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  • FIRST POST
    SnowMan
    Changes ahoy at the HSBC Global Investment Centre
    • #1
    • 17th Oct 12, 3:23 PM
    Changes ahoy at the HSBC Global Investment Centre 17th Oct 12 at 3:23 PM
    For those who don't know the HSBC Global Investment Centre (GIC) is a platform for holding ISA and non-ISA funds including the HSBC index tracking range.

    I have received a letter from HSBC, dated 16th October 2012, to say that on 16th November:

    a) the GIC will be 'adding a facility to allow you to transfer your existing ISAs into the GIC' and

    b) the GIC will be 'adding a far wider range of funds for you to invest in' and

    c) management of the accounts will transfer from HSBC Trust Company (UK) Ltd to HSBC Bank PLC.

    Accounts can be accessed after the changes on Monday 19th November.

    HSBC previously told me that they would be adding the HSBC class C trackers (i.e. the new clean class with a 0.1% amc rather than 0.25% amc, albeit with a 0.05% registration fee, so effectively 0.1% reduced TERs) onto the GIC on 15th or 16th November, so it looks likely that these classes will become available from then as part of the 'wider range'.

    As the HSBC trackers are amongst the cheapest trackers currently available, and now that the transfer in of ISAs into the GIC will be possible, these developments are of interest to passive investors.

    There is currently no official word on whether there will be any additional charge for holding the class C trackers on the GIC, although I was told on the phone a while back that no holding charge was planned.

    Anyway, I've set up this thread to collate and report information on the changes as it become available.
    Last edited by SnowMan; 17-10-2012 at 4:56 PM.
    I came, I saw, I melted
Page 1
  • redmalc
    • #2
    • 17th Oct 12, 6:29 PM
    • #2
    • 17th Oct 12, 6:29 PM
    Snowman,Thanks for that,I am a novice investor with some 120K in Skandia,Hargreaves,Fidelity share isa,s,i am also a Premier customer with HSBC,
    I am thinking that i need to consolidate all my investments into one company,do you think it will be possible to use the HSBC option,if so will it be competative on charges,i do not have any tracker funds in my portfolio.
  • SnowMan
    • #3
    • 17th Oct 12, 6:49 PM
    • #3
    • 17th Oct 12, 6:49 PM
    Snowman,Thanks for that,I am a novice investor with some 120K in Skandia,Hargreaves,Fidelity share isa,s,i am also a Premier customer with HSBC,
    I am thinking that i need to consolidate all my investments into one company,do you think it will be possible to use the HSBC option,if so will it be competative on charges,i do not have any tracker funds in my portfolio.
    Originally posted by redmalc
    As you are an HSBC customer already it will be a simple job to set up a Global Investment Centre account just go to the HSBC GIC main page and click on the 'Register for Global Investment Centre' button.

    Assuming you are already registered for on-line banking with HSBC then it will be a doddle to set up. You should be able to set it up without actually investing any money so will give you a chance to have a look at it.

    I am very much a passive investor and the GIC is good for passive investors who want to invest in the HSBC tracker range.

    Currently the GIC range of active funds is very limited so I doubt the GIC would be good for someone taking an active approach. Not sure if their 'wider range' will appeal to active investors in terms of choice and 'price'. But I am completely the wrong person to ask about active funds.

    If you wanted to start to hold some HSBC trackers then the GIC is certainly a good way to go about it. How good will depend on whether they have a holding charge for the class C trackers.

    Incidentally the terms mention that it will be possible to re-register funds onto their platform (to make them RDR compliant presumably) provided they offer that particular fund, there is nothing I can immediately see to indicate there will be any charge for doing that. The existing platform may not allow re-registration currently and may charge however.
    Last edited by SnowMan; 17-10-2012 at 8:26 PM.
    I came, I saw, I melted
  • owains
    • #4
    • 17th Oct 12, 8:27 PM
    • #4
    • 17th Oct 12, 8:27 PM
    There is currently no official word on whether there will be any additional charge for holding the class C trackers on the GIC, although I was told on the phone a while back that no holding charge was planned.
    Originally posted by SnowMan
    Thanks for keeping us updated. I'm particularly interested to see how the pricing structure changes for any "clean" funds. I would be amazed if a holding fee and/or trading fees aren't introduced sometime before the end of 2013:

    http://monevator.com/what-is-rdr/
  • SnowMan
    • #5
    • 17th Oct 12, 8:39 PM
    • #5
    • 17th Oct 12, 8:39 PM
    Thanks for keeping us updated. I'm particularly interested to see how the pricing structure changes for any "clean" funds. I would be amazed if a holding fee and/or trading fees aren't introduced sometime before the end of 2013:

    http://monevator.com/what-is-rdr/
    Originally posted by owains
    I agree with you there.

