You’ve seen many people advising you to invest in the IWDA. It is one of the most globally diversified ETFs out there.
However, you also chanced upon the SWRD ETF, and it looks exactly the same as the IWDA! How are these 2 ETFs different and which one should you choose?
Here’s a comparison between them.
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IWDA vs SWRD
IWDA and SWRD are similar ETFs which track the MSCI World Index. They are managed by different fund managers, and differ slightly from each other. IWDA has both a higher expense ratio and liquidity. SWRD which is the newer fund, has both a lower expense ratio and liquidity. In the end, investing in either ETF will not really make much of a difference.
Both ETFs are managed by different companies
You may be wondering why SWDA shows up on the iShares site instead of IWDA. You can read my comparison of IWDA vs SWDA to see how they are different.
IWDA is the earlier ETF which was launched in Sep 2009. The SWRD was launched much later in 2019!
As such, IWDA has a larger asset under management (AUM).
|ETF||Net Asset Under Management|
Both track the MSCI World Index
Both of these ETFs are managed by different fund managers. However, they both track the same MSCI World Index.
The MSCI World Index captures the best performing large and mid cap companies across 23 developed markets.
Some of its major holdings include Apple, Microsoft and Amazon.
Since both of these funds track the same index, they should have very similar returns.
This can be seen by their 1-year returns.
This information is accurate as of 2 Nov 2020.
Both are accumulating ETFs
Both of these funds are accumulating ETFs.
These funds will usually have ‘ACC‘ at the back of the fund name.
Here’s how the IWDA looks like on Tiger Brokers:
You will not receive a dividend from accumulating ETFs
This means that the dividends that you receive will be reinvested into the fund.
As such, you will not be able to receive any dividends from either fund!
You can read my comparison between accumulating and distributing ETFs to see how they are different.
They have different expense ratios
Since the returns are rather similar, the cost is something that you should consider.
Here are the expense ratios of the 2 funds:
Even though SWRD is the newer fund, it is able to charge a lower expense ratio.
IWDA has a higher trade volume
If you are frequent trader, you may be concerned with the ETF’s liquidity.
One of the indicators of an ETF’s liquidity is the ETF’s trade volume.
Here are the average trade volumes of these 2 funds on the LSE:
The IWDA is an older fund and more well established. As such, it has a much higher trading volume than the SWRD.
Here’s a summary of the comparison between IWDA and SWRD:
|Index||MSCI World Index||MSCI World Index|
|Type of ETF||Accumulating||Accumulating|
|Average Trading Volume||232,597||552|
Both of them have very similar returns. So which one should you choose?
Choose SWRD if you’re a long-term investor
If you are a long-term investor, the ETF’s liquidity may not really affect you that much. The only issue comes when you decide to sell your holdings.
As such, SWRD may be the better choice since you incur a lower expense ratio.
When you invest, you should always try to lower your costs. Even if the expense ratio is a 0.08% difference, it will add up in the long term!
Choose IWDA if you’re a frequent trader
If you make frequent trades, IWDA may be the better option for you. This is because IWDA has a much higher average trading volume.
As such, you will be able to buy and sell this ETF more easily compared to SWRD.
Both ETFs share very similar traits. As such, it may not really make a huge difference if you choose one over the other.
However, there are definitely some advantages if you:
- Choose IWDA if you’re a frequent trader
- Choose SWRD if you’re a long-term investor