Hargreaves and Lansdown Stocks&Shares ISA

mutley74

dunstonh wrote: »

Dont read too much into the trail commission. On a typical AMC of 1.5%, HL are getting around 1.2% of that. So rebating around 0.1% on ISAs is not exactly giving much back. ).

Whats your reference for this information? From the days when i used to invest with Chartwell, they always claimed/stated when they were one of the early/first brokers to share trail commission they offer an equal share (half) of their commission. In those days they used to offer a max of 0.25%.

If HL are getting around 1.2% that only leaves 0.3% plus any fee bonuses and intial fees for fund running costs etc.

dunstonh

Whats your reference for this information?

What do you mean reference? Its the standard bundled platform model. The figures vary a bit on the funds used and the terms agreed but the ballpark figures are much the same. The FSA was considering forcing platforms to declare their "cut" but backed down recently. Mainly from pressure from HL and the other bundled platforms. The unbundled platforms wanted a level playing field for all.

From the days when i used to invest with Chartwell, they always claimed/stated when they were one of the early/first brokers to share trail commission they offer an equal share (half) of their commission. In those days they used to offer a max of 0.25%.

They are only sharing the IFA cut. They are not sharing the platform cut. The IFA cut wont exist from the end of 2012. So, either they survive on the platform cut or they introduce explicit charges on top.

If HL are getting around 1.2% that only leaves 0.3% plus any fee bonuses and intial fees for fund running costs etc.

That is correct (Although initial is mostly over with now).

ChrisEvanson

Linton wrote: »

A lot to answer. Lets start on (1) which will also provide clues to the others.

There are a very wide range of investments available. Most have a long term tendancy to increase in value but with considerable fluctuations in the meantime.

Each investment will have its own characteristics. For example the FTSE is slightly lower now than it was 10 years ago. In the meantime it has halved, doubled and halved again. Recently it has risen strongly. Other investments, eg natural resources have risen perhaps 10-fold. A final class of investments, gilts and bonds, are similar to fixed rate savings and tend to increase fairly steadily though at a slow rate.

So how to make money? Well, you can make a lucky guess and invest in something that will do extremely well. That works briliantly if you can get it right. Invest in a few wilder things and if only one comes up you still do well.

Another way is to make use of the peaks and troughs. For example, if you have half your money in the FTSE and half in gilts & bonds, at some point the FTSE will rise to significantly disturb the 50-50 split. At that point you transfer some of the FTSE fund into the gilts&bond to re-establish equilibrium.

When the FTSE then drops so that you have significant excess of gilts&bonds you buy back into the FTSE. In this way you are continually selling when the FTSE is high and buying when it is low.

This is why you need the time - so that either the really good investments have had chance to perform, or for sufficient buy/sell cycles have taken place for your overall funds to be certain to be higher than when you started, no matter what the state of the fluctuations.

This is also why you need a range of investments, not just one. Either to improve the chance of getting THE winner or to have differently behaving investments for the % equalisation process to work.

NOTE - my two investment strategies above are extreme and simplistic examples to show the sort of mechanisms that enable the short term random behaviour of the markets to provide long term returns significantly greater than cash savings.

Thanks for replying. I had wondered if I was talking to myself!! The thing is, my main point here: you could invest say an inheritance on a stock that had been dragged down by sector (eg banking) and decide to invest in a company in that sector which had been artificially dragged down (eg Barclays to 50p) and then see your investment more than quadruple in a little over a year and walk away. Alternatively you could spread risk etc and mistime a few buys and sells and actually see relatively poor return over 5 years. Obviously the 'eggs in one basket' approach is far riskier but the more you spread the less likely you have to make big gains (yes and losses)

My point is that this '5 year' arbitrary figure for investing in shares so often bandied about is rubbish.

jamesd

terakris wrote: »

If i can chop and change between funds, makes it much easier to balance a small portfolio otherwise i was worried i would have 25% of my money in each of say 4 funds... which doesnt seem balanced for risk if one is more of a "punt" than another to me

You can also sell some of one fund you own and use that to buy some of up to five other funds. No minimum purchase amount though i suggest not buying less than £50 worth just to help keep their costs down. If you want to split more than five ways do two deals a few days apart. This is how you dodge the minimum per fund investment. Once you've put £50 in a fund this way you can top up with £250 or can buy one fund and do another sell split deal to spread the money out to different funds again.

