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Global Small Cap

Index tracking funds and ETFs
hiriskpaul
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Re: Global Small Cap

#477717

Postby hiriskpaul » February 1st, 2022, 10:03 am

1nvest wrote:
hiriskpaul wrote:
GeoffF100 wrote:There is a FTSE Global Small Cap Index, but there do not appear to be any funds that are available to us tracking it.

We hold Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) in our SIPPs, but unfortunately HL will not allow me to buy any more of it due to PRIIPS/lack of conforming KID. It shows how we are being gouged for fees though when it comes to small caps, TER of only 0.11%! It also covers emerging markets.

https://investor.vanguard.com/etf/profile/VSS

Institutional ('professional') Investors can still trade US ETF's/Mutual funds. Might be worth checking out the details with your broker. Typical requirements for registration for those not employed in the financial sector are something like a portfolio value of $500K+ (around £375K+ at recent $1.34/£ FX rate) and to have made 40 substantial trades in the last year, where a substantial trade is I believe $10K+/trade. So for example selling and then re-buying $12.5K (£9.4K) of a stock index fund 20 times would have you having enough demonstrable 'Trading experience'. If say £8/trade then a £320 'cost of admission' to be promoted from a regular retail to a professional investor. AFAIK being upgraded from a Retail to a Professional status is just a regulatory issue, all else remains the same.

I have professional investor status with IG and they do allow me access to US listed ETFs, but many retail brokers don't support this. My SIPP is with Hargreaves Lansdown and they classify all their customers as retail investors. They just don't have the systems and bureaucracy in place for anything else.

Outside a SIPP it is questionable whether it is worth investing in US listed ETFs that contain non-US shares anyway. That's because of the 15% dividend withholding tax on US securities and it applies to ETFs that don't contain US stocks. That would mean an extra 0.3% or so charge on an ETF such as VSS, rendering it more expensive than non-US listed alternatives.

OTOH, US listed ETFs containing US shares are worthwhile as 1) you would pay the WHT anyway with non-US listed funds/ETFs and 2) in taxable accounts you get a 15% tax credit which can be used to reduce or eliminate the UK income tax applied to dividends.

Hariseldon58
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Re: Global Small Cap

#477986

Postby Hariseldon58 » February 2nd, 2022, 10:37 am

Would holding us listed ETFs cause issues following your death, ( sorry for being morbid ) there was recent mention that significant admin hassles with administering an estate that holds more than $60,000 in us listed equities….

hiriskpaul
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Re: Global Small Cap

#478308

Postby hiriskpaul » February 3rd, 2022, 1:49 pm

Hariseldon58 wrote:Would holding us listed ETFs cause issues following your death, ( sorry for being morbid ) there was recent mention that significant admin hassles with administering an estate that holds more than $60,000 in us listed equities….

Probably not in a SIPP. Outside a SIPP I don't know and it is a concern should the US tax authorities find out for the sheer headache it might cause my executors. I would hope to dispose of all my US listed holdings before that happened (I hold Berkshire Hathaway in addition to US listed ETFs). The long term goal is to eventually have zero investments outside our SIPPs!


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