Currency Exchange Expense?

Today the VWRL dividends were paid and rolled into my BinckBank account. However, I expected to receive €0.25 for each stock. I got €0.24521 for each stock instead. Huh? I phoned BinckBank and they said it had to do with the exchange rate. Dividends are paid in another currency (dollars in this case) and then have to be converted to euros. So the announcement of the dividends being paid is more of a good guess…it could still be higher or lower.

Do you think the explanation this BinckBank employee gave me is the correct version?

It’s not the 15% dividend tax, which was his first guess (but those numbers didn’t add up anyway) before investigating the situation.

Oh dear, another effect to bear in mind…

The good news is: I bought another batch of shares. Yay!

Love,

Mrs EconoWiser

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7 thoughts on “Currency Exchange Expense?

  1. alwaysonit

    Do your broker allow you to hold multiple currency accounts?
    I plan to invest in VWRL and direct the broker to pay the dividends into my US currency account, to avoid losing 1.916% of my dividends. I’ll then reinvest my dividends manually in and not have to worry about this for the reinvested amounts.
    Have you ever considered lowering your TER by investing in both VUSA (0.07%) and in VEUR (0.12%) to reduce your total TER by about 0.15%? Both traded on the Amsterdam exchange. Is it worth this saving to leave out asian and developing markets?

    Reply
    1. econowiser Post author

      Great strategy.
      Yes, I have considered that. However, some readers have mentioned that in case one of us dies, the U.S. will charge estate tax. And since we’d like to leave some stocks for the kids….

      Reply
      1. alwaysonit

        They can only charge estate tax if your ETF is traded on a USA stock exchange.
        All the funds that I’ve mentioned are traded in Europe, so you don’t have to worry about estate tax.
        Do your broker allow you to hold multiple currency accounts and get your dividends paid into the USD account, or do you know a cheap broker that does?

        Saxo don’t allow this.

  2. Laur

    First time poster here, ran into your blog when I’ve decided to start investing (I’m an NL-based expat) and I think I’m halfway through your archive by now. Thanks for writing it, I think finding MMM’s blog alone was worth the time spent clicking next post 😉

    Anyway, I wanted to share this – a list of the Vanguard ETFs currently trading in Amsterdam:
    http://www.etfstrategy.co.uk/vanguard-lists-seven-low-cost-etfs-on-nyse-euronext-in-amsterdam-and-paris-48652/

    Not sure whether the TERs are still the same; I think I saw different figures in another article a few days back. I would be curious to know how do they compare with their counterparts, and whether you’d recommend one over the other. In terms of performance they seem to be quite similar: https://www.google.com/finance?q=LON%3AVWRL%2CAMS%3AVWRL&ei=gNcqVNjxFsmUwQOxt4Aw

    Reply
    1. Mark

      Hi Laur,
      Could be that you already have gotten an answer to your doubts, but maybe you find this late reaction useful though. For the TER’s I would advise you to always check the website of the fund provider, so for the Vanguard ETF’s you could check the Fact sheets of the ETF’s. Websites like morningstar are sometimes wrong about benchmarks, TER’s etcetera.
      VWRL is noted on different exchanges but is still just one fund (you can tell that from the ISIN code). The difference in returns probably just comes from differences in currency rates.
      Kind regards!

      Reply
      1. Laur

        Thanks for the clarification Mark, much appreciated. That’s good advice, I’ll make sure to check Vanguard’s site before I buy.

        I’ve since taken the plunge and opened an account with Binck; turns out I can create a separate USD account for those funds that trade in USD and thus get some form of protection from the currency fluctuation when dividends are being payed etc. It’s not 100% proof, I know, but at least the trackers that follow US companies should be safe(r). Same reasoning applies for VEUR, for instance, which I should keep in euro. Global market funds already reflect currency exchange rates intrinsically, so I’ll lose a bit on that no matter what.

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