Hargreaves and Lansdown Stocks&Shares ISA

jamesd

Loughton_Monkey wrote: »

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.

Yes, an accumulation FTSE tracker will outperform the FTSE index. It's why you sometimes see press reports saying that the FTSE has gone nowhere for ten years (index only) or is up by x including income.

It's also a trick used by the GEBs that offer FTSE growth with capital guarantee over say five years, because they use only the index value and keep the dividends.

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 fund takes 1.25% and out of that pays HL 0.5%. HL then pays you a portion of that 0.5% in either their ISA or their Fund and Share Account. Total cost for you is the £1250 less whatever HL rebates to you in the form of a Loyalty Bonus rebate.

The £200 never matters because the fund is paying HL. It's only funds that don't pay HL that count towards the 0.5% charge that's capped at £200. And this charge doesn't apply in the Fund and Share account, just in the ISA and SIPP.

HL also gets paid a platform fee by the fund, the extra 0.2-0.3% that dunstonh writes about.

Gaffy

Thank you, that's made things a lot clearer now.

mutley74

mutley74 wrote: »

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.

forgot to mention by doing investing this way one can top up any holding in a fund (does not matter what your intial investment amount is) by either adding the £250 min general fund top allowed by HL, or by selling and transfering units from another fund.

Doing investing this way allows one to invest in more than one fund at a time especially useful if you are just starting out with a new ISA.

jimjames

Something else I've noticed with HL, not sure if it applies to other discount platforms as well. They enable you as a retail investor to access funds that are normally only available to institutions and therefore generally have low charges.

Two examples I've seen are the HSBC All Share tracker with 0.27% TER and the Lindsell Train fund that normally has a £500,000 initial investment but with HL can invest from £50 at a 0.65%AMC - not bad for an actively managed fund.

dunstonh

Something else I've noticed with HL, not sure if it applies to other discount platforms as well. They enable you as a retail investor to access funds that are normally only available to institutions and therefore generally have low charges.

Most platforms do it. Although its more common on the unbundled platforms. The bundled platforms dont tend to offer as many as they dont get as much or even any hidden rebates on institutional funds. They are basically a sort of loss leader for bundled platforms.

Gaffy

Just one final question, on the HL website if it states that a funds yield is say 5% and a TER of 1.5%, has the TER already been taken off the stated yield value or is it yield minus TER = 3.5% ?

Lokolo

Gaffy wrote: »

Just one final question, on the HL website if it states that a funds yield is say 5% and a TER of 1.5%, has the TER already been taken off the stated yield value or is it yield minus TER = 3.5% ?

They aren't related. The yield is the dividend given out. The TER is the overall cost of buying.

Gaffy

Yes I realise that, I think I didn't explain myself so well.

What I'm trying to say is if the annual dividend paid out is 5% and the annual TER is 1.5% then the profit for that year is 3.5% excluding of course the rise or fall of the fund value, is that correct?

sabretoothtigger

correct. There is also charges to buy sometimes, hl usually reduce that to zero


Yield or dividends can drop. The expense ratio can rise, its their costs of dealing partly also they can choose to just charge you more though that doesnt change much

jamesd

The total return is after the TER costs and other costs not included in the TER are deducted. Total return is dividends/interest yield/distributions plus capital value change. This is what's shown on charts, though they often have the option to show capital movements only or total return.

Most funds deduct expenses first from dividends or interest but income funds quite often take it from capital instead so that it doesn't reduce the payout.

The lower fees are what cause the total return of an institutional fund to be higher than the same fund in retail form, something you can see if you chart the returns of both. The institutional fund will steadily gain more than the retail version.