Vanguard VWRL - the one stop solution?

[hiriskpaul]

VWRL is expensive compared to the sum of the parts, and I have never really understood the justification for this ...

Me neither. I built up my VWRL equivalent some years ago from HSBC's class C OEICs. These currently cost 0.06% for the UK and US, 0.07% for Europe and a whopping(!) 0.21% and 0.24% for Japan and Pacific ex-Japan respectively.

Admittedly I've left out niche items like Canada, and get my Emerging Markets fix elsewhere, but overall it's a pretty nicely globally diversified portfolio nevertheless. Its weighted cost is a truly skimpy 0.08%, and that even beats Vanguard US's VT. Held on iWeb, so no nasty percentage-based fees either.

All of the OEIC providers have been gradually reducing their charges. HSBC provide a good OEIC alternative to VWRL, tracking the same index for a TER of only 0.16%. If you are interested, Fidelity provide cheaper funds for Japan and Pacific ex-Japan at 0.1% and 0.13% respectively.

I am not entirely convinced these relatively small differences in charges actually make much difference to outcomes though. Vanguard and BlackRock/iShares are really good at running trackers with very small tracking errors. Their efficiency may make up for slightly higher TERs.

[bluedonkey]

I was happy with 0.21% for VWRL until I saw the post above citing 0.06% for VUSA (actually 0.7% per the Vanguard website just now)!

The source I used showed the annual expense for VWRL as 0.25%, not 0.21%. Perhaps you are looking at the OEIC and not the ETF?

https://global.vanguard.com/portal/site ... docId=1011

I think you meant 0.07% for VUSA. VUKE is 0.06%. I might have mixed those two up earlier, not that it makes a lot of difference.

Yes, my error. Should be:

VWRL 0.25%
VUSA 0.07%

These are small percentages, as a poster has pointed out the difference between 0.25% and 0.07% in £ terms is possibly near-trivial.

[Wizard]

Going back to the very opening point, as I am thinking of putting a lump of my SIPP into a very broad based tracker it was a helpful steer. Working on a £100k initial investment I came up with a saving of about £725 over five years. That assumes a split between VNRT (56%), VEUR (20%), VAPX (6%), VJPN (8%) and VFEM (10%). The weighted average charge comes in at about 0.13%. I have included five costs to purchase in my HL SIPP of £11.95 and assumed no change in value in the fund. Of course if the value increases (which clearly I hope it will) the advantage of the lower annual fee increases. I also like the idea of beinb able to tweak any future allocations.

For me, as I am already at the £200 cap in my SIPP in terms of fees from HL, ETFs are much better than OIECs as my understanding is that the fee cap does not apply to them.

Food for thought.

[Lootman]

Going back to the very opening point, as I am thinking of putting a lump of my SIPP into a very broad based tracker it was a helpful steer. Working on a £100k initial investment I came up with a saving of about £725 over five years. That assumes a split between VNRT (56%), VEUR (20%), VAPX (6%), VJPN (8%) and VFEM (10%). The weighted average charge comes in at about 0.13%. I have included five costs to purchase in my HL SIPP of £11.95 and assumed no change in value in the fund. Of course if the value increases (which clearly I hope it will) the advantage of the lower annual fee increases. I also like the idea of beinb able to tweak any future allocations.

VNRT solves the "Canada problem" at the price of paying 0.1% a year rather than the 0.07% for VUSA. Note that the largest Canadian share by market cap - The Royal Bank of Canada - is number 50 in the list of holdings after 49 US shares! It's possible that Barrick has leapfrogged that with its takeover of Randgold however.

As for tweaking the constituents, I think that is useful not so much because I think I know which regions will out-perform. That rather defeats the point of passive tracking. But because I am naturally over-weight the UK (because of other holdings). I'd prefer just to miss out the 6% of global market cap that is the UK weighting in VWRL. I suspect some others might be worried about the 53% weighting to the US, although personally I am not.

[JohnB]

@Wizard I have Vanguard ETFs in HL for that reason, and keep my Fidelity/Blackrock OEICs in a IWeb ISA

I like having more than one broker and more than one fund provider, just in case, and that split keeps costs down

[monabri]

There was an article in the Motley Fool which I interpreted to suggest that there was a Sterling hedged version of VWRL.

From the article ( link below). Is the TMF article correct, especially the last part of the following sentence?

"The one downside of the fund is that its base currency is US dollars, so investors are exposed to any fluctuation in the exchange rate between the US dollar and sterling. To solve this, the fund’s owners Vanguard have also put out a GBP version, where assets are hedged back to sterling. "

https://www.fool.co.uk/investing/2019/0 ... ole-world/

[Sobraon]

Fidelity provide cheaper funds for Japan and Pacific ex-Japan at 0.1% and 0.13% respectively.

Perhaps a little OT but hiriskpaul please could you identify these OEICs. Thanks.

[Lootman]

There was an article in the Motley Fool which I interpreted to suggest that there was a Sterling hedged version of VWRL.

From the article ( link below). Is the TMF article correct, especially the last part of the following sentence?

