CSPX vs SPY – 8 Ways They Are Different

CSPX vs SPY

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 (SPY)?

The difference between CSPX and SPY

CSPX is listed on the London Stock Exchange while SPY 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:

Index tracked

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.

SP 500 Top 10 Holdings

You can find out more about investing with the S&P 500 in Singapore with my guide.

The fund managers are different

CSPX is managed by iShares while while SPY is managed by State Street Global Advisors (SSGA).

CSPX was started in May 2010, while SPY started in Jan 1993. With this huge time gap, SPY has a much larger assets under management (AUM).

CSPXSPY
AUM44,481 million332,446 million

They are listed on different exchanges

CSPX is listed on the London Stock Exchange (LSE), while SPY is listed on the NYSE. This has certain implications on how you can buy these ETFs.

Both have the same minimum unit number of 1

The minimum units that you can purchase on either exchange is 1. Compared to the SGX which has a minimum lot size of 10 units, this makes it really accessible for you to purchase either ETF.

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.

BrokerLSENYSE
FSMOne
Interactive Brokers
Saxo Markets
Standard Chartered
Maybank Kim Eng
KGI Securities
OCBC Securities
Tiger Brokers
POEMS
TD Ameritrade
DBS Vickers

To invest in the LSE, you may need to find a specific broker to do so.

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:

BrokerUSLSE
Interactive Brokers1% of trade value
Minimum USD0.35
0.45 bps * trade value
Minimum 0.1 GBP per order
OCBC Securities0.3% of trade value
Minimum USD20
0.7% of trade value
Minimum GBP55

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 $10k!

As such, you should try to find the lowest brokerage fees so that they won’t eat into your returns!

Unit Price

The unit price of each ETF is the price you’ll need to pay for 1 unit. Both CSPX and SPY have rather similar unit prices.

CSPXSPY
Estimated Unit Price$380 USD$370 USD

Both unit prices are the same, so it will not make much of a difference. If you are looking for a S&P 500 ETF that has a lower unit price, you can consider VUSD instead.

Dividend withholding taxes

CPSX is domiciled in Ireland while SPY is domiciled in the US. You will incur a lower dividend withholding tax when you invest in Irish-domiciled ETFs.

CSPXSPY
Dividend Withholding Tax 15%30%

If you are a non-resident alien to the US, you will incur the 30% 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:

  1. From stock to ETF
  2. From ETF to you, the investor
Dividend Withholding Tax Layers

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.

CSPX Withholding Tax

SPY incurs the tax on the second layer

When the stock distributes its dividend to the SPY ETF, no tax is incurred. This is because it is from a US stock to a US-domiciled ETF.

US Stocks and US Domiciled ETF Dividend Withholding

However when the dividends are distributed to you, they will incur the 30% tax. This is because you are a non-resident alien.

SPY Withholding Tax

If you wish to track your dividends with taxes accounted for, you can consider trying out StocksCafe’s platform.

Dividends

The way that CSPX and SPY 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, the 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!

SPY is a distributing ETF

Meanwhile, SPY is a distributing ETF. This means that any dividends received by the fund manager will be distributed to you.

SSGA 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.

Estate tax

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 SPY is domiciled in the US, it will be included in your taxable estate.

However, CSPX is domiciled in Ireland.

CSPX Fund Domicile

Even though they own US stocks, you will not incur the estate tax!

If you wish to leave behind a legacy for your loved ones, CSPX may be the more ideal ETF to invest in.

Expense ratio

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:

CSPXSPY
Expense Ratio0.07%0.0945%

Interestingly, SPY has a higher expense ratio compared to CSPX, even though it has a larger AUM!

Based on the costs and taxes incurred, CSPX seems to be the more attractive ETF to invest in.

Liquidity

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.

CSPXSPY
Average Trading Volume132,00071,315,000

SPY has a much higher trading volume than CSPX due to it being listed on the NYSE.

If you are a frequent trader, SPY 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.

Verdict

Here is the complete breakdown between CSPX and SPY:

CSPXSPY
Fund ManageriSharesSSGA
AUM44,481 million332,446 million
ExchangeLSENYSE
Estimated Unit Prices$380 USD$350 USD
Dividend Withholding Tax 15%30%
Dividend DistributionAccumulatingDistributing
Estate TaxNoYes
Expense Ratio0.07%0.0945%
Average Trading Volume132,00071,315,000

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 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 SPY if you are a frequent trader

Even though SPY is the larger fund, it is actually more costly to invest in SPY compared to CSPX!

The only main advantage that SPY has over CSPX is the higher average trading volume. If you are a frequent trader, trading in SPY may help you to buy or sell the units at your intended price.

Conclusion

Both ETFs track the same index, so their performances should be very similar. The ETF that you choose depends on a few things:

  1. The taxes that you wish to incur
  2. The exchange that you want to trade in
  3. The expense ratio you’re willing to pay
  4. Whether you wish to receive your dividends or reinvest them

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