MOst adsvisers are unfit for purpose

Paul_Herring

EdInvestor wrote:

Charges on funds in the US are much lower than here.

See how high charges eat up your investment profits:mad:

The best measure of charges is the Total Expense Ratio

Average US TER: 0.92%
Average UK TER: 1.68%

Almost twice as high.

From TFA:

Yahoo wrote:

Wednesday September 28, 03:11 PM

What year is this article from? And what are the figures now?

EdInvestor

Last year, when the FSA finally decided to force the companies to put the TERs on the documentation ( they are usually higher thsan the AMC).

There are other hidden charges as well, of course.

Still trying to get the FSA make them disclose them as well. :rolleyes:

dunstonh

Thats on funds. What about packaged products which is where most people buy their stuff?

Chrismaths

Look at the average size of a US mutual fund compared to a UK fund. Also look at the proportion of passively managed US funds to UK. That distorts the figures. In addition, the burden (read cost) of compliance over here is huge. I looked into setting up an OEIC recently, and they are not cheap to do.

Gorgeous_George

I was offered a pension that 'only charged 1% of the fund value' per annum (NU).

If I invested £1,000 in year 1, after 20 years NU would have sucked out 20% or £200 (ignoring compound effect).

Tell me again why I should save with a managed fund.



GG

dunstonh

I was offered a pension that 'only charged 1% of the fund value' per annum (NU).

If I invested £1,000 in year 1, after 20 years NU would have sucked out 20% or £200 (ignoring compound effect).

Tell me again why I should save with a managed fund.

The NU property fund (a 1% charge on stakeholder) hasnt falled below 10% as long term average in 20 years. In the last 5 its being averaging 15% a year. If you dont pay the charges, you dont get access to that sort of investment.

The only way to avoid charges is to stick the money under the bed. They exist on every investment out there to some degree. Whether they are explict charges, implicit, charged at the start, the end or the bit in the middle.

EdInvestor

The only way to avoid charges is to stick the money under the bed. They exist on every investment out there to some degree.

Ah yes, but some are (much) larger than others.Investing directly in shares in an account with no annual fee and low dealing charges is much cheaper than buying a packaged product, for instance.

Tiggs_2

Gorgeous_George wrote:

I was offered a pension that 'only charged 1% of the fund value' per annum (NU).

If I invested £1,000 in year 1, after 20 years NU would have sucked out 20% or £200 (ignoring compound effect).

Tell me again why I should save with a managed fund.



GG

lol...how much profit would you like them to make on you over 20 years? any less than £200 and they may well be asking why they should LET you save with them!

Chrismaths

Ok Ed, I've got £5,000 to invest, and I want to buy 20 shares. How much are the dealing costs?

EdInvestor

Chrismaths wrote:

Ok Ed, I've got £5,000 to invest, and I want to buy 20 shares. How much are the dealing costs?

For a small amount like that, where a lot of shares are wanted, I would choose a Halifax Sharebuilder account which has no annual fee and a very low dealing cost of 1.50 a share, so 20 quid. Stamp duty is extra @ 0.5% on the purchase price, so a further 25 quid for a total of 45 quid in all.

Perhaps you could return the favoiur chrismaths.

How much will the dealing costs and research (aka "bundled stockbroker commissions") add to the annual expenses of the average unit trust/OEIC? As you know, these are not currently included in the AMC or TER, and there is no requirement to disclose them.

But as an investment manager I'm sure you have a fair idea how much they are.