Hi @jpc, thanks for your feedback!
My understanding is that the UK and Luxembourg signed a double taxation treaty last year and the withholding tax is now 15%, the same as it is for Ireland.
If you have different information I’d be keen to see it because it would make PRIW less exciting!
According to https://www.etfstream.com/articles/ireland-extends-leading-position-over-luxembourg-in-european-etf-market and Easy, But Boring Money - How To Reduce Withholding Tax? Luxembourg US withholding is 30%
@jpc, this explains your point perfectly! Thank you.
The investment world is a spiders web - appreciate your help.
Need to do some math now to work out the expenses benefit vs the withholding tax…
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Vanguard FTSE Developed World UCITS ETF
Stock market ticker: VEVE/VHVG
Total expense ratio: 0.12%
What does it invest in?
The Vanguard FTSE Developed World UCITS ETF (VEVE/VHVG) is designed to give investors exposure to a broad range of developed markets across the globe. This ETF tracks the performance of the FTSE Developed Index, which includes large and mid-cap companies from developed economies worldwide. The index encompasses a diverse array of industries and sectors, making it a comprehensive representation of the developed world’s equity markets.
VEVE/VHVG’s underlying index does not focus on specific themes or disruptive technologies, but rather seeks to capture the overall performance of developed world equities. As such, it includes companies from sectors like technology, healthcare, finance, consumer goods, and more.
One notable feature of VEVE/VHVG is its relatively low total expense ratio (TER) of 0.12% p.a. – in short, it’s a cost-efficient fund. This low expense ratio may make VEVE/VHVG an attractive option for investors looking for cost-effective exposure to developed world equities.
Why would you consider it for your portfolio?
Investors looking for broad exposure to developed markets around the world may find VEVE/VHVG appealing. This ETF offers a simple and efficient way to invest in a wide range of companies from developed economies, providing diversification benefits to your portfolio.
The low expense ratio of 0.12% p.a. is a significant advantage, as it minimises the costs associated with holding the ETF. Lower expenses mean that a larger portion of your investment returns remain in your pocket, potentially enhancing long-term returns.
Furthermore, VEVE/VHVG’s passive investment approach involves replicating the performance of the FTSE Developed Index. By not targeting any specific areas, it offers exposure to various industries and sectors, allowing investors to benefit from the overall growth of developed economies.
Does it pay an income?
Vanguard FTSE Developed World primarily focuses on capital appreciation rather than generating immediate income for investors. However, it is available in both distributing (VEVE) or accumulating (VHVG) forms. This gives investors the choice of reinvesting any dividends to accumulate over time, or having them paid out as an income.
You can invest in Vanguard FTSE Developed World UCITS ETF (VEVE/VHVG) via InvestEngine’s commission-free DIY platform.
Is this ETF a part of your wider investment portfolio? If so, are you happy with it? Leave a comment below.
When investing, your capital is at risk.
Money Market Funds
This week, we’ll be taking a closer look at two of our popular money market ETFs available on our platform.
Lyxor Smart Cash and Xtrackers GBP Overnight Rate Swap
What is a money market fund?
Andy, our Head of Investments explains here.
Lyxor Smart Cash
Stockmarket ticker: CSH2
Total expense ratio: 0.07%
What does it invest in?
The Lyxor Smart Cash - UCITS ETF C-GBP aims to outperform the SONIA benchmark by generating short-term returns while minimising volatility. This UCITS-compliant ETF employs an actively managed approach, strategically distributing investments across diverse financial instruments and repurchase agreements. Investments are carefully chosen and overseen in a rigorously assessed, liquid environment. SONIA, the benchmark, reflects the dynamic overnight interest rate based on a weighted average of interbank transactions in the Pounds interbank market.
Why would you consider it for your portfolio?
