thank you. That is the justification I was looking for. These would certainly be a minority of investors, but for anyone who currently holds USD, wishes to stay in USD and not convert to GBP, and would like a world tracker ETF, buying VWRD makes sense. That route would avoid unwanted forex drag converting USD to GBP.
For anyone not already holding USD though, converting GBP to USD purely to then trade VWRD rather than VWRL would add forex drag that isn't there otherwise.
mc2fool wrote:Well now you know a reason but you (and possibly Vanguard too, if Greg's theory is correct) seem to be assuming that UK investors are dumb and need protecting from themselves. ... After all, iShares do it.
Please do not put words into my mouth. And iShares is not a retail portal, so the comparison is not valid.