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[FONT="]Really?! The monevator articles I linked to and my own comparison on trustnet show HSBC are one of the worst and the total error negates the low TER quoted.
Historical data can be deceptive as HSBC were forced by competition to lower their TER.Vanguard seem to be the clear winner (to the extent that might well justify paying fees to hold them), though the timespan of available data is very limited (~1 year?).
Vanguard are much better for long term buy and hold as they charge dealing fees up front rather than showing them as long term tracker error.
[/FONT][FONT="]Is this £60 pa fixed for an unlimited number of funds and transactions? If so it certainly sounds like the best option for access to the Vanguard fund range (if you want to hold more than just one).[/FONT]
£60 covers anything on which BestInvest charge a custody fee, but buying and selling equities (including ITs and ETFs) carries dealing fees. I pay around £8 a pop but it's a bit more for smaller pots.
All fund and tracker buying and selling is free other than the trading fee on Vanguard trackers, which varies from tracker to tracker but is <0.5%I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
[FONT="]Really?! The monevator articles I linked to and my own comparison on trustnet show HSBC are one of the worst and the total error negates the low TER quoted. Vanguard seem to be the clear winner (to the extent that might well justify paying fees to hold them), though the timespan of available data is very limited (~1 year?). I’d appreciate it you could share any data that suggests otherwise!
Well I may well be doing it wrong or looking at the wrong data!
Here is a link to the fund factsheet for HSBCs FTSE All Share tracker.
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Scroll down to the "growth" section of the summary page, towards the bottom. There is a row at the bottom that lists "+/- Index" which I assumed was tracking error. It doesn't explicitly say which index, or even if it's one of the ones plotted on the chart.
Averaging those figures gives 1.7% tracking error over the last eight years. Tim Hale says anything under 2% is good?
Doing the same thing for "Fidelity MoneyBuilder UK Index" gives an error of 1.90% with a slightly higher TER.
The lowest error All Share tracker on Fidelity is "Aviva Investors UK Index Tracking SC1 Inc" at just 1.47% but it has a huge 0.93% TER.0 -
The only reason I was considering Fidelity is because I already had an old account with them and they seemed as good as any other.
I nearly went with Fidelity and they aren't a bad option.What happens if Fidelity or BestInvest etc. go bust? I assume my money is still ok because they are just agents for the funds?
Yup.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »I nearly went with Fidelity and they aren't a bad option.
I may still stick with them for now. The £60pa fee is a lot while I don't have much invested. I can always do an ISA transfer at a later date. Who knows what will happen after the RDR thing anyway.Yup.
Thanks. What about if I have predominately HSBC funds and HSBC went bump? Not that it's likely to happen. Since the funds are "OEIC" does that mean they are technically separate companies to HSBC and so would be unaffected?0 -
Would it be worth looking at Interactive Investor to avoid the £60 pa fees?I may still stick with them for now. The £60pa fee is a lot while I don't have much invested. I can always do an ISA transfer at a later date.0 -
Who knows what will happen after the RDR thing anyway.
Well, quite.Thanks. What about if I have predominately HSBC funds and HSBC went bump? Not that it's likely to happen. Since the funds are "OEIC" does that mean they are technically separate companies to HSBC and so would be unaffected?
It doesn't answer your question directly, but here is a HL page on investment safety.
http://www.hl.co.uk/investment-services/vantage-service/how-safe-is-your-investmentI am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Historical data can be deceptive as HSBC were forced by competition to lower their TER.
Vanguard are much better for long term buy and hold as they charge dealing fees up front rather than showing them as long term tracker error.Well I may well be doing it wrong or looking at the wrong data!
Here is a link to the fund factsheet for HSBCs FTSE All Share tracker.
Scroll down to the "growth" section of the summary page, towards the bottom. There is a row at the bottom that lists "+/- Index" which I assumed was tracking error. It doesn't explicitly say which index, or even if it's one of the ones plotted on the chart.
Averaging those figures gives 1.7% tracking error over the last eight years. Tim Hale says anything under 2% is good?
Doing the same thing for "Fidelity MoneyBuilder UK Index" gives an error of 1.90% with a slightly higher TER.
OK thanks for the info guys.The lowest error All Share tracker on Fidelity is "Aviva Investors UK Index Tracking SC1 Inc" at just 1.47% but it has a huge 0.93% TER.
