Often overlooked in broker price comparisons, the forex charges can dwarf the cost of the headline dealing fee.

Today I attempted to buy shares in a iShares Physically Backed Gold ETC, SGLN (GBP). [Well stocks are looking expensive]

Unfortunatelty, my first broker iWEB (=Halifax) only offered the USD version of the ETC.
Since they charge an extortionate 1.5% forex fee, a £5k trade would have cost £5 in dealing fees and £75 in forex fees. Then another £75 in forex when selling.
I believe iWEB managed for years with a forex spread of 0.5%, however like other brokers, they think the higher 1.5% charge can be snuck in under the radar of most investors.

I then used the TD Direct account. Whilst they also have an extortionate 1.5% forex load, TD Direct give the purchaser the choice of both the GBP and the USD versions of the etf.
So I can buy the UK version for a total dealing charge of £12.95, which I am happy with. No forex losses.

I challenged iWEB as they only offer the USD version. They said "we can only offer the one version of each etf". What rubbish.  

They CHOOSE to offer the one that is best value for them and worst for the customer.  Unless I am missing something, both will track the gold price, so the USD version will underperform the GBP version due to broker forex charges. 

TD Direct offer both. Even there, I don't see how it makes sense to buy the USD version, unless of course you trade out of one US Dollar stock into the ETC, without converting the money to sterling. 

Also, if I ever get back to buying more overseas stocks, then I'll need another broker account to avoid the 1.5% forex fees.

Conclusions

1: Watch the forex charges

2: More than one account can be useful when a broker does not offer your preferred investment.


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