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    • TheShape
    • By TheShape 10th Oct 16, 11:07 PM
    • 421Posts
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    TheShape
    L&G Stocks&Shares ISA
    • #1
    • 10th Oct 16, 11:07 PM
    L&G Stocks&Shares ISA 10th Oct 16 at 11:07 PM
    I have an L&G S&S ISA set-up in 2008 through Nationwide. Never really looked at what was happening with it, simply noted the current value and filed away the yearly statement.

    Logged on to the IPS portal for the first time today.

    I currently pay a DD of £50 p/m into it. £25 goes into each fund:

    L&G Ethical R Trust Acc - Current value £3864.21 (Annual Charge1.06%)

    L&G Tracker Trust A Acc - Current value £3675.31 (Annual Charge 1.01%)

    From reading here it seems the charges are rather high and I'm considering whether to transfer to another provider.

    What funds should I consider investing in? I'm intending to invest long term so would tend towards high risk (if they halved in value overnight I won't be panicking).

    I've looked at HL who have low monthly funding options £25+ and allow small lump sums of £100+. This appeals to me as I am likely to have small lump sums from time to time to invest or I may drop my contributions to £25 p/m in the short term and divert the rest to a pension.

    I've also looked at Charles Stanley Direct who while needing a regular £50 p/m or £500 lump sum investment, have lower fees.

    I like the flexibility of lower pay-in requirements but also realise there's a trade-off with the lower fees.

    Who else should I consider? What costs, if any, am I not taking into account?

    Grateful for any ideas/feedback on offer.
Page 1
    • bowlhead99
    • By bowlhead99 11th Oct 16, 6:14 AM
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    bowlhead99
    • #2
    • 11th Oct 16, 6:14 AM
    • #2
    • 11th Oct 16, 6:14 AM
    There are not many other costs to consider. If you use a fund supermarket platform like HL or CS (latter is cheaper) you will be exposed to a cost for using the platform and then also the ongoing running costs of the funds you choose to buy. the latter will be taken by the fund manager directly out of the fund's assets while the former will be billed explicitly to you by the platform.

    Different providers structure their fees in different ways, e.g. a percentage of your total pot, charged every month or quarter or year; or a fixed flat fee per month or quarter or year plus an amount every time you invest new money or change fund; or some combination.

    If you just want general exposure to worldwide equity, bond and real estate markets and are happy to use trackers to take that exposure (I see half of your current investment is through some sort of tracker), you could do worse than buy an L&G "multi-index" fund which is a multi-asset fund investing cheaply and globally with various risk levels available (e.g. multi-index 7 is likely to give higher returns but higher volatility than multi-index 5 over the longer term). Other similar products are available and I'm only suggesting L&G because you have heard of the name of that fund manager. The total cost of fund plus platform using that product is well under a percent.

    Obviously it depends what exactly you want to invest in. For example, half your current investment is invested 'ethically', which means you are keen to restrict your potential returns by telling the investment manager to avoid certain industries and sectors that he feels are less 'ethical' based on some arbitrary and subjective measure of morality. However, the other half of your investment is in a tracker which by its nature throws most of your money into the biggest companies in a given stock market with no active management and no regard for subjective views of 'ethicality'. So overall you are still investing in the companies which you told the first half of your portfolio to avoid.

    The 'what funds should I consider investing in' is a minefield as there are several thousand of them and it's not a question that is easily answerable. If you went to see an independent adviser (which is not at all affordable with the amount of money you are considering investing) they could give you the pros and cons, but that is a regulated activity. Here the best you can hope for is a bit of guidance. You say you want higher risk for the longer term. So, if you were using a 'single fund investing as a one-stop-ship in multiple international asset classes right out of the box' like L&G Multi-Index or Blackrock Consensus or Vanguard Lifestrategy, you would go for a version with more equities and lower bonds rather than vice versa.

    At the moment you have ~£7k of investment and if you keep plugging away with the £50pm and get some investment growth you will be at £10k (to keep the numbers simple); the platform fee at HL is 0.45% or £45 versus Charles Stanley at £25. So, that extra £20 a year is not going to break the bank but seems unnecessary to give it to HL when you don't have to and you do not value 'great customer service' because you are only investing in a single fund via direct debit and never have any reason to call them.