Consider incorporating the Lyxor Smart Cash ETF into your portfolio for its unique features. This ETF aims for short-term returns above the SONIA benchmark, catering to a shorter investment horizon. With a focus on maintaining low volatility, it appeals to those seeking stability. The active management strategy allows it to adapt to market changes, and a diversified portfolio enhances adaptability and potential risk mitigation.
As an investor, benefit from exposure to a highly liquid investment traded on an exchange. This ETF, following Lyxor’s reputable standards, offers transparent and cost-effective access to the benchmark rate and strategy, making it a valuable asset for your investment portfolio.
Does it pay an income?
The Lyxor Smart Cash ETF is not designed to provide an income. Instead, the earnings generated by the ETF are accumulated, contributing to its overall value and potentially supporting its objective of achieving short-term returns beyond the SONIA benchmark rate.
You can invest in The Lyxor Smart Cash ETF via InvestEngine’s commission-free DIY platform.
Xtrackers GBP Overnight Rate Swap
Stockmarket ticker: XSTR
Total expense ratio: 0.15%
What does it invest in?
The Xtrackers GBP Overnight Rate Swap ETF, designed to meet UCITS compliance standards, aims to deliver short-term returns that surpass the benchmark rate, SONIA, all while maintaining an exceptionally low level of volatility. This ETF operates within an actively managed framework, strategically allocating its investments across a diversified spectrum of financial instruments and repurchase agreements. These investments are meticulously chosen and managed in a high-scrutiny environment, with continuous monitoring of liquidity levels.
SONIA, the ETF’s benchmark, represents a dynamic overnight interest rate, calculated as a weighted average of all interbank transactions involving overnight assets within the GBP interbank market.
Why would you consider it for your portfolio?
Incorporating the Xtrackers GBP Overnight Rate Swap ETF into your investment portfolio can be substantiated by its distinctive attributes. The ETF focuses on generating short-term returns that outperform the SONIA benchmark rate, offering potential benefits within a shorter investment horizon. Furthermore, its emphasis on maintaining exceptionally low volatility levels can be appealing to investors seeking stability and reduced risk exposure within their holdings.
As an investor, you gain the advantage of exposure to a highly liquid ETF. This ETF, upholding Xtrackers’ reputable standards, provides transparent and cost-effective access to the underlying benchmark rate and investment strategy, rendering it a valuable asset for your investment toolkit.
Does it pay an income?
The Xtrackers GBP Overnight Rate Swap ETF is a distributing ETF that pays out the income from its underlying holdings, rather than automatically reinvesting it (as with an accumulating ETF).
The current yield is 4.05% (as at 20/12/23).
You can invest in the Xtrackers GBP Overnight Rate Swap ETF through InvestEngine’s commission-free DIY platform.
Are these ETFs a part of your wider investment portfolio? If so, are you happy with them? Leave a comment below.
When investing, your capital is at risk.
WisdomTree Megatrends UCITS ETF
Stock Market ticker: WMGG
Total expense ratio: 0.50%
What does it invest in?
The WisdomTree Megatrends - UCITS ETF is structured as a UCITS compliant exchange-traded fund with the primary goal of capitalising on the enduring growth potential of Megatrends and associated themes, aiming for long-term capital appreciation. This ETF tracks the WisdomTree Global Megatrends Equity Index, strategically investing in global listed companies engaged in investment themes across various megatrends. These megatrends encompass social, demographic, technological, environmental, and geological shifts.
Why would you consider it for your portfolio?
Including the WisdomTree Megatrends ETF into your investment portfolio is substantiated by its distinctive attributes. The ETF is designed to capture the long-term growth potential of Megatrends, aligning with investors’ objectives for sustained capital appreciation. Its focus on global listed companies involved in key investment themes provides a diversified approach to tapping into transformative shifts across different sectors.
Employing an active management framework, this ETF adapts to evolving market conditions, positioning itself to capitalise on opportunities that align with its investment objectives.
The WisdomTree Megatrends ETF, in line with WisdomTree’s reputable standards, offers transparent and cost-effective access to the underlying global megatrends and investment strategy, making it a valuable asset for inclusion in your investment portfolio.
