The Lemon Fool

Dod101 wrote:

scrumpyjack wrote:When you buy VWRL on the LSE there is no currency conversion, it is quoted in GBP and you buy in GBP. Most of the time there will be sellers as well who similarly are trading in GBP.

There will be a cost to the dividend conversion and firms like HL make a very large profit on those conversions. You could go for VWRP instead, which is the same but is accumulating so there is no currency conversion, the dividends are in effect automatically reinvested.

Presumably what you are saying is that there is no obvious currency conversion to the UK based buyer/seller. Currency conversion takes place 'behind the scenes'.

When I buy shares quoted in a foreign currency (for example a Canadian bank) I accumulate dividends in the foreign currency and then buy more shares in that currency which avoids any conversion costs. Sooner or later if/when I want to use the dividends in sterling, I would accumulate say a year's worth and then convert them in one transaction. I try to avoid a series of small conversions.

Dod

Not really. Most trading of VWRL on the LSE is UK holders buying and selling in GBP from/to UK market markers, so no currency conversion is involved.

Vanguard is not redeeming and issuing shares to enable these trades to go through.

scrumpyjack wrote:

Dod101 wrote:

scrumpyjack wrote:When you buy VWRL on the LSE there is no currency conversion, it is quoted in GBP and you buy in GBP. Most of the time there will be sellers as well who similarly are trading in GBP.

There will be a cost to the dividend conversion and firms like HL make a very large profit on those conversions. You could go for VWRP instead, which is the same but is accumulating so there is no currency conversion, the dividends are in effect automatically reinvested.

Presumably what you are saying is that there is no obvious currency conversion to the UK based buyer/seller. Currency conversion takes place 'behind the scenes'.

When I buy shares quoted in a foreign currency (for example a Canadian bank) I accumulate dividends in the foreign currency and then buy more shares in that currency which avoids any conversion costs. Sooner or later if/when I want to use the dividends in sterling, I would accumulate say a year's worth and then convert them in one transaction. I try to avoid a series of small conversions.

Dod

Not really. Most trading of VWRL on the LSE is UK holders buying and selling in GBP from/to UK market markers, so no currency conversion is involved.

Vanguard is not redeeming and issuing shares to enable these trades to go through.

OK. If that is how it works that is good. So you are saying that there is a 'pool' of London securities in VWRL that is in effect insulated from the rest. I guess that may be true as long as supply and demand are more or less balanced.

Dod

Dod101 wrote:

scrumpyjack wrote:

Dod101 wrote:
Presumably what you are saying is that there is no obvious currency conversion to the UK based buyer/seller. Currency conversion takes place 'behind the scenes'.

When I buy shares quoted in a foreign currency (for example a Canadian bank) I accumulate dividends in the foreign currency and then buy more shares in that currency which avoids any conversion costs. Sooner or later if/when I want to use the dividends in sterling, I would accumulate say a year's worth and then convert them in one transaction. I try to avoid a series of small conversions.

Dod

Not really. Most trading of VWRL on the LSE is UK holders buying and selling in GBP from/to UK market markers, so no currency conversion is involved.

Vanguard is not redeeming and issuing shares to enable these trades to go through.

OK. If that is how it works that is good. So you are saying that there is a 'pool' of London securities in VWRL that is in effect insulated from the rest. I guess that may be true as long as supply and demand are more or less balanced.

Dod

Yes, and bear in mind that where the professionals, whether Vanguard or Baillee Gifford have to engage in currency transactions, the percentage exchange costs they will bear are miniscule compared to the retail rip off rates that you and I will pay our brokers.

scrumpyjack wrote:

Dod101 wrote:

scrumpyjack wrote:
Not really. Most trading of VWRL on the LSE is UK holders buying and selling in GBP from/to UK market markers, so no currency conversion is involved.

Vanguard is not redeeming and issuing shares to enable these trades to go through.

OK. If that is how it works that is good. So you are saying that there is a 'pool' of London securities in VWRL that is in effect insulated from the rest. I guess that may be true as long as supply and demand are more or less balanced.

Dod

Yes, and bear in mind that where the professionals, whether Vanguard or Baillee Gifford have to engage in currency transactions, the percentage exchange costs they will bear are miniscule compared to the retail rip off rates that you and I will pay our brokers.

That is true so better leave it to them if possible. Of course the size of the average retail transaction will be miniscule in relation to the corporate transactions so there is some logic to it.

Dod

...so the conclusion is to collect $US dividends and then buy the $VWRL version in my non-ISA account? (In order to save 1.5% currency conversion fee). Admittedly, there will be a currency conversion payable upon selling the $US version.

