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SWDA Currency

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
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tgboswell
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SWDA Currency

#431919

Postby tgboswell » August 1st, 2021, 10:47 pm

I am really leaning towards SWDA but i'm confused on it's currency. On the Hargreaves Lansdown website, it says the currency is GBX, however, when I look on the key factsheet, it says the Fund Base Currency is USD and it's Share Class Currency is also USD, yet it's Trading Currency is GBP. Would that then require be to pay currency exchange fees to hold this accumulating ETF? Or is SWDA in fact, GBp?

I realize I have received some answers about this but yet I'm still very confused. Would I be paying hidden forex fees for the accumulation of dividends in the accumulation version of SWDA because it's Share Class Currency is USD aswell as it's Fund Base Currency. I really like this fund but I want to be sure on the currency issue before I proceed and deal

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Re: SWDA Currency

#431927

Postby XFool » August 1st, 2021, 11:57 pm

tgboswell wrote:I am really leaning towards SWDA but i'm confused on it's currency. On the Hargreaves Lansdown website, it says the currency is GBX, however, when I look on the key factsheet, it says the Fund Base Currency is USD and it's Share Class Currency is also USD, yet it's Trading Currency is GBP. Would that then require be to pay currency exchange fees to hold this accumulating ETF? Or is SWDA in fact, GBp?

AFAICS, if you choose the LSE listed version then it will be priced in GBP. I take it, inside the box, it will operate in USD but this is neither here nor there when it comes to the pricing of its shares on the LSE.

Look under "Listings": https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund

Obviously there must be currency conversion costs, but I assume these are simply part of the internal costs of the fund, a holder would not pay them directly - though over time they must be a drag on its NAV, plus currency fluctuations between USD and GBP would add to the volatility of its quoted GBP market price.

That would be my understanding - now wait for someone who actually knows anything about ETFs to come along!

tgboswell
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Re: SWDA Currency

#431928

Postby tgboswell » August 2nd, 2021, 12:07 am

XFool wrote:
tgboswell wrote:I am really leaning towards SWDA but i'm confused on it's currency. On the Hargreaves Lansdown website, it says the currency is GBX, however, when I look on the key factsheet, it says the Fund Base Currency is USD and it's Share Class Currency is also USD, yet it's Trading Currency is GBP. Would that then require be to pay currency exchange fees to hold this accumulating ETF? Or is SWDA in fact, GBp?

AFAICS, if you choose the LSE listed version then it will be priced in GBP. I take it, inside the box, it will operate in USD but this is neither here nor there when it comes to the pricing of its shares on the LSE.

Look under "Listings": https://www.ishares.com/uk/individual/en/products/251882/ishares-msci-world-ucits-etf-acc-fund

Obviously there must be currency conversion costs, but I assume these are simply part of the internal costs of the fund, a holder would not pay them directly - though over time they must be a drag on its NAV, plus currency fluctuations between USD and GBP would add to the volatility of its quoted GBP market price.

That would be my understanding - now wait for someone who actually knows anything about ETFs to come along!

Thank you for your response, so in your opinion, there would be nothing to worry about if I chose this as my core holding within a SIPP. The currency conversion costs will be done internally and there would be no forex exchange fees to pay whilst trading because it's trading currency is GBP? Also the accumulating dividends would be of no issue because they're not being distributed?

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Re: SWDA Currency

#431930

Postby 1nvest » August 2nd, 2021, 12:14 am

A fund/ETF might list in a number of stock markets/exchanges and share prices quoted in the respective currencies, but where the funds value is relative to a single (base) currency, such as US$.

You may be able to buy either using the base currency, such as CSPX, or in the domestic currency version such as CSP1. Total returns will still be the same either way, however your broker will typically levy a 1.5% or whatever fee if you buy using £ converted to US$ in order to hold the CSPX version, whilst no such FX/currency conversion cost would occur if you'd bought CSP1 using £;s.

I use ii as my broker and within that I can convert £ to $, paying a conversion fee for doing so, but once converted I could buy CSPX that trades in US$ using those $'s, and later sell and see the $ proceeds added to my $ cash holdings within the account. OR I could use £'s within the account to buy CSP1 using £'s ... that later when sold sees the proceeds in £'s added to my £ cash holdings.