"The one downside of the fund is that its base currency is US dollars, so investors are exposed to any fluctuation in the exchange rate between the US dollar and sterling. To solve this, the fund’s owners Vanguard have also put out a GBP version, where assets are hedged back to sterling. "

https://www.fool.co.uk/investing/2019/0 ... ole-world/

I think it is highly misleading of TMF to described the GBP shares of VWRL as being currency-hedged. It is not.

All that is happening here is that there are different share classes denominated in different currencies. There is no hedging involved. Whether you hold the GBP shares or the USD shares, your GBP-based returns will be the same, except for some minor differences because of any FX that has to happen for contributions, withdrawals and dividends.

[hiriskpaul]

Fidelity provide cheaper funds for Japan and Pacific ex-Japan at 0.1% and 0.13% respectively.

Perhaps a little OT but hiriskpaul please could you identify these OEICs. Thanks.

Fidelity Index Japan P GBP Income
https://www.fidelity.co.uk/factsheets/? ... arketCode=

Fidelity Index Pacific ex Japan Fund P Income Shares
https://www.fidelity.co.uk/factsheets/? ... arketCode=

Links posted from a mobile, so hope they work. Accumulation units are also available.

[hiriskpaul]

There was an article in the Motley Fool which I interpreted to suggest that there was a Sterling hedged version of VWRL.

From the article ( link below). Is the TMF article correct, especially the last part of the following sentence?

"The one downside of the fund is that its base currency is US dollars, so investors are exposed to any fluctuation in the exchange rate between the US dollar and sterling. To solve this, the fund’s owners Vanguard have also put out a GBP version, where assets are hedged back to sterling. "

https://www.fool.co.uk/investing/2019/0 ... ole-world/

Agree with Lootman. The article is nonsense, there is no currency hedging in the GBP priced version of VWRL. It is highly questionable as to whether the lack of hedging is a downside to the fund as well.

[mc2fool]

There was an article in the Motley Fool which I interpreted to suggest that there was a Sterling hedged version of VWRL.

From the article ( link below). Is the TMF article correct, especially the last part of the following sentence?

"The one downside of the fund is that its base currency is US dollars, so investors are exposed to any fluctuation in the exchange rate between the US dollar and sterling. To solve this, the fund’s owners Vanguard have also put out a GBP version, where assets are hedged back to sterling. "

https://www.fool.co.uk/investing/2019/0 ... ole-world/

Agree with Lootman. The article is nonsense, there is no currency hedging in the GBP priced version of VWRL. It is highly questionable as to whether the lack of hedging is a downside to the fund as well.

I am puzzled by both the TMF article's statement that "Vanguard have also put out a GBP version" of VWRL and the comment above about "the GBP priced version of VWRL", and Lootman's similar comment about GBP shares and USD shares of it.

From what I can see VWRL is GBP priced and appears to be the only "version" available (on the LSE at least). Or am I missing something, and if so, what is the EPIC of the USD priced shares of VWRL?

[Lootman]

I am puzzled by both the TMF article's statement that "Vanguard have also put out a GBP version" of VWRL and the comment above about "the GBP priced version of VWRL", and Lootman's similar comment about GBP shares and USD shares of it.

From what I can see VWRL is GBP priced and appears to be the only "version" available (on the LSE at least). Or am I missing something, and if so, what is the EPIC of the USD priced shares of VWRL?

I will admit that I took it at face value that there were both GBP and USD versions of VWRL, since that is typical of many ETFs.

But if there is only a GBP version then that makes TMF's article comment about "hedging" even more bizarre.

[hiriskpaul]

There does only appear to be a GBP version on the LSE, which makes the article even more ridiculous. However, it is listed on other exchanges in a variety of currencies. From the Web page:

Listed currencies: USD,GBP,EUR,CHF
Base currency: USD
Exchange: SIX Swiss Exchange,NYSE Euronext - Amsterdam,London Stock Exchange,Deutsche Boerse,Borsa Italiana S.p.A.,Bolsa Mexicana De Valores

CHF listing: https://www.six-group.com/exchanges/fun ... RBWM25CHF4

[mc2fool]

There does only appear to be a GBP version on the LSE, which makes the article even more ridiculous.

Nope, I was missing something. VWRD is the USD version on the LSE.

And while it seems to be true in this case, it's not a good idea to just assume that GBP versions of such ETFs aren't hedged without checking. iShares has lots like that, e.g. iShares Core MSCI World ETF SWDA/IWDG...

[hiriskpaul]

There does only appear to be a GBP version on the LSE, which makes the article even more ridiculous.

Nope, I was missing something. VWRD is the USD version on the LSE.

And while it seems to be true in this case, it's not a good idea to just assume that GBP versions of such ETFs aren't hedged without checking. iShares has lots like that, e.g. iShares Core MSCI World ETF SWDA/IWDG...

Currency hedged ETFs and tracker OEICs seem to be a growing fashion, so agreed it is well worth checking and not relying on "hedged" appearing in the title.

I missed VWRD as well. Vanguard really should provide all the tickers and ISINs for the various listings.

[vandefrosty]

I missed VWRD as well. Vanguard really should provide all the tickers and ISINs for the various listings.