This is exactly what is confusing me. As I understand it, Tracking error included costs quotes in the TER, so the TER is irrelevant if you have access to tracking error data. So as Aviva has the lowest tracking error it is "cheaper" even with a higher quoted TER.gadgetmind wrote: »Vanguard are much better for long term buy and hold as they charge dealing fees up front rather than showing them as long term tracker error.
Correct me if I'm wrong, but to make a direct comparison between Vanguard trackers and the HSBC trackers, you'd have to add the quoted tracking error (which I think is just the quoted TER) to any upfront fees. It depends on what platform you use, but it could actually work out "cheaper".gadgetmind wrote: »£60 covers anything on which BestInvest charge a custody fee, but buying and selling equities (including ITs and ETFs) carries dealing fees. I pay around £8 a pop but it's a bit more for smaller pots.
All fund and tracker buying and selling is free other than the trading fee on Vanguard trackers, which varies from tracker to tracker but is <0.5%
Great. Thanks for clarifying.0 -
This is exactly what is confusing me. As I understand it, Tracking error included costs quotes in the TER, so the TER is irrelevant if you have access to tracking error data. So as Aviva has the lowest tracking error it is "cheaper" even with a higher quoted TER.
I have no idea.
I am also confused as to why the HSBC All Share has an annual management charge of 0.25% and a TER of 0.27%, while the Fidelity MoneyBuilder All Share has a ridiculously low AMC of 0.1% and yet has a higher TER at 0.3%??0 -
Taking on board the comments earlier, I have been looking further into fund composition in order to try and decide on weightings.
I have decided to add one more fund to the mix:
FTSE All World Emerging Index
Legal & General Global Emerging Markets Index
Fund Code LGGEA
Annual Management Charge 0.65%
Total Expense Ratio (TER) 0.99%
Which curiously enough makes my portfolio exactly the same as the Monevator Slow and Steady portfolio. It's interesting that I have independently come to the same conclusions. The TER for this fund is higher than the others, but it will only be contributing a small percentage so it's not too bad.
I will not be using quite the same weightings as Monevator. I have decided on the following:
27% - FTSE All Share Index
18% - FTSE World Europe ex UK Index
22% - USA S&P's 500 Index
10% - FTSE World Japan Index
10% - FTSE World Pacific excluding Japan Index
13% - FTSE All World Emerging Index
By weighting and summing the stated composition of all the funds, this produces:
23.73% - United Kingdom
22.06% - United States
12.43% - Eurozone
9.49% - Japan
7.15% - Asia - Developed
6.06% - Asia - Emerging
5.71% - Europe - ex Euro
4.52% - Australasia
3.41% - Latin America
1.49% - Africa
1.34% - Europe - Emerging
0.05% - Middle East
0.01% - Canada
Which puts me somewhere in between HSBC World Index "Balanced" and "Dynamic" fund portfolios.
Looking at the Vanguard funds, it seems they are much more heavily weighted to the UK, and they tend to favour Japan at the expense of Australia. I'd have liked to have pushed Canada higher (certainly it should be above the Middle East!) but none of the trackers seem to include it in any significant percentage.
There are no bonds in this mix yet since I am heavily weighted to cash. Once I have the portfolio going and there's a decent amount of money in there, I will reduce equities down to around 80% and bring in 20% bonds to help smooth out the fluctuations.
I'm pretty happy with where I have ended up, and unless someone shouts up to say I have made a massive mistake somewhere, I think I will be going ahead with this portfolio and seeing what happens.
Any last minute suggestions??:D0 -
Any last minute suggestions??:D
Looks good to me. The only thing observations I would make are that you're over-exposed (relative to MSCI world index anyway) to Asia and UK at the expense of US (~50%). However, I'm sure this is a deliberate choice.
In case it influences your decision to start buying immediately, I contacted Interactive Investor about availability of the FTSE UK All Share Vanguard fund and received this reply...When the Buy/Sell option is not available for a fund it will generally mean that we are unable to facilitate an investment in to this fund.
These positions will change on a regular basis and may be subject to change at short notice so if you have a particular fund that you are looking to invest in to I would request that you send us a secure message with the ISIN of the fund and we can investigate and confirm this for you.
I have requested a review of the Fund included in your link. This should be available on our platform within 3-5 days if you are looking to invest.
I have asked them to find out whether the whole Vanguard tracker range will be available, though I think it's unlikely. Or, if they do strike a deal with Vanguard, I suspect there'll no longer be the 0% commission trades.0
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