    In the short term hopefully there will be no platform fee for the class C HSBC trackers on the GIC.

    At some point they will have to introduce a platform fee for their non HSBC funds (or else they will not make any money on those funds after platform RDR comes in probably at the end of 2013).

    I suppose it is possible that when that platform fee is introduced it won't apply to HSBC funds only non HSBC funds (I don't know if platform RDR would stop them from doing that), but I think that has to be unlikely. However I don't think they would want to scare away investors in HSBC funds on the HSBC platform by too high a platform charge on those funds.

    If there is going to be a platform fee for holding the HSBC class C trackers on the GIC, post platform RDR, then it would make sense for HSBC to apply that now (to avoid the complications when it was later introduced). An alternate view might be that by temporarily not applying a platform fee on the class C trackers they could attract funds onto the GIC.
    Last edited by SnowMan; 17-10-2012 at 9:18 PM.
    I came, I saw, I melted
  • dougz
    • #6
    • 20th Oct 12, 4:35 PM
    • #6
    • 20th Oct 12, 4:35 PM
    Hopefully HSBC will realise that such charges, if significant, could end up with some customers leaving the bank altogether, e.g if their tracker investments were qualifying them for free Premier banking.
  • SnowMan
    • #7
    • 20th Oct 12, 4:46 PM
    • #7
    • 20th Oct 12, 4:46 PM
    Hopefully HSBC will realise that such charges, if significant, could end up with some customers leaving the bank altogether, e.g if their tracker investments were qualifying them for free Premier banking.
    Originally posted by dougz
    Good point, was thinking of applying for an HSBC Premier bank account myself, at the moment I bank with First Direct

    HSBC Premier benefits are available without a monthly account fee if you meet any of the following criteria:
    One of which is

    You have either joint savings or investments of at least 50,000 with HSBC in the UK. We request that your main income is paid into your HSBC Premier Bank Account;
    I don't see any danger of them introducing an across the board platform charge right now as they would have had to tell us about it now (to implement it with the 16th November change) because they would have to have given 30 days notice of its introduction.

    Of course any NEW funds (such as the class C trackers) coming onto the platform could have a holding/platform fee from 16th November.
    Last edited by SnowMan; 20-10-2012 at 4:54 PM.
    I came, I saw, I melted
  • nxdmsandkaskdjaqd
    • #8
    • 21st Oct 12, 9:54 AM
    • #8
    • 21st Oct 12, 9:54 AM
    I took a keen interest in this, however, the following statements in their website are unclear:

    In the section How Much Does It Cost
    There is no charge for setting up the Global Investment Centre service.
    There is no initial charge on any funds in the Global Investment Centre.
    An annual management charge and other expenses will also apply.

    In the Top 5 FAQ it states:
    There is an initial charge of no more than 1% when purchasing funds through our Global Investment Centre.
  • SnowMan
    • #9
    • 21st Oct 12, 1:19 PM
    • #9
    • 21st Oct 12, 1:19 PM
    I took a keen interest in this, however, the following statements in their website are unclear:

    In the section How Much Does It Cost
    There is no charge for setting up the Global Investment Centre service.
    There is no initial charge on any funds in the Global Investment Centre.
    An annual management charge and other expenses will also apply.

    In the Top 5 FAQ it states:
    There is an initial charge of no more than 1% when purchasing funds through our Global Investment Centre.
    Originally posted by nxdmsandkaskdjaqd
    I don't think there is an initial charge for any fund available through the GIC currently.

    I don't think there has ever been an initial charge for the HSBC trackers.

