Buy ETFs on Euronext v LSE (Euro/Sterling)

[AaronK]

Hi,
Just looking at some advice on buying an ETF on Euronext Amsterdam rather than on London Stock Exchange.
The advantage to buying on Amsterdam I think is that I can buy ETFs in euro rather than Sterling.
This would mean not having to pay currency exchange rates and not dealing with currency volatility eating into any potential gains...
Am I missing something here?

As an example I could buy an iShares FTSE 100 ETF on Euronext Amsterdam without having to pay any sterling exchange rate.

ISHARES FTSE 100 | IE0005042456 | Euronext exchange Live quotes

Trackers iShares Core FTSE 100 UCITS ETF ETF IE0005042456 XAMS Euronext Amsterdam Live Euronext quotes, realtime prices, charts and regulated news

live.euronext.com

I get that in the FTSE 100 example above I'd still have full exposure to Sterling but at least I'd be buying in Euro so not paying exchange fees...
Thanks for any insight!

 

[jpd]

The exchange fees are built into the euro price

In any case the FTSE 100 covers a lot of companies that have worldwide exposure eg HSBC, Astra Zeneca, BP, ... so that their share price and company valuation, while it is quoted in £s, depends on more than just sterling. As an example, BP sells most of its crude output ion $ so the $/£ exchange rate has a big influence on its profits in £s

I wouldn't worry too much about the exchange rate risk if you are buying in an ETF of global companies

 

[AaronK]

Thanks JPD
If you bought into an ETF with a base fund currency in GBP, doesn't that mean you're exposed to currency rates when you sell out later though?
So if the ETF increases in value by 10% but the GBP also increases in value against the Euro by 10% that then cancels out your gains (as you cash out in Euro)?

The buy price at the moment for iShares FTSE 100 on LSE is £5.68 while on Euronext is €6.44 which is at the interbank rate I think, so I'd have thought buying the Euro ETF works out cheaper as you don't pay to buy the Sterling..

 

[jpd]

If the GBP increases in value against the Euro by 10%, then the ETF value quoted on Euronext in €s will go up by 10% as well so it doesn't matter whether you buy in £s or €s

 

[RobFer]

Thanks JPD
If you bought into an ETF with a base fund currency in GBP, doesn't that mean you're exposed to currency rates when you sell out later though?
So if the ETF increases in value by 10% but the GBP also increases in value against the Euro by 10% that then cancels out your gains (as you cash out in Euro)?

The buy price at the moment for iShares FTSE 100 on LSE is £5.68 while on Euronext is €6.44 which is at the interbank rate I think, so I'd have thought buying the Euro ETF works out cheaper as you don't pay to buy the Sterling..

As jpd explained it doesnt matter. Currency might matter say if it was a Russian company that sold Russian dolls in Russia. If the Russian currency tumbles then your shares will be exposed.

 

[AaronK]

But does the initial funding of your trading account not matter if you need to purchase Sterling? You pay FX fees?
I've seen threads where people ask how to get the best exchange rate to put sterling into their trading account, so I'm wondering why not buy the same share or fund on an euro exchange and avoid needing the sterling at all.
Thanks!

 

[panindub]

But does the initial funding of your trading account not matter if you need to purchase Sterling? You pay FX fees?
I've seen threads where people ask how to get the best exchange rate to put sterling into their trading account, so I'm wondering why not buy the same share or fund on an euro exchange and avoid needing the sterling at all.
Thanks!

I've have bought Euro ETFs on the EuroNext Amsterdam for this reason (slight advantage in my opinion) , in that I don't always get best exchange rate with banks/brokers and it's simpler process for me to transfer euros to broker and buy. Also no exchange charges when I do cash out either.

But @jpd does have a valid point that under the hood their is exchange rate risks..... nothing that worries me.