Last updated on March 5th, 2022
There are many S&P 500 ETFs that are available out there.
So how exactly is the UCITS ETF (CSPX) different from the NYSE version (IVV)?
The difference between CSPX and IVV
CSPX is listed on the London Stock Exchange while IVV is listed on the NYSE. While they both track the same S&P 500 index, they mainly differ in terms of their expense ratio, dividend withholding tax and dividend distributions.
Here’s an in-depth comparison between these 2 ETFs:
Both ETFs track the 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, they should have almost the same performance in the stock market.
This is because both funds will have the same holdings in the same proportion.
You can find out more about investing with the S&P 500 in Singapore with my guide.
The fund manager is the same
CSPX was started in May 2010, while IVV was started in May 2000. With this huge time gap, IVV has a much larger assets under management (AUM).
They are listed on different exchanges
Both have the same minimum unit number of 1
Not all brokers allow you to trade on both exchanges
Some brokers do not allow you to trade on the London Stock Exchange. In contrast, the NYSE is being offered by many brokers.
|Maybank Kim Eng
To invest in the LSE, you may need to find a specific broker to do so. You can view my guide to see what are the best ways to buy LSE ETFs from Singapore.
You can also view my comparison between Tiger Brokers and FSMOne to see which broker is better for you.
Commissions charged may be different
When you are trading in different exchanges, you may incur different costs. For example, here are some of the commissions when you trade in both markets:
|1% of trade value
Minimum USD 0.35
|0.05% * trade value
Minimum GBP 1
|0.3% of trade value
|0.7% of trade value
You can also consider Tiger Brokers which offers you a minimum of USD1.99/trade.
Interactive Brokers’ commissions may seem attractive. However, they will charge you a custodian fee of $10 per month if your total amount is below $100k!
As such, you should try to find the lowest brokerage fees so that they won’t eat into your returns!
The unit price of each ETF is the price you’ll need to pay for 1 unit. Both CSPX and IVV have rather similar unit prices.
|Estimated Unit Price
Both unit prices are very similar, especially since they are in the same currency (USD). As such, the unit price would not make much of a difference.
Dividend withholding taxes
CPSX is domiciled in Ireland while IVV is domiciled in the US. You will incur a lower dividend withholding tax when you invest in Irish-domiciled ETFs.
|Dividend Withholding Tax
However there is a tax treaty between Ireland and US. Any dividends issued from Irish-domiciled ETFs 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
CSPX incurs the tax on the first layer
For CSPX, the dividends from the US stocks are distributed to an Irish-domiciled ETF. As such, the 15% withholding tax applies on the first layer.
IVV incurs the tax on the second layer
When the stock distributes its dividend to the IVV ETF, no tax is incurred. This is because it is from a US stock to a US-domiciled ETF.
However when the dividends are distributed to you, they will incur the 30% tax. This is because you are a non-resident alien.
If you wish to track your dividends with taxes accounted for, you can consider trying out StocksCafe’s platform.
The way that CSPX and IVV handle their dividends are rather different.
CSPX automatically reinvests your dividends
CSPX is an accumulating ETF. 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.
If you are looking to reinvest your dividends from the start, CSPX may be a better choice.
This is because you do not need to incur any additional transaction fees when the fund reinvests your dividends for you!
IVV is a distributing ETF
Meanwhile, IVV is a distributing ETF. This means that any dividends received by the fund manager will be distributed to you.
BlackRock will distribute the dividends to you on a quarterly basis.
This is great if you want to receive some income when you invest in this fund!
You can read my comparison between accumulating and distributing ETFs to see how they are different.
Another significant cost of investing in US-related assets is the estate tax. This can go from 18% all the way to 26%!
An estate tax is a tax on the right for you to transfer your assets after you have passed on.
Since IVV is domiciled in the US, it will be included in your taxable estate.
However, CSPX is domiciled in Ireland.
Even though they own US stocks, you will not incur the estate tax!
You will only incur an estate tax on your Irish-domiciled ETFs if:
- You or your beneficiary are an Irish citizen
- You own an Irish property
If you wish to leave behind a legacy for your loved ones, CSPX may be the more ideal ETF to invest in.
On top of the trading commissions you’ll need to pay the broker, you will have to pay an expense ratio to the fund manager as well.
The expense ratio is charged by the fund manager to cover the costs of running the fund.
Based on the value of your assets in the fund, you will be charged an annual fee.
Here are the expense ratios for these 2 funds:
CSPX is almost twice as expensive compared to IVV. Although the percentages may seem really small, it can add up in the long term!
Whenever possible, you should try your best to invest in a fund that charges you the lowest fees.
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.
|Average Trading Volume
IVV has a much higher trading volume than CPSX due to it being listed on the NYSE.
If you are a frequent trader, IVV will be a better ETF to invest in. This is because you will be able to buy or sell the ETF at your intended price.
Here is the complete breakdown between CSPX and IVV:
|Estimated Unit Prices
|Dividend Withholding Tax
|Average Trading Volume
So which ETF should you choose?
Choose CSPX if you want to reinvest your dividends
If you intend to invest in the S&P 500 for the long term, CSPX will be the better choice. Your dividends are automatically reinvested.
This allows you to compound your money to a larger extent!
Moreover, you can save on transaction fees that you would need to pay if you were to reinvest the dividends by yourself!
CSPX is more tax-efficient for non-US investors
If you are a non-US investor, CSPX seems to be the more tax-efficient ETF to invest in.
You will receive a much lower dividend withholding tax and not incur any estate tax. However, the expense ratio is slightly higher!
As such, you’ll need to consider the total costs of investing in an ETF, rather than just the taxes that you’ll incur.
Choose IVV if you are a frequent trader
Even though IVV is the larger fund, it is actually more costly to invest in IVV compared to CSPX!
The only main advantage that IVV has over CSPX is the higher average trading volume. If you are a frequent trader, trading in IVV may help you to buy or sell the units at your intended price.
Both ETFs track the same index, so their performances should be very similar. The ETF that you choose depends on a few things:
- The taxes that you wish to incur
- The exchange that you want to trade in
- The expense ratio you’re willing to pay
If you’re looking for a way to track the markets and your portfolio, you can consider using TradingView, which allows you to monitor more than 50 stock exchanges.
Are you passionate about personal finance and want to earn some flexible income?