However, it's just occurred to me that it could cause me more problems when trying to work out any CGT especially when using HMRC rules & regs to calculate any loss/profit. I'm using the online CGT calculator that i was referred to many moons ago and it keeps life simple(r)

So maybe i'll just bite the bullet and pay the 1.5%!!

Rajput1962 wrote:...so the conclusion is to collect $US dividends and then buy the $VWRL version in my non-ISA account? (In order to save 1.5% currency conversion fee). Admittedly, there will be a currency conversion payable upon selling the $US version.

However, it's just occurred to me that it could cause me more problems when trying to work out any CGT especially when using HMRC rules & regs to calculate any loss/profit. I'm using the online CGT calculator that i was referred to many moons ago and it keeps life simple(r)

So maybe i'll just bite the bullet and pay the 1.5%!!

Other brokers have much lower currency conversion fees, down to 0.1% with Degiro
Here is an IC article on it
https://www.investorschronicle.co.uk/ma ... e-dealing/

scrumpyjack wrote:

Rajput1962 wrote:...so the conclusion is to collect $US dividends and then buy the $VWRL version in my non-ISA account? (In order to save 1.5% currency conversion fee). Admittedly, there will be a currency conversion payable upon selling the $US version.

However, it's just occurred to me that it could cause me more problems when trying to work out any CGT especially when using HMRC rules & regs to calculate any loss/profit. I'm using the online CGT calculator that i was referred to many moons ago and it keeps life simple(r)

So maybe i'll just bite the bullet and pay the 1.5%!!

Other brokers have much lower currency conversion fees, down to 0.1% with Degiro
Here is an IC article on it
https://www.investorschronicle.co.uk/ma ... e-dealing/

An alternative is to use an OEIC. Dividends are then converted by the fund manager at institutional rates and paid in pounds. There are no excess reportable income issues with OEICs either. A low fee OEIC alternative to VWRL is HSBC FTSE All-World Index, management fee of 0.13%. The fee for VWRL is 0.22%. An accumulating version is available as well which will save on the round-trip dividend reinvestment costs.

It is of course imperitive to choose a broker that does not charge a platform fee for holding OEICs!

EthicsGradient wrote:

Hariseldon58 wrote:@EthicsGradient

ii messed up my holding of VEVE and have corrected it, to pay dividends in £ , rather than showing it priced in $ with dividends in $, it’s all the same ultimately but preferable for me to have dividends in £.

Are you sure you're actually going to get your next dividend in pounds? Because VEVE pays in dollars:
https://www.vanguardinvestor.co.uk/inve ... tributions
and ii, in a general account, keep it in dollars, until you manually convert it into pounds. There is no facility, as far as I know, to have it automatically converted. I've just searched to check again, and can find nothing.

Here are other people talking about it, and they all agree there's nothing you can do but take the payment in dollars. https://moneyforums.citywire.co.uk/yaf_ ... r-ETF.aspx

You are correct, when the transfer took place my £ denominated VEVE became listed in $ re the price of the ETF and not surprisingly $ dollar distributions , this was corrected to the version listed in £ and I was led to believe the distributions would return to be in £ ( as they were with HL ) I see they are still in $, an irritant.

Hariseldon58 wrote:You are correct, when the transfer took place my £ denominated VEVE became listed in $ re the price of the ETF and not surprisingly $ dollar distributions , this was corrected to the version listed in £ and I was led to believe the distributions would return to be in £ ( as they were with HL ) I see they are still in $, an irritant.

VEVE pays its dividends in $, and you can see from here:

https://www.vanguardinvestor.co.uk/inve ... g/overview

Click on Overview and then on Distributions.

GeoffF100 wrote:

Hariseldon58 wrote:You are correct, when the transfer took place my £ denominated VEVE became listed in $ re the price of the ETF and not surprisingly $ dollar distributions , this was corrected to the version listed in £ and I was led to believe the distributions would return to be in £ ( as they were with HL ) I see they are still in $, an irritant.

VEVE pays its dividends in $, and you can see from here:

https://www.vanguardinvestor.co.uk/inve ... g/overview

Click on Overview and then on Distributions.

HL convert all foreign dividends to pounds. They don't provide an option to do anything else. Annoyingly they don't state the exchange rate. I have on occasion checked it and found it fairly reasonable. HL say they charge 1% to convert dividends, but on the times I have checked, the fee seems to be lower than that. Hard to tell precisely though as they don't provide a conversion time either.