Best Stocks and Shares ISA

barf0r

Hi,

I'm looking to make a regular investment in an index tracker stocks and shares ISA.

I can't find any comparisons for the lowest fees so I can choose the best one.
I think the fees are usually around 0.5% - 1.5%. Is this correct?
Does anyone know who offers the lowest fees?


Thanks.

mr_fishbulb

Which indexes do you want to track?

Rollinghome

Fidelity, M&G, L&G, and F&C all have FTSE All share index trackers charging between 0.3% and 0.5% p.a. (The L&G all share tracker is just called the UK index.)

The two points you need to check are the fees but also the tracking accuracy. They don't all use the same method to track and a fund that charges 0.1% or so more might do better than the cheapest. You can compare them at http://www.trustnet.com/Investments/Perf.aspx?univ=U&Pf_AssetClass=A:&Pf_Sector=U:UG&Pf_sortedColumn=NameFull&Pf_sortedDirection=Asc

Jonbvn

Buy a fund through a funds supermarket (H&L, Fidelity etc.), and you will save a lot on fees. I think Hargreaves & Lansdown are the cheapest. Lots of great info on their site about every fund you can imagine!

Rollinghome

Jonbvn wrote: »

Buy a fund through a funds supermarket (H&L, Fidelity etc.), and you will save a lot on fees. I think Hargreaves & Lansdown are the cheapest. Lots of great info on their site about every fund you can imagine!

With the exception of the low charging index tracker funds.

On those mentioned there's no up front fee if you buy directly from the managers and H-L don't give any rebate on the annual charge. In some cases, H-L charge an additional 0.5% pa for trackers within a ISA because there's little or no commission for them. If you buy directly from the managers you have the advantage of buying instantly just before the noon price fix, and so having a good idea of the price, rather than having to order the day before.

So trackers can be the exception that prove the rule. For most other funds a fund supermarket will be cheaper.

dunstonh

The title says best ISA but the choice of tracker means you will rarely get best. By definition, a FTSE all share tracker will be around the mid table mark. FTSE100 trackers and FTSE250 trackers offer potential to be at the top but then they also have the potential to be at the bottom (in the last 10 years, FTSE100 trackers spent more time near the bottom and FTSE250 trackers more time at the top - past performance is no indication of future).

Trackers are often best purchased in ETF form although the cost of trackers in unit trust form has dropped recently.

Rollinghome

dunstonh wrote: »

The title says best ISA but the choice of tracker means you will rarely get best. By definition, a FTSE all share tracker will be around the mid table mark. FTSE100 trackers and FTSE250 trackers offer potential to be at the top but then they also have the potential to be at the bottom (in the last 10 years, FTSE100 trackers spent more time near the bottom and FTSE250 trackers more time at the top - past performance is no indication of future).

Trackers are often best purchased in ETF form although the cost of trackers in unit trust form has dropped recently.

As FTSE 100 companies make up over 80% of the All-share index I doubt there will ever be a vast performance gap between the two indexes. Over the last 5 years for example the FTSE100 is up 35.22% while the All-share is up 38.8%. Provided the fees are similar then unit trust trackers will be in line with that.

Something that is to be watched is that some of the greedier managers such as Virgin are charging 1% for their FTSE100 tracker and others charge a higher fee in order to pay higher commissions to intermediaries - which will knock back returns.

There are dealing fees to buy and sell ETFs so the return will be dependent on the amount invested and the period held. For that reason they are less likely to be suitable for regular savings (which seems to be what the OP had in mind).

turbobob

Rollinghome wrote: »

With the exception of the low charging index tracker funds.

On those mentioned there's no up front fee if you buy directly from the managers and H-L don't give any rebate on the annual charge. In some cases, H-L charge an additional 0.5% pa for trackers within a ISA because there's little or no commission for them. If you buy directly from the managers you have the advantage of buying instantly just before the noon price fix, and so having a good idea of the price, rather than having to order the day before.

So trackers can be the exception that prove the rule. For most other funds a fund supermarket will be cheaper.

I've read that before but has it changed? For example Hargreaves Lansdown section of FAQ that covers this - http://www.h-l.co.uk/our-services/self-select-ISAs-frequently-asked-questions#q15

But looking in the key features section for say, the L&G UK Index (R) fund I can't see an asterisk next to the annual charges figure

Rollinghome

turbobob wrote: »

I've read that before but has it changed? For example Hargreaves Lansdown section of FAQ that covers this - http://www.h-l.co.uk/our-services/self-select-ISAs-frequently-asked-questions#q15

But looking in the key features section for say, the L&G UK Index (R) fund I can't see an asterisk next to the annual charges figure

No it hasn't changed afaik.

The ones they charge an extra 0.5% on are those that don't pay any (or very low) trail commission to advisers. I believe that although the annual charge on the L&G UK index is only 0.5% (TER 0.52%) L&G still pay 0.25% trail commission so that isn't one of those that H-L charge extra for in an ISA. So if you want a tracker within an H-L ISA that's one of the best bets. (But you can equally have it in an L&G ISA bought directly without any extra charge and with the advantage of instant dealing.)

The F&C all-share tracker charge is just 0.3% p.a. but H-L add an extra 0.5% p.a. fee on that if it's within an ISA or SIPP. So would then make it more expensive than L&G. http://www.h-l.co.uk/funds/security_details/sedol/0846419 See footnote 1.

The charge on the Fidelity UK tracker is just 0.10% pa but has a TER of 0.27%, doesn't track as well as either L&G or F&C and is subject to the H-L additional 0.5%. See http://www.h-l.co.uk/funds/security_details/sedol/0387532

Scottish Widows all-share tracker charge is 0.25% (TER 0.36%) but also subject to the H-L 0.5% charge. http://www.h-l.co.uk/funds/security_details/sedol/3190500

M&G Index Tracker charge is 0.30% (TER 4.7%) but subject to the H-L additional charge. http://www.h-l.co.uk/funds/security_details/sedol/3111095

Gartmore UK Index charge 0.5% (TER 0.70%) and subject to H-L surcharge. http://www.h-l.co.uk/funds/security_details/sedol/3338935

turbobob

Thanks. I've noticed the HSBC trackers don't seem to have an extra charge either, have low charges (0.25% AMC typically), and a range of different indexes to track.

e.g http://www.h-l.co.uk/funds/security_details/sedol/0046781

Rollinghome

That's an interesting one isn't it? TER of just 0.27% so there can't be much commission in it for H-L.

For some reason HSBC trackers haven't followed the indexes very well despite low charges. Their all-share tracker trails the other low cost ones already mentioned and their 250 tracker is down against the index over 5 years by around 11%: index +70.85%, fund +59.79%. I don't know how that compares with other 250 trackers. Is it possible their charges used to be higher and now they've brought them down in line with the competition? Which might also explain H-L's apparent oversight.