Does it pay an income?
The WisdomTree Megatrends ETF is not designed to provide regular income. Instead, the earnings generated by the ETF are accumulated, contributing to its overall value and potential to achieve long-term capital appreciation. Investors looking for a growth-oriented strategy aligned with the transformative shifts represented by global megatrends may find this ETF a compelling addition to their investment arsenal.
You can invest in the WisdomTree Megatrends ETF via InvestEngine’s commission-free DIY platform.
Is this ETF a part of your wider investment portfolio? If so, are you happy with it? Leave a comment below.
When investing, your capital is at risk.
In light of Bitcoin reaching yet another all time high fueled by Trump’s pro crypto stance, this week we take a look at the Global X Blockchain ETF (BKCG).
This ETF focuses on companies involved in blockchain technology, the system behind cryptocurrencies like Bitcoin. Blockchain is a decentralized and secure way of recording transactions, which has applications in finance, supply chain management, and other industries. The companies in this ETF may include those developing blockchain technology, providing services related to blockchain, or using it to enhance their business processes.
The fund might appeal to investors who believe in the long‑term potential of blockchain as a transformative technology. It provides exposure to a range of businesses that are either creating or benefiting from blockchain innovations, without needing to invest directly in cryptocurrencies, which can be highly volatile. This could be attractive for those who want to diversify their investments in the tech space but are specifically interested in emerging technologies.
Issuer details
Global X ETFs is a leading provider of specialized thematic and sector‑specific ETFs, with over $50 billion in assets under management as of June 2024. As a subsidiary of Mirae Asset Global Investments, Global X focuses on thematic investing. Founded in 2008 by Bruno del Ama, Global X ETFs is known for its focus on niche and innovative investment themes, allowing investors to access areas of the market experiencing rapid growth and transformation. Notable ETFs include the Global X Robotics & Artificial Intelligence ETF (BOTZ) and the Global X Lithium & Battery Tech ETF (LIT), reflecting Global X’s commitment to providing exposure to cutting‑edge industries and trends.
Index details
The Underlying index is designed to provide exposure to companies that are positioned to benefit from further advances in the field of blockchain technology. A blockchain is a peer‑to‑peer shared distributed ledger (or decentralized database) that facilitates the recording of transactions and tracking of assets without the need for the use of a central authority acting as a trusted intermediary (i.e., a bank). Certain users, known as nodes, elect to maintain a copy of the database (‘ledger’) on their computer. Nodes connect on a peer‑to‑peer basis with other nodes, propagating trasactions and blocks across the network to be independently verified by other nodes according to the network’s rules. Transactions are aggregated into blocks which record the time and sequence of transactions, like new pages of a ledger. ‘Blocks’ are linked together with the prior block to form a ledger of information — because the rules for adding information to the ledger are public, any transactions and new pages of the ledger can be independently verified by any use maintaining a copy of the ledger, resulting in a shared and continually reconciled database. Blockchains may also be private or public networks. A public blockchain network is a publicly available set of rules that anyone can download and run to participate in the network. A private blockchain network is a centralized blockchain that requires an invitation from the originator of the network to participate. Specifically, the Underlying Index will include securities issues by ‘Blockchain Companies’ as defined by Solactive AG, the provider of the Underlying Index (the ‘Index Provider’).
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With Gold delivering returns over 5% this week, we look at the iShares Physical Gold (SGLN) which tracks the price of Gold.
This ETC provides investors with a way to invest in physical gold, by following the daily price of gold. It does this by owning gold bars.
This ETC may appeal to investors looks to include gold in their portfolio, without the need to hold it physically.
Issuer details
iShares ETFs are issued and managed by BlackRock, the world’s largest asset management company.
With 800+ products globally and over $2trn in assets (as at June 2024), iShares ETFs are a flexible, low‑cost way for investors to gain exposure to various market segments, including fixed income, emerging markets and broad‑based indexes.