    Another option, given you probably don't need the functionality of a 'fund supermarket' with 2000 fund choices in your portfolio, would be to go direct to the fund provider. This may mean you cut out a layer of platform costs but the admin has to be paid for somehow so there may still be an annual admin fee or simply a higher running cost of the fund. L&G (again, only because you mentioned them, others are available) is an example of a fund house that offers its own ISAs direct to customer.

    Really the only thing to avoid if you want to save costs is going through a bank or building society like Nationwide because, generalising, they will end up making quite average funds available to you at high cost or quite poor funds available to you at average cost.
    • TheShape
    • By TheShape 11th Oct 16, 11:00 AM
    • 421 Posts
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    TheShape
    • #3
    • 11th Oct 16, 11:00 AM
    • #3
    • 11th Oct 16, 11:00 AM
    Thanks bowlhead.

    A multi-asset fund like the Vanguard Lifestrategy 100 looks to be the sort of thing I'd be interested in.

    The fact that there is an 'ethical' investment fund is the result of simply picking a fund from a list with no real regard for its ethical nature. It's not something I am particularly concerned about. I'm just glad it performed better than the other fund.

    I couldn't find any mention of fees to transfer out my current S&S ISA in any of my documentation so it appears that I just need to decide if the flexibility of paying in smaller monthly/lump sums with HL is worth the extra cost. I suppose if I did have an extra small lump sum, I could just up my regular payment for a couple of months until it's invested then adjust back down.

    It appears that some of the platforms need a cash fund alongside the investment funds for fees to be paid from else there are extra costs to sell funds to pay fees.
    • bowlhead99
    • By bowlhead99 11th Oct 16, 1:31 PM
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    bowlhead99
    • #4
    • 11th Oct 16, 1:31 PM
    • #4
    • 11th Oct 16, 1:31 PM
    Yes, the platforms give you a cash account within the ISA where your new contributions go before they're invested or your disposal proceeds go when you sell, or your dividends go if you have the Income version of a fund and it pays you periodically and you haven't invested it yet.

    If this cash bit is completely empty when your monthly or quarterly or semiannual platform fees are due, they will sell a few units from your investments to raise the money to cover the charges. And they reserve the right to give you an extra admin fee if you create that hassle for them.

    Of course, you could just sell a bit of your fund manually to raise the money before you need it, or simply not spend some of your contributions, so you're never caught short.
    • TrustyOven
    • By TrustyOven 11th Oct 16, 7:32 PM
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    TrustyOven
    • #5
    • 11th Oct 16, 7:32 PM
    • #5
    • 11th Oct 16, 7:32 PM
    I've also looked at Charles Stanley Direct who while needing a regular £50 p/m or £500 lump sum investment, have lower fees.
    Originally posted by TheShape
    Regarding the £500 lump sum - I'm not sure if that applies.

    Perhaps that only applies with some investments?

    When I login, the minimums for me are £100 per holding (unless I do regular monthly investment, in which case it's £50 as you noted already).

    I used to be with Fidelity, and I think even they had the £500 minimum, but I was quite able to buy say £150 worth of OEICs without problems.
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    • TheShape
    • By TheShape 11th Oct 16, 9:13 PM
    • 421 Posts
    • 205 Thanks
    TheShape
    • #6
    • 11th Oct 16, 9:13 PM
    • #6
    • 11th Oct 16, 9:13 PM
    Regarding the £500 lump sum - I'm not sure if that applies.

    Perhaps that only applies with some investments?

    When I login, the minimums for me are £100 per holding (unless I do regular monthly investment, in which case it's £50 as you noted already).

    I used to be with Fidelity, and I think even they had the £500 minimum, but I was quite able to buy say £150 worth of OEICs without problems.
    Originally posted by TrustyOven
    It's definitely referenced on the main S&S ISA page.

    The way it's worded perhaps suggests it's the minimum 'initial' lump sum investment. This makes sense as they'd want to encourage a decent level of initial investing but wouldn't want to discourage established investors from putting in £100+ as and when available.

