Vanguard VWRP vs. VWRL: What is the Difference?
Adam Woodhead
Co-Founder
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Dom Farnell
Co-Founder
Dom is an experienced retail investor, learning his craft in what he likes to call the “hard way”. Through many of these lesson’s he has crafted himself a sound investment strategy that has enabled him to make investing into a business not just a hobby. He wanted to create The Investors Centre to be able to use these lessons and help other people establish them selves in the world of investing.
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Quick Answer:
VWRP and VWRL are effectively the same fund – the difference is in their treatment of their dividends. VWRP is accumulating Vanguard reinvests the dividends on your behalf. VWRL is distributing: the dividends are paid into your investment account.
What are Vanguard FTSE All-World UCITS ETFs?
Vanguard FTSE All-World UCITS ETFs are exchange-traded funds (ETFs) that aim to provide broad exposure to global equity markets. These ETFs track the FTSE All-World Index, which includes large and mid-cap stocks from both developed and emerging markets, covering approximately 90-95% of the global investable market capitalization.
VWRP vs VWRL: What is the Difference?
| Feature | VWRL (Distributing) | VWRP (Accumulating) |
|---|---|---|
| Dividend Treatment | Pays dividends quarterly; ideal for income-focused investors (e.g., retirees) | Reinvests dividends automatically; ideal for long-term growth via compounding |
| Tax Implications | Dividends are taxed in the year received | Not taxed immediately; taxed on capital gains upon sale |
| Suitability Based on Investment Goals | Best for investors seeking periodic income | Best for long-term growth investors avoiding manual reinvestment |
| Total Expense Ratio (TER) | 0.22% | 0.22% |
| Geographic and Sector Diversification | Global diversification across 3,700+ stocks and sectors | Global diversification across 3,700+ stocks and sectors |
| Fund Domicile and Tax Efficiency | Domiciled in Ireland; benefits from US tax treaties | Domiciled in Ireland; benefits from US tax treaties |
| Unit Prices and Trading | Around 70–80 GBP; watch for broker minimum fees | Around 70–80 GBP; watch for broker minimum fees |
Accumulating vs Distributing ETFs
Accumulating ETFs (VWRP)
- Tax Efficiency: Reinvested dividends aren’t immediately taxable, which can defer taxes until the investment is sold.
- Compounding Growth: Reinvestment leads to potential higher returns over time due to compound interest.
- No Regular Income: Investors do not receive periodic cash payouts.
- Complex Tax Calculation: Investors must account for reinvested dividends when calculating capital gains tax upon sale.
Distributing ETFs (VWRL)
- Regular Income: Provides a steady stream of income, which can be ideal for retirees or those seeking periodic cash flow.
- Simplicity: No need to track reinvested dividends for tax purposes.
- Immediate Taxation: Dividends are taxable in the year they are received, potentially leading to higher annual tax liabilities.
- Missed Compounding: Cash payouts mean that investors miss out on the potential benefits of compounding if they do not reinvest the dividends.
Accumulating ETFs and UK Tax
Accumulating ETFs (VWRP)
Tax Implications: In the UK, the tax treatment of accumulating ETFs like VWRP can be favorable, but it requires careful record-keeping.
- Capital Gains Tax (CGT): Investors in accumulating ETFs must include reinvested dividends when calculating CGT on sale. The accumulated dividends increase the cost basis, potentially reducing the taxable gain.
- Dividend Allowance: The first £2,000 of dividends are tax-free. Accumulating ETFs indirectly benefit from this allowance since dividends are not received directly.
Practical Example: Suppose an investor holds VWRP for several years. When they sell, they must adjust the purchase price by adding the reinvested dividends to the initial investment amount. This ensures they are not taxed twice—once when the dividends were reinvested and again on the sale proceeds.
How to Invest in Vanguard Funds and ETFs (For UK Investors)
Investing in Vanguard funds and ETFs can be done through various platforms that cater to different investor needs.
- Choose Your Investment Platform
- Open an Account
- Select Your Vanguard ETF: VWRP (Accumulating) and VWRL (Distributing)
- Place Your Order
- Monitor Your Investment
While it may seem logical to invest in a Vanguard FTSE All World ETF or other Vanguard funds directly through Vanguard’s own platform, this may not always be the most cost-effective option in the long run. Vanguard’s platform exclusively offers its own products and can be more expensive over time compared to other platforms.
Competitors offer lower annual fees for shares and ETFs, making them significantly cheaper over extended investment periods. Therefore, it’s crucial to consider platform fees carefully as they can impact your future financial security. Evaluate whether the services provided justify the costs over the long term. Here’s a look at some of the most popular options:
eToro – Best for Beginners & Social Trading
Pros & Cons
- Commission-free stock investing
- Unique CopyTrader™ social trading feature
- Intuitive interface for new users
- FCA regulated
- $5 withdrawal fee
- Higher spreads on non-stock assets
- Limited depth for advanced traders
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How Much Does It Cost to Invest with eToro?
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Is eToro Safe and FCA Regulated?
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Who Should Use eToro?