Index details
This ETF tracks the price of gold, which is influenced by several factors.
Like most commodities, the balance between how much gold is available (supply) and how much people want to buy (demand) can affect its price. Also, in times of economic uncertainty or stock market fluctuations, investors may turn to gold as a ‘“safe haven”’, which can raise gold prices. As gold is priced in US dollars, the strength of key currencies, especially the U.S. dollar, impacts gold prices. Lower interest rates reduce the opportunity cost of holding non‑yielding assets like gold, potentially increasing its appeal and price.
These factors are interconnected, and can affect gold prices in complex ways.
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With Federal Reserve’s preferred measure of inflation (Core PCE) ticking up to 2.8% this week, we look at one of the ETFs that can help investors mitigate inflation via short duration fixed income.
The iShares US Inflation‑linked Bonds 0 – 5 Years ETF (TI5G) offers investors exposure to US Treasury inflation‑protected bonds. Their value is linked to inflation, meaning they can provide some protection against rising levels of US inflation. This ETF buys US government bonds which have maturities up to 5 years. This means that the bonds will be paid back within a 5‑year timeframe. This ETF is currency-hedged mitigating currency risk when investing in overseas markets.
This ETF might appeal to investors who are looking for a lower risk investment. US government bonds are generally considered to be lower risk compared to other types of investments, as they are backed by the US government. Bonds with shorter maturities are also considered to be less risky than bonds with longer maturities, as they have less time until the bonds are paid back, and are therefore less sensitive to interest rate movements.
Because the ETF holds bonds issued by the US government, the fund’s value can be influenced by changes in interest rates, inflation, and the perceived stability of the US government. If interest rates rise, the market value of the bonds typically falls, and vice versa.
Issuer details
iShares ETFs are issued and managed by BlackRock, the world’s largest asset management company.
With 800+ products globally and over $2trn in assets (as at June 2024), iShares ETFs are a flexible, low‑cost way for investors to gain exposure to various market segments, including fixed income, emerging markets and broad‑based indexes.
Index details
The US Inflation‑linked Bonds 0 – 5 Years index provides investors with exposure to short‑term US Treasury Inflation‑Protected Securities (TIPS), offering protection against inflation. With its focus on short‑term maturities and inflation‑adjusted returns, the index serves as a valuable tool for investors seeking to hedge against inflation and preserve purchasing power.
As Bitcoin breaks through the $100,000 level, and whilst the FCA is yet to allow any Bitcoin ETFs to be marketed to retail investors, this week we take a look at the Invesco CoinShares Global Blockchain (BCHS).
This ETF focuses on providing exposure to companies that are involved in the development, research, and implementation of blockchain technology. Blockchain is a decentralised digital ledger system that allows for secure and transparent transactions across various industries, most notably in financial services, supply chain management, and cybersecurity. The companies in this ETF may include those that directly work on blockchain platforms, as well as those that benefit from integrating blockchain technology into their operations.
This ETF could appeal to investors who are interested in technological innovation and want to gain exposure to the potential growth of blockchain technology across different sectors. It might also attract those who believe in the long‑term potential of blockchain to revolutionise industries and want to diversify their portfolio with companies that are early adopters or key players in this space.
Issuer details
Invesco is one of the world’s largest ETF providers with over US$680 billion globally in ETF assets under management (as at 31 March 2024). It offers over 140 EMEA ETFs spanning regions and strategies across equities, fixed income and commodities.
Its culture of innovation lets it find new opportunities for investors, as well as ways to improve the performance of core ETF exposures.
Index details
The CoinShares Global Blockchain index provides investors with specialized exposure to the blockchain technology sector by tracking companies involved in blockchain development and innovation. By focusing on this high‑growth technology area, the index offers a unique view of the performance of key players within the blockchain space.
When investing, your capital is at risk. InvestEngine does not offer financial advice. If in doubt, contact an Independent Financial Advisor.