    I was thinking of going with CSD anyway because I might as well save £20 p/a vs HL, even better to know that I should be able to add £100+ lump sums.

    I'll be needing to transfer the L&G ISA first as I've already been making subscriptions to it this tax year.
    Last edited by TheShape; 11-10-2016 at 9:21 PM. Reason: Adding detail
    • droopsnoot
    • By droopsnoot 12th Oct 16, 12:09 PM
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    droopsnoot
    • #7
    • 12th Oct 16, 12:09 PM
    • #7
    • 12th Oct 16, 12:09 PM
    Picking up on this I had a look at my own Nationwide S&S ISA - because I've been drip-feeding that into this tax year as I forgot to cancel the monthly payment, if I'm going to put any more into an S&S ISA this year it will have to be here.


    Picking up on the comment about the "Multi-index" funds not being too bad, I logged in to IPS (the Nationwide S&S web site) to see what options they offer, and it turns that the answer is "none of them". They offer a range of L&G Unit Trust Managers products, but none are called "Multi-index" anything. I had a quick search to see if that's the proper name, and it does seem to be. So I'll have to pick something else or waste it into a cash ISA in the hope that interest rates go up.
    • bowlhead99
    • By bowlhead99 12th Oct 16, 12:56 PM
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    bowlhead99
    • #8
    • 12th Oct 16, 12:56 PM
    • #8
    • 12th Oct 16, 12:56 PM
    Picking up on this I had a look at my own Nationwide S&S ISA - because I've been drip-feeding that into this tax year as I forgot to cancel the monthly payment, if I'm going to put any more into an S&S ISA this year it will have to be here.
    Originally posted by droopsnoot
    Just because you have been putting money into an s&s ISA with a particular provider for the first half of this tax year, doesn't mean that money, or any more money you choose to invest "will have to be here".

    Having determined that the offering is poor, your obvious solution is not simply a choice between continuing to contribute to that poor offering, or "waste it into a cash ISA". Why not transfer it to a different S&S ISA provider instead?
    • TheShape
    • By TheShape 12th Oct 16, 12:56 PM
    • 421 Posts
    • 205 Thanks
    TheShape
    • #9
    • 12th Oct 16, 12:56 PM
    • #9
    • 12th Oct 16, 12:56 PM
    Picking up on this I had a look at my own Nationwide S&S ISA - because I've been drip-feeding that into this tax year as I forgot to cancel the monthly payment, if I'm going to put any more into an S&S ISA this year it will have to be here.


    Picking up on the comment about the "Multi-index" funds not being too bad, I logged in to IPS (the Nationwide S&S web site) to see what options they offer, and it turns that the answer is "none of them". They offer a range of L&G Unit Trust Managers products, but none are called "Multi-index" anything. I had a quick search to see if that's the proper name, and it does seem to be. So I'll have to pick something else or waste it into a cash ISA in the hope that interest rates go up.
    Originally posted by droopsnoot
    Are the S&S ISA rules not the same in that you can transfer them to another provider and then continue to pay in?

    My intention is to complete a transfer to CSD and then continue adding funds.
    • bowlhead99
    • By bowlhead99 12th Oct 16, 1:54 PM
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    bowlhead99
    Are the S&S ISA rules not the same in that you can transfer them to another provider and then continue to pay in?

    My intention is to complete a transfer to CSD and then continue adding funds.
    Originally posted by TheShape
    Yes, you can indeed do that. The main reason places like nationwide get away with charging the high fees that they do, is because people are generally lazy and don't bother looking at the details of their investment (e.g. only have it because they forgot to cancel it); or don't do any basic research to realise that they could transfer it to a better one at all, or that maybe they could do that immediately; or don't do any research to even realise that better ones exist (e.g. just use the place that gives them their bank account and assume the price must be the 'going rate').

    If you look at the page of 6 standard options for a new investor at Nationwide today:

    http://www.nationwide.co.uk/products/investments/our-investment-funds/investment-funds

    The current version of the L&G tracker trust (class N) has running costs from L&G of only 0.06%. It is cheap as chips as it is a specialist fund only investing in one country's stockmarket and putting nearly all of its money in the very biggest companies. So, not suitable to be anyone's entire portfolio - due to its specialist nature and not having a good spread of industry sectors or geographies - but basically it is dirt cheap to run the fund and the tracker market is very competitive these days so charges have come down significantly in recent years.