They do, on the fact sheet.
https://global.vanguard.com/portal/site/loadPDF?country=se&docId=1011

So this shows GBP and USD listings in London, plus listings also in Zurich, Amsterdam and Frankfurt mentioned up-thread.

Greg

[mc2fool]

I missed VWRD as well. Vanguard really should provide all the tickers and ISINs for the various listings.

They do, on the fact sheet.
https://global.vanguard.com/portal/site/loadPDF?country=se&docId=1011

So this shows GBP and USD listings in London, plus listings also in Zurich, Amsterdam and Frankfurt mentioned up-thread.

Yes, and that's where I found it, but I only found that document from a general google. How do you discover VWRD from their UK site?

I can't see any mention to it on the VWRL page, https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing

And it doesn't seem to be on their all ETFs page, https://www.vanguardinvestor.co.uk/what-we-offer/etf-products

Indeed, unless I'm totally missing it (quite possible ), VWRD doesn't seem to be mentioned anywhere on http://www.vanguardinvestor.co.uk, which, after all, is the place UK based investors are likely to look. Can you find it on there?

[vandefrosty]

Yes, and that's where I found it, but I only found that document from a general google. How do you discover VWRD from their UK site?

I can't see any mention to it on the VWRL page, https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-all-world-ucits-etf-usd-distributing

And it doesn't seem to be on their all ETFs page, https://www.vanguardinvestor.co.uk/what-we-offer/etf-products

Indeed, unless I'm totally missing it (quite possible ), VWRD doesn't seem to be mentioned anywhere on http://www.vanguardinvestor.co.uk, which, after all, is the place UK based investors are likely to look. Can you find it on there?

Fair challenges, as I found it by google too.

It seems to me that the vanguardinvestor site (which I don't use as I'm in North America) is constructed to funnel clients towards opening a VG account and investing directly. And so the absence of VWRD is perhaps a concession (sacrifice?!) to keeping the offering simple. It's easy, I think, to imagine novices not appreciating the distinction and generating lots of tidy up for Customer Services from folks surprised to have bought a USD-priced asset rather than a GBP one (notwithstanding that USD is its base currency)

You can access the fact sheet on the vanguardadviser site, https://www.vanguard.co.uk/adviser/adv/home, but you need to confirm - ahem - that you are a 'professional investor' on the way in. The multi-tab style of those fund pages is what I see on the Vanguard Canada site, where VG doesn't offer brokerage services.

I agree it's not easy to find if you don't know you're looking for it...

Greg

[TedSwippet]

Indeed, unless I'm totally missing it (quite possible :D), VWRD doesn't seem to be mentioned anywhere on http://www.vanguardinvestor.co.uk, which, after all, is the place UK based investors are likely to look.

Can I just ask why you find it so odd that VWRD isn't mentioned here?

As vandefrosty says, this site is primarily (perhaps even solely?) aimed at UK investors, and there's no reason for any UK investor to want VWRD when VWRL exists. Using VWRD rather than VWRL would just introduce unwanted forex drag into both buy and sell, for no benefit elsewhere.

I'm not trying to be snippy here, by the way. It's just that I really cannot see any reason for Vanguard to put VWRD details front-and-centre on their UK retail site. Omitting it likely prevents a lot of UK investor confusion and some potentially costly mistakes. Am I missing something?

[mc2fool]

Indeed, unless I'm totally missing it (quite possible ), VWRD doesn't seem to be mentioned anywhere on http://www.vanguardinvestor.co.uk, which, after all, is the place UK based investors are likely to look.

Can I just ask why you find it so odd that VWRD isn't mentioned here?

As vandefrosty says, this site is primarily (perhaps even solely?) aimed at UK investors

Errrrr, yes, exactly. It's their UK site and VWRD is a UK traded ETF listed on -- and only on == the London Stock Exchange. Where do you think Vanguard should describe that London listed ETF instead? On their French site? On their Swiss site? (Certainly not on their US site -- that would be illegal!)

there's no reason for any UK investor to want VWRD when VWRL exists. Using VWRD rather than VWRL would just introduce unwanted forex drag into both buy and sell, for no benefit elsewhere.

Really? No reason? What, absolutely no reason? Unequivocally no reason? Perhaps what you really mean is just, no reason that you can think of, eh?

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.

You are making a big assumption, that UK investors always trade in £££s, but that's just not necessarily so. Some brokers offer multi currency accounts and UK investors who like to trade, say, US shares can have a US$ trading account and buy and then sell their Microsoft holding and switch to Apple, sell Facebook to buy Netflix, dump Amazon and buy VWRD, etc, etc, all in US$ and with no currency exchange. How many do that? Dunno, but certainly some on these boards (and TMF before) have said they do.

It's just that I really cannot see any reason for Vanguard to put VWRD details front-and-centre on their UK retail site. Omitting it likely prevents a lot of UK investor confusion and some potentially costly mistakes.

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. Maybe some do, I wouldn't care to comment, but I think that the proper thing for Vanguard to do would be to put all of their UK ETFs on their UK site and clearly show their trading currencies, and for VWRL/VWRD have it well described that there is also a USD/GBP version. Clear information has to be more useful than concealment. After all, iShares do it.