Self Select Share ISA Charges

mwjackson

Hi guys,

Just wondering if someone could help clarify this.

I plan to open a self select share ISA (with Selftrade incidently), and they report a 12.50 charge for each trade. However, I plan to stick my money into a low cost fund in a lump sum, which they report as having £0 charges. What happens when the fund rebalances itself midyear (if they do this?)

So, excluding the £40pa admin charge, which of the following scenarios am I going to get charged:

- £0 transaction, just the fund charges (1-2%)
- £12.50 for the single lump sum trade into the fund, plus fund charges
- £0 for the initial lump sum, but possible multiple trading charges as the fund buys/sells stocks, plus fund charges?
- Something else?

Finally, can someone briefly explain the different fund charges?
- Std Initial Charge
- Effective Initial Charge
- Annual Management Charge

Any help is muchly appreciated

Sanzai

I've not used Selftrade myself, but a glance at their website suggests that you will be charged the admin fee, the initial charge minus any discount offered by Selftrade, and the management fee of that particular fund. There may also be a £1.50 cost for each time you reinvest your income/dividends, but I am not certain this applies to funds.

Some funds also specify a performance charge, so depending on the fund you are interested in, this additional charge may be a feature.

The standard initial charge would be the usual charge you have to pay on buying into a fund. The effective initial charge is this minus whatever discount the fund supermarket (in this case Selftrade) is able to offer you and it is what you will pay if you buy into a fund through them. The annual management charge is the fee you pay for the fund to be managed (i.e. when you buy into these funds, you are contributing to a pool of money which the fund manager(s) use to acquire various shares/bonds/gilts, etc.) Your fund is being managed, and these people need to be paid....

I have recently started a S&S ISA but through Hargreaves Lansdown. They seem to offer similar things to Selftrade regarding funds/OEICs but with no annual admin fee or reinvestment charge. Might be worth looking into? Also, I'm not sure which fund you are interested in, but perhaps you may want to consider buying into more than one fund to diversify your portfolio further?

Sorry, forgot to reply to your part about the fund rebalancing. This would be something you do yourself in this sort of self-select situation. Selftrade are not going to do it. As for whatever trades are made within the fund by the fund manager(s), you are not directly charged for that, although I presume it is reflected in the annual management charge.

mwjackson

Fantastic, this answers all my questions... many thanks!