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IWDA vs URTH – Is There A Difference?

IWDA vs URTH

Last updated on June 17th, 2021

You’ve decided to invest in an ETF that tracks the MSCI World Index.

However, you’ve noticed that there’s one listed in the NYSE (URTH) and another on the London Stock Exchange (IWDA)!

So how are they different and which one should you choose?

The difference between IWDA and URTH

IWDA is listed on the London Stock Exchange while URTH is listed on the NYSE. While they both track the same MSCI World Index 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 IWDA and URTH track the MSCI World Index.

The MSCI World Index tracks stocks across 23 developed market countries. The main countries for this index include:

  1. United States
  2. Japan
  3. United Kingdom
  4. France

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.

MSCI World Index Top 10 Holdings

The fund manager is the same

Both IWDA and URTH are managed by BlackRock under the iShares family of ETFs.

When you go to iShare’s website, you may notice that they are talking about SWDA instead of IWDA. However, they are actually the same ETF!

IWDA was started in September 2009, while URTH was started in Jan 2012. Since IWDA is the older fund, it has a much larger assets under management (AUM).

IWDAURTH
AUM31,591 million1,135 million

They are listed on different exchanges

IWDA is listed on the London Stock Exchange (LSE), while URTH 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 the NYSE or LSE 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 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:

BrokerUSLSE
Interactive Brokers1% of trade value
Minimum USD 0.35
0.05% * trade value
Minimum GBP 1
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.

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 IWDA and URTH have rather similar unit prices.

IWDAURTH
Estimated Unit Price$75 USD$115 USD

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

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

IWDAURTH
Dividend Withholding Tax 15%30%

If you are a non-resident alien to the US, you will incur a 30% dividend withholding tax when you receive dividends from US stocks.

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

IWDA incurs the tax on the first layer

For IWDA, the dividends from the US stocks are distributed to an Irish-domiciled ETF. As such, the 15% withholding tax applies on the first layer.

Withholding Tax IWDA

URTH incurs the tax on the second layer

When the stock distributes its dividend to the URTH 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.

URTH Dividend Withholding Tax

Irish-domiciled ETFs are only advantageous for US stocks

You may want to incur a lower dividend withholding tax via Irish-domiciled funds. However, this only applies to US stocks.

When you invest in these ETFs that track the MSCI World Index, not all of the stocks come from the US.

MSCI World Index Country Weightage

Here are some of the withholding taxes that you’ll incur when these stocks distribute their dividends:

Stock ListingWithholding Tax
Japan15%
China10%
UK0%
Korea15%

The main advantage of investing in an Irish-domiciled ETF is that you’ll reduce the withholding taxes from US stocks.

This is rather significant since more than 60% of the index’s holdings come from the US!

However, the withholding taxes still remain the same for stocks that come from other countries.

Dividend distribution

The way that IWDA and URTH handle their dividends are rather different.

IWDA automatically reinvests your dividends

IWDA 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, IWDA 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!

URTH is a distributing ETF

Meanwhile, URTH 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.

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

However, IWDA is domiciled in Ireland.

IWDA Irish Domiciled

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:

  1. You or your beneficiary are an Irish citizen
  2. You own an Irish property

If you wish to leave behind a legacy for your loved ones, IWDA 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:

IWDAURTH
Expense Ratio0.2%0.24%

The expense ratio of URTH is slightly higher than IWDA. This is understandable since URTH has a smaller amount of assets compared to IWDA.

As such, the costs are spread over a smaller number of investors into the fund!

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.

IWDAURTH
Average Trading Volume232,000113,850

Even though URTH is listed on the NYSE, it actually has a lower trading volume than IWDA!

There is not much significant difference in trading volume between either ETF. Both of them are much lower compared to the S&P 500 ETFs which are listed on the NYSE.

Verdict

Here is the complete breakdown between IWDA and URTH:

IWDAURTH
Index TrackedMSCI World IndexMSCI World Index
Fund ManagerBlackRockBlackRock
AUM31,591 million1,135 million
ExchangeLSENYSE
CurrencyUSDUSD
Estimated Unit Prices$75 USD$115 USD
Dividend Withholding Tax 15%30%
Dividend DistributionAccumulatingDistributing
Estate TaxNoYes
Expense Ratio0.20%0.24%
Average Trading Volume232,000113,850

So which ETF should you choose?

Choose IWDA if you want to reinvest your dividends

If you intend to invest in the MSCI World Index for the long term, IWDA 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!

IWDA is more tax-efficient for non-US investors

If you are a non-US investor, IWDA 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, you’ll still need to consider the total costs of investing in an ETF, rather than just the taxes that you’ll incur. One example is the trading commissions that you’ll incur.

Choose URTH if you want a consistent dividend income

If you intend to receive dividends as an additional source of income, then URTH is the way to go.

URTH will be more suitable if you are at the later stage of your life. You can receive quarterly payouts even when you’re retired!

However, you will need to invest a significant amount of money into the ETF for the dividends to sustain you in the long run!

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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