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Service: Investment Fund (Unit Trust)
Product: US Equity Index
Review by hdeakin299
submitted on 18 June 2012
Likes: Low TER : Covers a broad area : Helps to make ETFs more mainstream
Dislikes: Takes are bit of effort and planning but worth it (so not really a bad point !!)
This review is actually about a broad range of ETF trackers which I shall call the Vanguard ETF tracker range.
I first heard about the availability of these in a recent article by Richard Evans in the Saturday Daily Telegraph late May 2012.In this article he states that low charges are a key factor for ETF enthusiasts and that the Vanguard range of trackers meets this need very well indeed as they specialize in low cost index tracking funds and these are now being offered to British investors in ETF form ( in addition to their existing unit trust range). A quick look at some web sites show at least 30 or so of these ETFs so there is a good choice for British investors.Both the equity UK FTSE tracker and the UK gilt trackers have TERs of around .1% or thereabouts: so very reasonably priced
Their FTSE Emerging Markets ETF has a TER of .45% which is still good.However I decided to "have a go" with the Vanguard S&P 500 ETF which invests in the US Index and which has a TER of 0.09%. " How to do it?" was the next question and I decided to treat the Hargreaves Lansdown platform as my protected "sandbox" area for "messing about with" and "learning how to do it with" ETFs which are still quite a new area for me. Inevitably there are hurdles to be crossed and for me , in this particular case , these were as follows :- 1) Checking out whether this ETF was physical or synthetic 2) Checking out the distributor/reporting status 3) Clearing out existing non ETF investments to create the funds for the new investments 4) Filling out the W-8BEN form for the USA authorities 5) Trading when the US stock market is actually open : here I found that early afternoon trading was no good but late afternoon was OK . You click on the button and the site gives you a few seconds to decide so you have to be quick to click on your mouse if you are happy to proceed . It was all very quick indeed and the printed contract note arrived the next day. I was quite pleased that I had managed to pull it off .The commission charge by H/L was £11.95.
There was one part which needed a calculator to estimate the exchange rate and the number of shares to buy with my sterling funds, that I had available , for the (as then) dollar price of 60.81 dollars per share. I had to include the dealing charge: luckily it all fell on the right side of the line and I had a few quid left over and the transaction went through OK
I was quite impressed with the way H/L handled the W-8BEN form which is required by the USA authorities .Firstly I printed it off from the H/L site:they have a step by step guide to completing the W-8BEN form which I used to help me fill in the form having printed it off from the PDF . I then posted it too them and was able to trade within a few days.
I think the usefulness of this tracker will be to add some broad clout (I wont use the word "stability" in these volatile times) to my ETF "sandbox" which up to now has had included some pretty specialist and esoteric stuff in it . More generally, this range will , I think , will help make ETFs mainstream and more on a par with other collective investments like unit and investment trusts etc.So far I am pleased with the results.
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