Etf Comparison VUSD / VUSA

Hey guys, can someone explain the difference between these two vanguard etf’s? I know VUSD is in dollar and VUSA in pounds. But is there any other difference?

Well technically both ETFs are underlying in USD, thus GBP one has the FX risk added. The “hedged” ETFs are the once which provide alternative to USD ETFs.

So in short they are same, just added FX risk for non USD listed ETF.

Thanks for your response. Why would anyone then invest in VUSA? It makes more sence to me to invest in VUSD since you have no currency risk, especially since im not using GBP. Is this correct?

Well it is mostly for GBP folks, as they tend to have GBP accounts thus currency risk is by default. If you are non GBP, only point would be currency diversification. However I wouldn’t personaly diversify in GBP.

In which case we could lose money? If gbp depreciate (to usd, eur, hrk,…), value of our investment in VUSA will go up because we bought us stocks nominated in usd.

But I also bought vusd because I don’t see any reason to buy vusa.

There is no currency risk in buying the GBP version compared to the USD version. 100 shares of either can always be exchanged for exactly the same number of grams of gold or Euros or Yen. These two ETFs are exactly the same fund, backed by the same Vanguard shareholdings in US companies.

Suppose the conversion between miles and kilometres was suddenly redefined. Would it change how tired one might feel after running from Athens to Marathon?

Then I don’t understand why USD nominated outperform GBP

In USD terms they performed the same.

VUSD is up 20.67% in dollars. VUSA Is up 16.86% in pounds. But the value of a pound over the same period increased by a factor of 1.2067/1.1686 against the dollar, so in dollar terms VUSA has returned the same 20.67%.

VUSD has returned the same 16.86% in terms of pounds.

So if I invest 1000$ in both USD and GBP, I believe I would get less with GBP version. So I still don’t understand how there is no currency risk? When GBP provided less returns.

I suggest you try it in the practice account.

Buy 100 VUSD and 100 VUSA. They will cost you the same in USD. Wait a week, or a month, or until it appears that VUSA and VUSD have gained or lost by different percentages. Now sell both holdings. They will sell for identical numbers of USD. All the while you hold these positions the app will be showing you identical Returns for the two positions since Return is always computed in terms of your account currency.

Notice that cost of 100 shares of both packagings of IE00B3XXRP09 is essentially the same in my account currency. That will still be true a year from now. Maybe they will both cost £6,000, to within a few pounds of each other. The values of the two shareholdings will never differ by more than a very few pounds. So I have no currency risk due to buying one rather than the other.

Although I understand, it’s still confusing :confused:

It’s the same thing as choosing currency at skyscanner web page, for example. Price of a plane ticket is always the same, just exchanged to wanted currency. You are buying stocks from the US market, S&P500 index, and you pay them in USD. If you live in the UK, Vanguard does the calculation for you. I live in Croatia, so I have to do the math for myself. We both bought units for 56 USD last year, and we both sold them for 66 USD yesterday, so we both earned 10 USD. But I paid 56x6,7= 375,20 HRK for one unit, and I sold it for 66x6,4=422,40 hrk. You bought one unit for 44,78 GBP, and you sold it for 51,51 GBP.

Thanks, its clear to me!

“for my own benchmark” (investing money in each benchmark at the exact time and amount) I’d like to say there is little to no difference.

I don’t know if you can see it but there are two different lines at the bottom of the graph.

  • Solid black at the bottom is SNP500 (SPDR) in USD
  • Dashed black at the bottom is SNP500 (VUSA) in GBP
  • Dotted black at the top is EQQQ in USD GBX

so if there is any difference in USD vs GBP it is nothing to loose sleep over :peace_symbol:

isn’t EQQQ in GDP ? or is this QQQ?

nice chart though. interesting discussion

yeah, my bad. this one is Invesco EQQQ.L which is in GBX, (EQQU is the USD one)

image

no worries, I know you were just testing us to see if we were awake :wink:

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I’m doing an experiment on Practice, let’s see after some weeks.
www.trading212.com/pies/dSz8F9sQFHoBKFTkSiLH9xz2pkBBW

I predict that you will see some differences due to some ETFs being distributing and some accumulating. But VUSA & VUSD will return almost nearly the same.

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