    So, management and admin of the fund itself is low cost. The expensive bit is having Legal&General's IPS administer your investment, handling subscriptions, redemptions, fund switches, reporting and customer service (your online login), HMRC compliance and whatnot. For this they charge 0.31%

    And then on top, just for fun, Nationwide charge 0.4% for the oversight of their "investment committee" who basically decide that the few L&G funds they introduce you to are broadly fit for purpose in terms of doing what they say on the tin and being suitable for retail investors. It's a huge annual fee for a middleman considering they are only giving you general information and not tailored advice like you'd get from an independent financial advisor at a similar cost (on large enough investments).

    So with Nationwide I would end up paying close to 0.8% for the latest version of the Tracker Trust or 1% for a FTSE World tracker, even though the underlying funds cost under 0.1% or under 0.3% to run and the IPS platform fee of 0.31% is not much worse than Charles Stanley at 0.25% or TD Direct at 0.3%. But the total cost is so much more than that, because Nationwide grab a huge slice for themselves, of whatever their customers buy, because their customers don't know any better.

    Nationwide would say they are doing a valuable service which costs them money, and to be fair, many of their customers wouldn't have a clue where to start if their trusted bank or building society didn't help them out, leaving people worse off financially by never investing at all. But the 'value' you get from NW at 0.4% could be got for free through your own research if you're willing to put the effort in.
    Last edited by bowlhead99; 12-10-2016 at 1:57 PM. Reason: fixed link
    • droopsnoot
    • By droopsnoot 13th Oct 16, 11:09 AM
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    droopsnoot
    Just because you have been putting money into an s&s ISA with a particular provider for the first half of this tax year, doesn't mean that money, or any more money you choose to invest "will have to be here".

    Having determined that the offering is poor, your obvious solution is not simply a choice between continuing to contribute to that poor offering, or "waste it into a cash ISA". Why not transfer it to a different S&S ISA provider instead?
    Originally posted by bowlhead99


    I think I'd decided that transferring an S&S ISA was more hassle than transferring a cash one. I asked a similar question last year and got a response that as I'd been contributing during that tax year I couldn't open a new S&S ISA elsewhere (which was my original question in that other thread). Another comment appeared (which I don't remember if I saw and decided against, or didn't see) that suggested I might be able to transfer the S&S ISA elsewhere, but it might involve selling some of the funds. I didn't do anything about it, including not stopping with the monthly contributions so I could start a fresh one this year.
    • droopsnoot
    • By droopsnoot 13th Oct 16, 11:17 AM
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    droopsnoot
    The main reason places like nationwide get away with charging the high fees that they do, is because people are generally lazy and don't bother looking at the details of their investment (e.g. only have it because they forgot to cancel it); or don't do any basic research to realise that they could transfer it to a better one at all, or that maybe they could do that immediately; or don't do any research to even realise that better ones exist (e.g. just use the place that gives them their bank account and assume the price must be the 'going rate').
    Originally posted by bowlhead99


    I think another reason may well be that warm fuzzy feeling that Nationwide are sat there in the High Street and I can go in and sit down and talk to a person, where HL and all the others are not.


    But it's something I need to look at, thanks for the breakdown of fund charges, I see that anyone getting involved in the provision of these things is going to want their cut, but it does seem a large chunk goes to IPS. As IPS is being sold to Aegon, and I have beef with them on a trivial matter that I ought to be able to get past but cannot, it might be a nice excuse to move it elsewhere.


    My background is very much "unsophisticated investor". I got into these various funds after putting some money into a Nationwide savings account and being offered some advice on how to improve returns and reduce tax as the amount got higher. This dates back to a time prior to it being as clear as it is now that choices offered by banks are limited, and that there are other options. While I do read up in these areas from time to time, it's unlikely that I'm going to formulate much of an investment strategy outside of a range of trackers that hopefully do better than cash savings.
    • badger09
    • By badger09 13th Oct 16, 2:33 PM
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    badger09
    droopsnoot

    The reason transferring a S&S ISA to another provider can be (but isn't always) more hassle than transferring a cash ISA is simple.

