Vanguard Total World Bond ETF (BNDW) – US92206C5655 – BD2Z2D0
For the purposes of the ISA regulations, Exchange Traded Funds (ETFs) are treated as collective investment schemes. As no such schemes are authorised by the FCA in the UK, only non-UK domiciled ETFs can qualify for ISA inclusion. Schemes must either be EEA based UCITS compliant schemes which are recognised by the FCA under section 264 FSMA 2000 or EEA/non-EEA schemes which are recognised under sections 270/272 FSMA 2000.
Some fund providers offer both US and European domiciled ETFs (line in this example, Vanguard) and whereas the US ETFs won’t be ISA qualifying, the European ETFs may (and usually do) qualify for ISA inclusion as they meet the ‘recognised UCITS’ criteria (see relevant ISA Guidance below).
There are European Vanguard ETFs on the FCA Register (so, ISA qualifying).
As a general rule, US domiciled/registered ETFs do not qualify for ISA inclusion. Although, in theory, they could qualify if they were to apply for and receive the necessary FCA recognition as outlined above, we have not yet seen a US registered ETF that has this recognised status. This US Vanguard ETF is not on the FCA register so not ISA qualifying.
Recognised UCITS
‘Recognised UCITS’ means a collective investment scheme that meets all of the following criteria:
- is constituted in an EEA state other than the UK
- is a recognised scheme within the meaning of section 264 of the Financial Services and Markets Act 2000
- complies with the requirements to be a UCITS scheme for the purposes of the Collective Investment Schemes Sourcebook (see in particular COLL 1.2.2)
The EEA consists of the 27 member states of the EU, plus Iceland, Liechtenstein and Norway. A list of the member states of the EU is available.