If you do get income one way to use it is to sell enough of a fund to take it to £250 total then buy back £250 worth of that fund.

mutley74

dunstonh wrote: »

What do you mean reference? Its the standard bundled platform model. The figures vary a bit on the funds used and the terms agreed but the ballpark figures are much the same. The FSA was considering forcing platforms to declare their "cut" but backed down recently. Mainly from pressure from HL and the other bundled platforms. The unbundled platforms wanted a level playing field for all.



They are only sharing the IFA cut. They are not sharing the platform cut. The IFA cut wont exist from the end of 2012. So, either they survive on the platform cut or they introduce explicit charges on top.



That is correct (Although initial is mostly over with now).

thanks for the clarifcation. I did not appreciate there was an extra "cut" over the IFA cut! No wonder HL have monet to keep posting me all these glossy magazines!
Seems like a bit of a "con" as i thought all financial products should be stating how much they pay the IFA or broker.

dunstonh

mutley74 wrote: »

thanks for the clarifcation. I did not appreciate there was an extra "cut" over the IFA cut! No wonder HL have monet to keep posting me all these glossy magazines!
Seems like a bit of a "con" as i thought all financial products should be stating how much they pay the IFA or broker.

You have to remember that HL in the respect of their platform are a product provider. Not an IFA. The current rules only require disclosure on what the IFA gets paid. Not the provider.

It is a bit mucky as the individual should know who is getting what on either everything or nothing. Not just one party involved. And of course, in the respect of a DIY platform, the IFA is not involved. Yet the platform is still holding on to most of the IFA cut. After RDR (end of 2012), they wont be able to do that on new business.

Loughton_Monkey

cheerfulcat wrote: »

Dividends are paid out to the investor ( income units ) or reinvested ( accumulation units ).

Yield in the case of the HSBC tracker ( presumably similar on other trackers, depending on where the charges are deducted ) is 2.65%. Historic yield of FTSE 100 according to Digitallook is 2.9%, forecast 3.1%.

In that case, then, surely a FTSE tracker (accumulation) should actually outperform FTSE itself? Or to be more precise, a tracker unit should change - each day/month - by (a) Increase in FTSE itself PLUS (b) Receipt of dividends, MINUS (c) 0.25% charge.

mutley74

One other "trick" i found to get round the min. lumpsum investment of £1000 per fund with HL is to buy a lum sum investment of a very low risk fund (such as a bond fund). Then when i find market conditions are suitable start selling some units either in packets of £50, 100 etc into a fund i wish to transfer proceeds into.

I have done this lots of times, which has given me an opportunity to build up small holdings into various high-risk/specialist funds which i did not want to commit £1000 intially.
I find this is easier to manage than set up a monthly payments with HL, as i can control which fund and when to invest online.

Gaffy

I'm still slightly confused at the Annual Management Charge (AMC).

I know that Hargreaves Lansdown own AMC is 0.5% of the total value of all funds held, up to a maximium of £200.00

Is this different to the AMC of each individual fund held and does one get charged both AMC's (HL and fund)?

As an example, if one was to invest £100k in Invesco Perpetual High Income Inc, the AMC for this fund is 1.5% (minus of course the 0.25 HL cashback).

So, the total AMC would be £1250.00 (or 1.25%) for this fund, but would this be capped at £200.00 as stated above, or would it be £1250.00 (fund AMC) + £200.00 (HL AMC) with the total being £1450.00 for the year.

jimjames

Gaffy wrote: »

I'm still slightly confused at the Annual Management Charge (AMC).

I know that Hargreaves Lansdown own AMC is 0.5% of the total value of all funds held, up to a maximium of £200.00

This is not the case. HL do not charge any annual fees for funds held in an ISA. The 0.5% charge refers to holding shares in your ISA not any unit trust/OIEC funds.

Gaffy wrote: »

As an example, if one was to invest £100k in Invesco Perpetual High Income Inc, the AMC for this fund is 1.5% (minus of course the 0.25 HL cashback).

So, the total AMC would be £1250.00 (or 1.25%) for this fund, but would this be capped at £200.00 as stated above, or would it be £1250.00 (fund AMC) + £200.00 (HL AMC) with the total being £1450.00 for the year.

The total AMC would be exactly what the provider charges minus any loyalty bonus that HL pay out. There is no charge from HL for holding the fund in their ISA.

The actual figure to look for is the TER (Total Expense Ratio) which includes the annual charge and any misc charges - normally its a few tenths of a percent more. Eg Aberdeen Asia Pacific AMC is 1.75%, TER is 1.85%