Within a ISA you're not allowed to hold foreign currencies, so generally you'd look to hold the £ trading currency versions to otherwise avoid FX conversion costs when you buy and again when you sell. If funds pay dividends in $'s they'd equally be converted to £'s at a conversion cost, so better inside ISA to hold accumulating funds to avoid avoidable FX fees/costs.

I believe SWDA is similar to CSP1, trades in £'s, at least for the London listed version. Others might also be able to buy the same (perhaps under a different name) in Germany that trades in Euros. Behind that the actual fund values all of its assets in US$'s, so the price quote you get in £ or Euro's or whatever will be the current exchange rate at the time of placing the trade order.

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Re: SWDA Currency

#431931

Postby 1nvest » August 2nd, 2021, 12:31 am

Towards the middle of the SWDA factsheet https://www.ishares.com/uk/individual/e ... rough=true

DEALING INFORMATION
Exchange London Stock Exchange London Stock Exchange
Ticker SWDA IWDA
Trading Currency GBP USD
This product is also listed on: Euronext Amsterdam,Bolsa Mexicana De
Valores,Borsa Italiana,SIX Swiss Exchange,Deutsche Boerse Xetra

It indicates SWDA trades in £ whilst IWDA trades in $'s.
Behind that its the exact same fund, valued in US$.

Exposure wise total gains/losses for SWDA will be total funds gain/loss in $'s +/- FX £/$ gain/loss.

The stock gain/loss and £/$ currency gain/loss will sometimes move in the same direction, sometimes in opposite directions, so your total return in £ terms may be amplified or attenuated by the £/$ gain/loss.

In your SIPP, just buy/hold the SWDA £ based version and your broker wont levy any additional FX fees when you either buy or sell shares.

tgboswell
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Re: SWDA Currency

#431934

Postby tgboswell » August 2nd, 2021, 12:57 am

1nvest wrote:Towards the middle of the SWDA factsheet https://www.ishares.com/uk/individual/e ... rough=true

DEALING INFORMATION
Exchange London Stock Exchange London Stock Exchange
Ticker SWDA IWDA
Trading Currency GBP USD
This product is also listed on: Euronext Amsterdam,Bolsa Mexicana De
Valores,Borsa Italiana,SIX Swiss Exchange,Deutsche Boerse Xetra

It indicates SWDA trades in £ whilst IWDA trades in $'s.
Behind that its the exact same fund, valued in US$.

Exposure wise total gains/losses for SWDA will be total funds gain/loss in $'s +/- FX £/$ gain/loss.

The stock gain/loss and £/$ currency gain/loss will sometimes move in the same direction, sometimes in opposite directions, so your total return in £ terms may be amplified or attenuated by the £/$ gain/loss.

In your SIPP, just buy/hold the SWDA £ based version and your broker wont levy any additional FX fees when you either buy or sell shares.

Thank you, that makes more sense to me now, so I am good to go and buy the SWDA and I don't have to worry about additional FX fees because the trade currency is priced in GBP

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Re: SWDA Currency

#432019

Postby hiriskpaul » August 2nd, 2021, 1:16 pm

tgboswell wrote:
1nvest wrote:Towards the middle of the SWDA factsheet https://www.ishares.com/uk/individual/e ... rough=true

DEALING INFORMATION
Exchange London Stock Exchange London Stock Exchange
Ticker SWDA IWDA
Trading Currency GBP USD
This product is also listed on: Euronext Amsterdam,Bolsa Mexicana De
Valores,Borsa Italiana,SIX Swiss Exchange,Deutsche Boerse Xetra

It indicates SWDA trades in £ whilst IWDA trades in $'s.
Behind that its the exact same fund, valued in US$.

Exposure wise total gains/losses for SWDA will be total funds gain/loss in $'s +/- FX £/$ gain/loss.

The stock gain/loss and £/$ currency gain/loss will sometimes move in the same direction, sometimes in opposite directions, so your total return in £ terms may be amplified or attenuated by the £/$ gain/loss.

In your SIPP, just buy/hold the SWDA £ based version and your broker wont levy any additional FX fees when you either buy or sell shares.

