Vanguard s&p 500 fund

[Markno9]

Hi there

Apologies in advance if its a stupid question but In reference to this fund - Vanguard S&P 500 UCITS ETF (VUSA)

Its priced in GBP on the Vanguard UK website and my question is ...... what happens if the pound gets stronger against the dollar , does that impact this fund at all ? Or is it just priced in GBP and would be bought and sold in GBP ?

Thanks
Mark

[bitchstewie]

Look at VUSA v a US or $ priced S&P 500 tracker and you can see the difference the GBP value makes.

[LeoSayer]

Alternatively, compare a hedged fund with a non-hedged fund.

Non-hedged fund price in GBP = down 3.4% YTD
Hedged fund priced in GBP= down 19.5% YTD

https://www.morningstar.co.uk/uk/etf/snapshot/snap...
https://www.morningstar.co.uk/uk/etf/snapshot/snap...

Put simply, the hedged fund undertakes FX transactions that sell USD and buy GBP regardless of market sentiment. Year to date this will have created losses for the fund because of the strengthening USD, hence the poor performance of the hedged version.

If you feel that GBP will strengthen against the USD then you could buy the hedged version of the fund as above.

Personally, I've never bought a currency hedged equity fund.

[Kickstart]

I prefer investing in an unhedged S&P fund, as my uninformed take on matters is that the UK is likely to have higher rates of inflation that the US over the medium term, which everything being equal, is likely to mean the pound dropping in value again the dollar
All IMHO

[r1tey]

Such as (and thanks)

[Jiebo]

Kickstart said:

I prefer investing in an unhedged S&P fund, as my uninformed take on matters is that the UK is likely to have higher rates of inflation that the US over the medium term, which everything being equal, is likely to mean the pound dropping in value again the dollar
All IMHO

The 'fair' value of GBP against the USD is somewhere in the 1.4 region. Whether it returns to this in the years ahead is another matter.