HSBC Tracker Help!

Keltyx

I have a cash ISA and a SO paying into it monthly. I pay in £425 every month to ensure I use the full allowance over the year.

I have had this setup for a few months now to see if it was sustainable and find myself with a bit more available to save than I though. After a bit of research I have decided to drip feed £100 a month into a S&S ISA, and my funds of choice are £50 into the HSBC FTSE 100 index tracker, and £50 into the 250 tracker. I chose trackers after Jack Bogle's book made a whole load of sense of to me.

I have never operated a S&S ISA before or any other sort of share trading account. So my question is, do I just pop down my local HSBC branch and setup a S&S ISA and sort out the funds & SO's all at once? I already have a current account with HSBC so this would be the easiest option? (I wont have anywhere near £50k combined in HSBC for some time so im not worried about an all eggs in one basket atm)

Any help would be appreciated.

dunstonh

do I just pop down my local HSBC branch and setup a S&S ISA and sort out the funds & SO's all at once?

No. If you intend to DIY (strange choice with the FTSE 100 given its long term under performance and really poor weighting), then you may as well buy via a fund supermarket that is geared to DIY investors. Such as Hargreaves Lansdown.

(I wont have anywhere near £50k combined in HSBC for some time so im not worried about an all eggs in one bastket atm

It would be £100k as investments have their own limits. Although it doenst matter when using conventional unit trust funds.

sabretoothtigger

Are offshore unit trusts still relatively safe in that case

Zebra

Keltyx wrote: »

After a bit of research I have decided to drip feed £100 a month into a S&S ISA, and my funds of choice are £50 into the HSBC FTSE 100 index tracker, and £50 into the 250 tracker.

Good choice in my opinion - HSBC seem to be the cheapest for trackers.
Although personally I would go for their UK All-Share - have you considered that?

dunstonh

Good choice in my opinion - HSBC seem to be the cheapest for trackers.

Blackrock aer cheaper at 0.2%. Fidelity Moneybuilder has 0.1%.

Are offshore unit trusts still relatively safe in that case

The risks in unit linked funds, ignoring investment risk , are fraud and misrepresentation. The FSCS will give you some protection on those with unit linked funds but offshore funds wont have FSCS protection. Although they may have some local protections which may or may not be as good.

Zebra

dunstonh wrote: »

Blackrock aer cheaper at 0.2%. Fidelity Moneybuilder has 0.1%.

Kelty - you need to check the TER (total expense ratio) rather than the headline figures popularly quoted.

For example Fidelity may have an annual charge of 0.1% but the TER is 0.27% and Hargreaves-Lansdown make an additional 0.5% annual charge when held in an ISA.

artha

Zebra wrote: »

Good choice in my opinion - HSBC seem to be the cheapest for trackers.
Although personally I would go for their UK All-Share - have you considered that?

Doesn't the 250 generally do better than the 100 or all share?

sabretoothtigger

I rate the 250 over the 100 personally. I used to hold the all share and its fairly similar to the 100 rather then buying the 250 exclusively


Over the last year the 250 slightly outperformed the more usually held FT100 and if we look over 2 years to include the falls then the 250 index outperformed by about 8%



http://uk.finance.yahoo.com/m8


Midcaps were over 5 years 40% better, 10 years 65% better. Of course it could be different going forward, I think the top 100 has more international companies.

I like how the 250 index will sell companies that have grown too big, where as the FT100 only sells when the price of companies has fallen.
Maybe that explains the difference over time. As a tracker its more active ?

Jonbvn

artha wrote: »

Doesn't the 250 generally do better than the 100 or all share?

The problem with the FTSE100 is that it is dominated by only a few mega-cap stocks, with a strong oil and mining bias.

http://www.ftse.com/Indices/UK_Indices/Downloads/FTSE_100_Index_Factsheet.pdf

IMHO, this represents inadequate diversification.

dunstonh

Zebra wrote: »

Kelty - you need to check the TER (total expense ratio) rather than the headline figures popularly quoted.

For example Fidelity may have an annual charge of 0.1% but the TER is 0.27% and Hargreaves-Lansdown make an additional 0.5% annual charge when held in an ISA.

TERs from different sources will often be different depending on when they take their data.

For example, Fidelity you have as 0.27% but I just checked two sources and one had it at 0.28%. (different snapshot dates). The blackrock trackers were showing 0.22% to 0.29% TER depending on the index/region (UK equity being 0.24%).

Chris2000

The HSBC All-Share Institutional units have Total Expense Ratio 0.27% and Hargreaves Lansdown don't charge extra for holding them in an ISA as they do with the Fidelity fund.

Regarding All-Share vs. FTSE 100, traditionally I would expect an All Share tracker to perform better in the long term because it doesn't require the fund manager to keep dumping stocks on the way down as they leave the index and overpaying for the new entrants. But the All Share is something like 70% FTSE 100 anyway and larger companies may have greater exposure to overseas growth so nothing is certain.