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What Features Stand Out on eToro’s Platform?
eToro offers £0 commission on stocks. There’s a $5 withdrawal fee and a $10 monthly inactivity fee after 12 months. Spreads on forex start from 1 pip. Currency conversion fees apply unless using eToro Money.
Yes, eToro is regulated by the FCA (FRN 583263) and protects UK client funds under FSCS. The platform also uses two-factor authentication and industry-standard security protocols.
eToro is perfect for beginners who want a simple platform, low costs, and the ability to follow or copy expert investors. It also appeals to users exploring both stocks and crypto in one place.
eToro’s standout feature is CopyTrader™, which lets users replicate the portfolios of top investors. The app also includes real-time data, social feeds, analyst ratings, and integrated crypto trading—all in an easy-to-navigate design.
CFDs are complex instruments with a high risk of losing money rapidly due to leverage. 61% of retail CFD accounts lose money when trading CFD’s with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IG – Pro-Grade Tools, Broad Markets
Pros & Cons
- Access to 18,000+ markets
- Advanced tools like ProRealTime
- ISA and SIPP available
- Strong FCA regulation
- £12/month inactivity fee
- Higher fees for infrequent traders
- May overwhelm beginners
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How Much Does It Cost to Invest with IG?
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Is IG Safe and FCA Regulated?
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Who Should Use IG?
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What Features Stand Out on IG’s Platform?
UK share dealing costs £8 per trade or £3 if you make 3+ trades per month. Platform fees are £96/year unless actively waived. Forex spreads start from 0.6 pips. Additional charges apply for international markets and data feeds.
Yes, IG is fully regulated by the Financial Conduct Authority (FCA). Client funds are held in segregated accounts and protected under the FSCS scheme up to £85,000 in case of broker insolvency.
IG is ideal for experienced investors who want access to global markets, powerful charting tools, and tax-efficient accounts. It suits active traders and long-term investors comfortable with a slightly more advanced platform.
IG offers advanced charting, smart order types, ProRealTime integration, and extensive market research. Users can invest through web or mobile, with access to ISAs, SIPPs, and margin trading. The platform is customisable and supports multiple asset classes.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Saxo – Best for Professional Investors
Pros & Cons
- 19,000+ global stocks and ETFs
- Advanced research and trading tools
- Tiered account structure with lower fees at higher levels
- FCA regulated
- Supports ISAs and SIPPs
- £500 minimum deposit
- Inactivity fee on entry-level accounts
- Platform complexity may overwhelm beginners
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How Much Does It Cost to Invest with Saxo?
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Is Saxo Safe and FCA Regulated?
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Who Should Use Saxo?
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What Features Stand Out on Saxo’s Platform?
UK stock trades start from £5.99. Forex spreads from 0.08 pips. Inactivity fee of £25/quarter for classic accounts. Fees reduce significantly for Platinum and VIP clients.
Yes, Saxo is fully regulated by the Financial Conduct Authority (FCA) and offers FSCS protection. Client funds are held in segregated accounts with top-tier banks.
Saxo is best for experienced, high-volume traders or investors seeking global exposure and advanced tools. It suits professionals looking for premium features and reduced fees at scale.
SaxoTraderGO and SaxoTraderPRO offer institutional-grade tools, deep asset coverage, advanced order types, and real-time data integration. Saxo also provides high-quality research and personalised support for premium users.
64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Which Fund Should You Choose?
Your choice between VWRL and VWRP should be guided by your investment goals:
- If you prefer regular income and are perhaps in or nearing retirement, VWRL may be more suitable due to its dividend distributions.
- If you are in the accumulation phase and prefer reinvesting dividends for potential higher growth over time, VWRP would be the better option.
Both ETFs provide the same core benefits of diversification and low management fees, but their different approaches to dividend management cater to distinct investor needs.
By understanding these nuances, you can make a more informed decision that aligns with your financial goals and tax considerations.
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- Copy Trading
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61% of retail CFD accounts lose money when trading CFD’s with this provider.
FAQs
What are the main differences between VWRP and VWRL?
VWRP is an accumulating ETF that reinvests dividends back into the fund, ideal for long-term growth. VWRL is a distributing ETF that pays out dividends quarterly, suitable for those seeking regular income. Both track the same FTSE All-World Index and are managed by Vanguard.
Which Vanguard ETF is better for long-term growth?
VWRP is generally better for long-term growth due to its accumulating nature, where dividends are reinvested, leading to potential higher returns through compounding.
How are dividends taxed in accumulating and distributing ETFs?
In accumulating ETFs like VWRP, dividends are reinvested and not immediately taxable, deferring tax until the ETF is sold. In distributing ETFs like VWRL, dividends are paid out and typically taxed in the year they are received.
Can I invest in Vanguard ETFs through platforms other than Vanguard's own platform?
Yes, Vanguard ETFs can be accessed through various platforms like eToro, IG, and Saxo. These platforms offer additional features and may have different fee structures compared to Vanguard’s platform.
What are the key considerations when choosing an investment platform for Vanguard ETFs?
Consider the platform’s fees, range of investment options, trading tools, and user interface. Platforms like eToro are known for social trading features, IG for comprehensive trading tools, and Saxo for advanced features and research resources.