    Cash is cash, whether its held in a Nationwide/Halifax/Santander etc etc cash ISA, but an S&S ISA is just a wrapper, which can contain a multitude of different investments.

    Unless both your new and old S&S ISA providers offer exactly the same investments, a straight transfer isn't possible, so you might need to sell some or all of the assets in the old S&S ISA, arrange for the cash to be transferrred, then buy new investments in the new S&S ISA.

    Some providers charge for every investment you transfer, so it could work out much cheaper to simply convert all your investments to cash and avoid/minimise transfer fees. You'd still have buying fees to pay though.

    There has always been misunderstanding about ISA rules. Basically, you can open as many as you want but you can only pay new money into one (of each type) at a time.

    So, if you're not happy with the investment in your Nationwide S&S ISA, its probably worth deciding what you do want to invest in and find the cheapest platform for your circumstances (lump sum/monthly savings etc), which offers that investment. Open an S&S ISA with them and arrange for them to transfer your Nationwide ISA, converted to cash if appropriate.

    I hope that hasn't confused you even further
    • droopsnoot
    • By droopsnoot 13th Oct 16, 6:24 PM
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    droopsnoot
    No, thanks for that. It does make sense that it's based on whether the holdings are available on the other platform. I'll have a look around and see what other platforms are out there and what they offer.
    • TheShape
    • By TheShape 14th Oct 16, 12:53 AM
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    • 205 Thanks
    TheShape
    Has anyone here got experience of transferring from the Nationwide/L&G IPS platform or to the Charles Stanley Direct platform?

    I've looked and cannot find any mention of transfer fees, it also appears that the funds I'm currently invested in (in the first post above) are available through CSD.

    Am I right to assume that the transfer will result in me holding the same two funds at (approximately) the same value as before the transfer?
    • bowlhead99
    • By bowlhead99 14th Oct 16, 7:14 AM
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    bowlhead99

    Am I right to assume that the transfer will result in me holding the same two funds at (approximately) the same value as before the transfer?
    Originally posted by TheShape
    Basically the idea is that the same number of units of the same funds simply turn up, still in your name, on the other platform, having been transferred 'in specie'.

    Note that the specific 'class' of units in those unit trusts that you mentioned you hold (class N for the tracker and class R for the Ethical) are not the ones that CSD offers to customers now wishing to put new money in. For example the "R" was originally designed for 'retail' customers with commissions built into it (which these days get quietly rebated by the platform in the background and help you afford your platform fee and any advice fee) while the "I" which appears on CSD's list has a lower 'clean' price avoiding that administrative palaver and is targeted at institutions (although the platform providers can access it because they have bulk buying power).

    So, CSD may allow you to transfer in your funds in the old class and hold it on their platform (later having the manager convert the class over for you, or redeem you out of the old one and subscribe to the new one when you're ready); *or* maybe they would say they can't transfer them in specie as they are because they don't offer that class any more full stop, and it will have to be a cash transfer where IPS redeem you out of the holdings and send the cash to CSD.

    Presumably you don't want these funds any more anyway, because - although they will now be much cheaper without the Nationwide 0.4% fee - you will use it as an opportunity to select from the much wider pool of funds offered by CSD. Both your existing funds are only invested in the UK stockmarket rather than globally, and you have mentioned moving into a multi asset, multi region fund. So a cash transfer isn't too bad as what you ultimately want is a pile of cash to spend on new funds.

    Anyway, if you fill out the transfer form at CSD asking to transfer the assets rather than cash, they will sort it as best they can and contact you if it doesn't work. A cash transfer is usually quite a bit quicker than fund re-registration but does leave you 'out of the market' for the couple of weeks while it processes which may not be desirable when the markets can easily move a percent or two every day. Meanwhile, an in-specie transfer of assets can be slow and lumbering and take a lot longer than a cash one before you are finally ready to exit those funds and buy into new ones that you prefer - but at least you maintain your existing interest in the markets. I don't have any specific experience of IPS to CSD myself in terms of ease / timescale.

    Good luck and have fun with your new investment platform!
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