Thank you, that makes more sense to me now, so I am good to go and buy the SWDA and I don't have to worry about additional FX fees because the trade currency is priced in GBP

Correct and this is a benefit of an accumulating ETF. If you hold a distributing ETF, dividend payments are made in the underlying currency of the fund, typically dollars for a global ETF. Those dividends will then be converted by your broker to pounds, although outside an ISA some brokers give you the option of not converting immediately to pounds. The charges for the conversion vary across brokers and some can be quite high. eg HL charge 1%.

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Re: SWDA Currency

#432136

Postby 1nvest » August 3rd, 2021, 12:58 am

hiriskpaul wrote:
tgboswell wrote:
1nvest wrote:Towards the middle of the SWDA factsheet https://www.ishares.com/uk/individual/e ... rough=true

DEALING INFORMATION
Exchange London Stock Exchange London Stock Exchange
Ticker SWDA IWDA
Trading Currency GBP USD
This product is also listed on: Euronext Amsterdam,Bolsa Mexicana De
Valores,Borsa Italiana,SIX Swiss Exchange,Deutsche Boerse Xetra

It indicates SWDA trades in £ whilst IWDA trades in $'s.
Behind that its the exact same fund, valued in US$.

Exposure wise total gains/losses for SWDA will be total funds gain/loss in $'s +/- FX £/$ gain/loss.

The stock gain/loss and £/$ currency gain/loss will sometimes move in the same direction, sometimes in opposite directions, so your total return in £ terms may be amplified or attenuated by the £/$ gain/loss.

In your SIPP, just buy/hold the SWDA £ based version and your broker wont levy any additional FX fees when you either buy or sell shares.

Thank you, that makes more sense to me now, so I am good to go and buy the SWDA and I don't have to worry about additional FX fees because the trade currency is priced in GBP

Correct and this is a benefit of an accumulating ETF. If you hold a distributing ETF, dividend payments are made in the underlying currency of the fund, typically dollars for a global ETF. Those dividends will then be converted by your broker to pounds, although outside an ISA some brokers give you the option of not converting immediately to pounds. The charges for the conversion vary across brokers and some can be quite high. eg HL charge 1%.

ii charges 1.5% for currency conversions of up to £25K, 1.25% for 25K to 50K. 50K to 100K is 1%, 100K to 600K 0.5%, 0.25% for 600K and above. Most will fall into that higher 1.5% cost range for dividends. Outside of SIPP/ISA I can hold foreign currencies so US$ dividends just accumulate as US$ cash. With accumulation funds outside of ISA you have to remember to uplift the cost per share by the dividends so that you're not taxed twice, can be easier to just use a non-accumulation fund outside of ISA and if your account supports multiple currencies it might not matter which version you hold (£ or $ for instance). Inside ISA and £ trading currency and accumulation is generally easier/better.

I intend to open some multiple family member accounts with Freetrade, where FX is 0.45% and there's no monthly fee for the general account and adding in a ISA account costs £3/month each. So less than £10/month for three accounts compared to £30 with ii. Somewhat penny pinching, but £360/year versus £120/year for brokerage, £240/year difference ... is worth it IMO. Under TD Waterhouse/TD Direct (that ii took over) with larger accounts such as ours they provided the same for free.

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Re: SWDA Currency

#447293

Postby AshleyW » October 2nd, 2021, 5:26 pm

As many people have replied SWDA is priced in US$ which are converted to £ on the LSE. This is unhedged so you benefit or suffer from currency variations. There is however a sterling hedged version of SWDA which could be more appropriate for some investors, It's a relatively recent addition so not much history.

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Re: SWDA Currency

#447318

Postby TedSwippet » October 2nd, 2021, 6:26 pm

1nvest wrote:Exposure wise total gains/losses for SWDA will be total funds gain/loss in $'s +/- FX £/$ gain/loss.

The stock gain/loss and £/$ currency gain/loss will sometimes move in the same direction, sometimes in opposite directions, so your total return in £ terms may be amplified or attenuated by the £/$ gain/loss.

Somewhat late to the party, but I feel like I should just add here that this part of things is not correct. A fund or ETF's denomination currency has no bearing on investor returns. Any currency exposure comes from the currency (or currencies) of the assets that the fund or ETF holds.

Fully explained in this article: Currency risk and ETFs, trackers, and other funds - Monevator


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