I already have an account with Schwab, and so buying the Schwab ETFs would be pretty easy. Anyone have input as to whether there is a compelling reason to buy Vanguard/Blackrock instead?
I've been considering adding a small ETF component into my investments (S&P500, NASDAQ or Russell). Leaving aside whether such is a good idea or not, I wondered what is the best way to do it.
Since they are all traded there is no advantage or disadvantage in buying Schwab ETF's as they are not selling directly to you.
I have my reasons for not buying ETFs!
Well if they are just trackers, then there are a few questions to answer:
- The method used to replicate the index
- The tracking error
- Expense ratio
I use iShares or Vanguard for ETFs but I think Schwab offer free trading on their own ETFs which gives an advantage to use theirs (save around 5 bucks purchase fee).
As others have said, look at tracking error and expense ratio. I looked at Schwab and it seems they have their own ETF styles rather than an ETF for FTSE100 / SP500, etc.
I am reviving this thread, seeking for some help with regards to basic S&P500 ETFs. I just opened an Interactive Brokers Account, loaded it up with CHF, converted to USD and bought the SPY ETF. However, this implies an FX risk, so I was wondering if there are any CHF denominated S&P500 ETFs. I found this one:
Vanguard S&P 500 ETF, Ticker VUSA ( https://www.marketwatch.com/investin...countryCode=CH )
Interactive Brokers gives the following info:
Underlying Information Description/Name Vanguard S&P 500 UCITS ETF (VUSA@AEB)
Contract Information Description/Name VANG S&P500 USDD
Symbol VUSA
Exchange EBS, BATECH, CHIXCH, TRQXCH
Contract Type Stock
Country/Region IEIreland
Closing Price 71.75
Currency Swiss Franc (CHF)
Conid 121613790
ASSETID IB23217978
CINS G9T17W137
ISIN IE00B3XXRP09
This does not help much. Is it a similar ETF to SPY, denominated at CHF? Price is very far away, but I guess this is irrelevant.
Also, is this ( https://www.marketwatch.com/investin...od=over_search ) the same, denominated in EUR?
Yes very much the same, VUSA has multiple currencies too.
The currency risk is misleading, the assets are identical if you wish to track the S&P500
Nestle earns only 2% of it's profits in CHF, a higher amount in Indian Rupees, therefore holding Nestle has a 98% foreign currency risk as it reports profits in CHF. Would you consider hedging for Nestle?
Currency hedging is pointless for pretty much anything but bonds.
In your specific case - having it denominated in CHF won't matter one bit in the long term.
And you would only pay additionally for the cost of hedging - usually the difference in the interest rates between the two currencies.
So, no need to worry or think that having SP500 in CHF would make a difference.
Especially with IB where the cost of converting chf to USD is minimal (less than 2usd for 10 - 25k).
You could buy large US ETF with minimal fee like Vanguard Total (VT)
Ok, understood! Thanks for the clarifications.
So, based on the above, even if I go for USD denominated ETFs, SPY is no different to VOO for example from a performance perspective, right?
What about taxation in CH? Would it make a difference which one I choose? Or would the CHF denominated ETF be preferable by the Swiss tax authorities (in terms of simplicity of portfolio value calculation or P&L)?
No difference
No advantage for tax, the USD one will be more liquid so likely will have a smaller spread, but then you have a spread to buy USD. Irrelevant on a 10 year holding period, but added cost if 'trading'