You may decide to invest in a S&P 500 ETF managed by BlackRock. However, you see that BlackRock offers both CSPX and CSP1!
So how exactly are these 2 ETFs different?
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The difference between CSPX and CSP1
CSPX and CSP1 are exactly the same ETF. However, CSPX is denominated in USD while CSP1 is denominated in GBP. You should have a very similar performance between either ETF when you compare them in the same currency.
Here is an in-depth comparison between these 2 ETFs:
Both ETFs track the same index
Both ETFs track the same S&P 500 index.
The S&P 500 is a stock market index that measures the performance of 500 large companies listed in the US.Source: Wikipedia
As such, both funds should have the same holdings in the same proportion.
In fact, the S&P 500 actually has 505 stocks in the index! This is because there are some stocks that have multiple share classes.
You can find out more about investing with the S&P 500 in Singapore with my guide.
Different currency denomination
CSPX is denominated in USD, while CSP1 is denominated in GBP on the London Stock Exchange (LSE).
As such, the minimum lot size for either ETF is 1.
This is how both ETFs look like on Tiger Brokers.
GBX stands for the sterling pence. 100 GBX (pence) is equal to 1 GBP (pound).
However, CSPX can be denominated in other currencies when it is listed on other exchanges!
Besides the LSE, CSPX is listed in 2 other exchanges:
- Bolsa Mexicana De Valores
- Euronext Amsterdam
Here are the different currencies, based on the exchange this ETF is listed on:
|London Stock Exchange||CSPX||USD|
|Bolsa Mexicana De Valores||CSPX||MXN|
One thing you might want to note is that all S&P 500 ETFs will have their underlying assets in USD. However, the currency in which they are denominated in depends on the exchange this ETF is listed on.
You can view my guide to see what are the best ways to buy LSE ETFs from Singapore.
Performance is the same
If you want to compare the performance between CSPX and CSP1, it may be different based on the currency denomination.
However to make a fair comparison, you will need to compare the performance of both ETFs using a single currency. Since all of the assets are listed in USD, BlackRock usually uses USD to track the performance.
There may be some slight changes in the performances of the different ETFs due to currency fluctuations.
However since they are holding the same US stocks, the net asset value for both ETFs will be the same!
As such, you should not be too worried about comparing the performance of these ETFs against one another.
Both are accumulating ETFs
CSPX and CSP1 are both accumulating ETFs. This means that they will not distribute your dividends to you. Instead, they will reinvest the dividends they receive into the same stocks in the index.
This will help to save on your transaction fees, especially when you already intend to reinvest your dividends!
This is different from distributing ETFs which distribute your dividends to you instead.
Since they are the same UCITS ETF, both CSPX and CSP1 are Irish domiciled.
This has some implications on the taxes you’ll incur:
15% dividend withholding tax for non-resident aliens of USA
However there is a tax treaty between Ireland and US. Any dividends you receive from an Irish-domiciled ETF will only incur a 15% withholding tax!
2 layers of taxes
For any ETF, the fund manager buys the stocks based on the index they are tracking. The dividends that they distribute are collected from the stocks in their fund.
As such, there are 2 layers where you may incur some taxes:
- From stock to ETF
- From ETF to you, the investor
Both ETFs incur the tax on the first layer
For both CSPX and CSP1, the dividends from the US stocks are distributed to an Irish-domiciled ETF. As such, the 15% withholding tax applies on the first layer.
No estate tax for non-Irish citizens
Even though both ETFs own stocks that are from the US, both ETFs are domiciled in Ireland.
With this fund structure, you will not incur the dreaded US estate tax if you invest with these UCITS ETFs!
This will give you significant tax savings, as none of your assets will be taxed.
However, you may still be taxed under the Irish laws if:
- Either you or your beneficiary is an Irish citizen
- You own a property in Ireland
Since CSPX and CSP1 are essentially the same ETF, they will have the same expense ratio as well.
The expense ratio helps to cover some of the expenses that the fund manager incurred while managing the fund.
Both ETFs have the same expense ratio of 0.07%.
As such, the cost of investing is the same even if you invest in either ETF.
If you are looking to actively trade using these ETFs, you may want to look at their liquidity. One of the indicators you may want to look at is the ETF’s trading volume.
Here are the average trading volume for both ETFs listed on the LSE:
|Average Trading Volume||94,000||16,876|
CSP1 has a much lower trading volume compared to CSPX. You may not be able to buy or sell at your intended price when you’re trading CSP1!
There are so many similarities between these 2 ETFs. So which one should you invest in?
CSP1 is suitable if you live in the UK
Your base currency is in GBP if you live in the UK. As such, it may be better if you invest in CSP1 instead.
This is because you do not need to exchange your GBP to another currency to start investing in this ETF!
By investing in CSP1, you will save on any currency conversion fees you may incur. Moreover, you are not subject to any fluctuations in the exchange rate!
CSPX is suitable if you live in the US
If you live in the US or other countries that have the USD as your base currency, CSPX may be the more suitable choice.
Again, you do not need to change your currency to another one. This means that:
- You do not incur any currency exchange fees
- You are not subjected to any currency fluctuations
Either ETF is suitable if your base currency is neither GBP or USD
If you live in other countries, your base currency will not be in USD or GBP. As such, you’ll still need to convert your base currency to either USD or GBP to invest in this S&P 500 ETF.
It does not really matter which currency you choose. Ultimately, both ETFs will give you very similar returns!
CSPX and CSP1 are 2 different names for exactly the same ETF. In the end, the only thing you’ll need to consider between these 2 ETFs is the currency you wish to invest in!