    I think some of the active funds might have had a 1% initial charge at some point, but that has now been removed.

    They obviously haven't updated that FAQ.
    I came, I saw, I melted
  • SnowMan
    HSBC have made a last minute decision to delay the update due this weekend and the following message has appeared on their website today after you have logged into GIC.

    Important notice

    We informed you recently about improvements to the Global Investment Centre including changes to your Terms and Conditions from 16 November 2012.
    These changes have been delayed and will now be in place for 3 December. Your new Terms and Conditions will come into effect from Friday 30 November and the updated service will be available to you on Monday 3 December. Until then the current Terms will apply.
    I came, I saw, I melted
  • SnowMan
    The Global Investment Centre updates took place over the weekend.

    While a number of new funds have been added there is no sign of the HSBC clean C class (0.1%) trackers.

    I rang them up to ask them when the clean C class trackers would be made available and was told the following:-

    - the clean C class should be available around January 2013.
    - they are now telling me there is going to be a platform charge for holding the clean classes on the GIC of 0.29% per annum.
    - it will be possible to transfer away from the GIC now without charge.
    - it will be possible to re-register away (in specie transfer) from January without charge.
    - it appears it will be possible to continue to hold the dirty class (0.25%) of HSBC funds as legacy business on the GIC without additional platform fee

    With the 0.29% pa platform fee (assuming this is right) the clean class of HSBC trackers will be hideously expensive.

    For example the HSBC FTSE all share tracker has an OCF of 0.28% for the dirty class and 0.18% for the clean class.

    Allowing for the platform fee the clean class will cost 0.47% pa to hold on the GIC compared with the 0.28% pa for continuing to hold the dirty class on a legacy basis
    Last edited by SnowMan; 03-12-2012 at 9:28 AM.
    I came, I saw, I melted
  • nicknameless
    presumably new purchases of the dirty class trackers will not be possible after a certain date?
  • SnowMan
    presumably new purchases of the dirty class trackers will not be possible after a certain date?
    Originally posted by nicknameless
    They didn't give a specific date for when the dirty class will be withdrawn although you would expect it would have to be some time between when the clean class are made available (probably January 2013) and 1st January 2014 when platform RDR is expected to come in. I suspect from a practicality viewpoint it would be more likely to be January 2013.
    I came, I saw, I melted
  • nicknameless
    They didn't give a specific date for when the dirty class will be withdrawn although you would expect it would have to be some time between when the clean class are made available (probably January 2013) and 1st January 2014 when platform RDR is expected to come in. I suspect from a practicality viewpoint it would be more likely to be January 2013.
    Originally posted by SnowMan
    What a right royal PITA

    I don't have much money with them as just started up a passive investment portfolio but looks like I will now have to look elsewhere for next year.

    It seems the 'set things up, drip feed, ignore and get on with life' approach isn't that simple at the moment!

    Any recommendations?
  • SnowMan
    What a right royal PITA

    I don't have much money with them as just started up a passive investment portfolio but looks like I will now have to look elsewhere for next year.

    It seems the 'set things up, drip feed, ignore and get on with life' approach isn't that simple at the moment!

    Any recommendations?
    Originally posted by nicknameless
    Talking specifically about the HSBC trackers:

    Personally I would suggest anyone with HSBC existing funds on the GIC stays put for the immediate time being and waits for things to settle down before moving those existing funds away. It could be that holding HSBC dirty legacy trackers remains cheapest for the immediate future.

    And I cannot see any reason not to carry on contributing until new investment into the HSBC dirty class on the GIC is not allowed. It sounds like it will reasonably easy to exit from the GIC when the time comes.

    Interactive Investor offer the clean C class trackers but their 80pa platform fee and other transfer and withdrawal charges makes it an expensive option to hold these funds for most.

    And Alliance Trust Savings may offer the clean class from January but again with a platform fee of 48pa and other charges including dealing charges for buying and selling funds it may not be a good option for many.

