A question for users of the Vanguard platform.

[Montello]

A question for users of the Vanguard platform.

I see they have a list of 78 available investment products/fund but some of them seem almost identical?

What is the difference between the following pairs?

FTSE Developed Europe ex UK UCITS ETF
and
FTSE Developed Europe ex-U.K. Equity Index Fund

or

ESG Developed World All Cap Equity Index Fund
and
ESG Developed World All Cap Equity Index Fund (UK)

or

FTSE 100 Index Unit Trust
and
FTSE 100 UCITS ETF
Each of the above pairs seems to offer identical propositions but there is obviously a difference but I am assuming it a a technical or regulatory matter but I would like to understand the differences.


Does anyone know?

[ernestrome]

The first, the difference is between an Index fund vs Exchange Traded Fund. The former is bought from the fund manager whilst the latter is traded like a stock on the exchanges and you buy it through at broker at the market price.

For the second the difference isn't very clear to me, maybe the first is structured as an irish UCITS whilst the second is a UK based passive fund?

The third, the difference is between a unit trust and an ETF. A unit trust holds a portfolio of assets and you buy a share of that portfolio.

[Montello]

The first, the difference is between an Index fund vs Exchange Traded Fund. The former is bought from the fund manager whilst the latter is traded like a stock on the exchanges and you buy it through at broker at the market price.

For the second the difference isn't very clear to me, maybe the first is structured as an irish UCITS whilst the second is a UK based passive fund?

The third, the difference is between a unit trust and an ETF. A unit trust holds a portfolio of assets and you buy a share of that portfolio.

So, essentially they are trying to replicate/return the same sort of investment; one being an UCITS ETF and the other the Index Fund ...

What are the benefits of holding each and why would the platform offer retail investors the option of either?

[ernestrome]

Well, each structure has different cost, trading and legal implications the full scope of which are beyond me but which are well detailed elsewhere (i.e. lmgtfy :)). To take one difference as an example, (I use Ajbell, but I think it is common across platforms) if I want to sell an ETF holding I can do that at a moment's notice at whatever the market price for selling is at that moment and they'll charge me £9.95 but if I want to sell the index fund version it only cost me £1.50 but might take a couple of days to process, and I'll get that day's price on the day they get around to processing it. Index funds are only valued once daily I think, whereas the market is setting the price for the ETF constantly.

Why would a platform offer different versions? Because if a customer or class of customers will or can only buy unit trusts/etfs/funds, or are limited to only holding UK based investments vs those located in Ireland or elsewhere for one reason or another they might go elsewhere if they cannot get them on their current platform. Presumably once you have the infrastructure in place they're all going to get processed through your sausage machine. AFAIK there's not a sufficient competitive advantage in saying our platform will only deal in any oneparticular type but we won't sell the others.