UK Advice - Which ETF? VUSA?

[gmuk]

Hi folks.

Investing newbie here, UK-based. Going to open my first brockerage account and invest in some ETFs (index-trackers, wanting to get into passive investing).

Reading MMM, I get that Vanguard is a great option and especially the S&P 500 index trackers. Here in the UK, Vanguard makes the VUSA ETF available with a TER of 0.09% (https://www.vanguard.co.uk/documents/portal/factsheets/sp-500-etf.pdf).

I'm curious if other UK Mustachains have gone this route? This fund is in GBP, but they're US holdings, so I'm not completely sure what the tax implications are or if any earnings will fluctuate with currency exchange rate.

Your thoughts (and any other recommendations for a good passive portfolio) would be greatly appreciated.

Thanks!

[daverobev]

Hey,

ok, first - a hefty proportion of your investing should be in (home country) stocks - simply because it has the most direct impact on you, vs inflation etc. Especially with the UK, which has a nice reasonably diverse core pair of indices (FTSE 100 + FTSE 250 - former is multinationals and large companies, latter is more domestic stuff). One HUGE thing with the S&P 500 compared to most countries' headline index is that the S&P (like the FTSE100) contains a lot of the true global companies. For Americans, the S&P is a double win there.

So, that aside (and ignoring the VUKE.L vs Irish-domiciled ETFs like HUKX.L - so, the former is a wrapper for a UK fund holding the FTSE 100, meaning withholding tax is paid in the US; for the Irish ones, none is. However the MER on VUKE is lower than HUKX... I haven't figured out which is actually better, but I'm tending towards the Irish).

The S&P 500 IS US holdings, so you will need to fill in a W8-BEN form with your brokerage in order to get only 15% divis withheld not 30%. And yes, it'll all fluctuate as the $ does against the £.

If you search for a post by Grace I think, I gave what I thought was a pretty good passive portfolio! Or at least a starting point - you have to know what your goal is, what your risk tolerance is, etc.

[gmuk]

Thank you very much daverobev! I took a look at Grace's post and found it very useful.

Thanks!