    In terms of new money if HSBC GIC stop allowing investment into the dirty class in January 2013, Fidelity Fundsnetwork bundled version might be an option (or possibly Cavendish although I would prefer to directly access Fidelity Fundsnetwork rather than through Cavendish as there is no obvious advantage to the latter). Fidelity Fundsnetwork may still be offering the dirty class of HSBC trackers without platform fee right up to the end of 2013. Although what Fidelity Fundsnetwork will do about RDR and when is unknown so hard to say.

    Best Invest offer the HSBC dirty trackers without platform fee but I would currently avoid them because of their account closure and transfer fees. When things settle you want to be able to move away easily and could be more difficult if holding funds with Best Invest.

    Sippdeal and Hargreaves Lansdown can be ruled out because of their platform fees and other charges to hold the HSBC trackers.


    When the dust settles there may also be a good way of holding Vanguard or HSBC clean trackers or other cheap trackers that might become available which will mean ditching the HSBC dirty trackers.

    Much as I like Vanguard I can't invest with them now because it means paying a platform fee. Paying a platform fee isn't necessarily a problem but what is a problem is that the platform fee could be changed at short notice.

    A Legal and General UK index (FTSE all share) clean class may become cheap to buy again (at the moment the dirty class is only cheap if bought through Cavendish).


    In summary being in a flexible position to be able to move later is very important so I would consider sticking with the GIC for now.
    Last edited by SnowMan; 03-12-2012 at 11:14 AM.
    I came, I saw, I melted
  • nicknameless
    wow thanks

    this is becoming almost as clear as choosing an energy supplier and tariff
  • grey gym sock
    good advice about keeping your options open and watching exit charges.

    i thought the plan was that fidelity fundsnetwork would be charging 0.25% + 45 per year if you go direct, and you'd save the 45 if you go via cavendish.

    which might make GIC and cavendish similar pricing.

    for smaller investments, you'd only want to pay a percentage for a platform (e.g. GIC or cavendish). for larger investments, you'd only want to pay a fixed charge (e.g. iii or ATS).

    but the other important factor is the range of funds available.
  • owains
    I have been following this for a while so just wanted to say thanks for sharing your findings and advice.
  • SnowMan
    i thought the plan was that fidelity fundsnetwork would be charging 0.25% + 45 per year if you go direct, and you'd save the 45 if you go via cavendish.
    Originally posted by grey gym sock
    The 45 charge is I understand an option that Fidelity Fundsnetwork provide in return for which investors incur no initial or switch charges.

    As the main trackers used by DIY investors on Fidelity Fundsnetwork such as the HSBC range and the Fidelity range have no initial or switching charge there is currently no 45 charge and it doesn't make sense to switch to that option as it just means paying 45 for nothing.

    An active fund bought through Cavendish typically has an amc of 1.5%. Of that 1.5%, Fidelity keep 0.2% as a platform charge, the fund manager gets 0.75% and the remainder of 0.55% is paid as commission to Cavendish. Of that 0.55%, 0.5% is effectively given back to the investor as extra units and Cavendish keep 0.05%. So the 0.25% you mention is the platform charge of 0.2% plus the 0.05% cavendish keep.

    However that is just a typical example. With a tracker with a low amc (such as the HSBC range and Fidelity moneybuilder range) the percentages have to be completely different and lower.

    It does indicate what the Fidelity Fundsnetwork proposition may be like after RDR. So an investor may be charged 0.25% pa to purchase a fund via Cavendish made up of the 0.2% and 0.05% Fidelity and Cavendish fees).

    For the active fund the investor is in the same position. For the tracker they are charged more than pre RDR.

    However I have not seen any announcement that this is what Fidelity will do post RDR (or how they will deal with legacy business) and would be interested in anything that clarifies that.

    The only clues I have are in this article which is fairly vague but possibly suggests they won't change things until the end of 2013.

    I am holding HSBC trackers and the Fidelity Moneybuilder UK index on Fidelity Fundsnetwork (not via Cavendish) so I am very interested in any news on this.
    I came, I saw, I melted
  • grey gym sock
    good point that you can currently opt out of the 45.

    http://www.moneymarketing.co.uk/wrap...049067.article is an article mentioning the 0.25% + 45 model. and it says the 45 will be compulsory from next january.

    cavendish seem to think the 45 won't apply to them - http://www.cavendishonline.co.uk/investments/RDR
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