With whom to invest a tracker-heavy portfolio?

Noktok

Am I right in thinking that Hargreaves Lansdown levy higher than average annual charges for tracker funds?

If so, where would be the best place to go to start a tracker-oriented portfolio?

psychic_teabag

H-L do charge extra for funds which don't pay enough trail commission (as well as shares, and ETFs, and I think IT's, though the recent big china IT whose name I've forgotten does pay trail commission IIRC).

However, at the moment, the HSBC trackers seem to get away without this extra penalty despite the relatively low annual charge.

sabretoothtigger

I think Dunston described who charges the least, go search what he said. Im fine with HL and HSBC if I want it personally but I appreciate on a big sized fund small percentage differences matter

dunstonh

I think Dunston described who charges the least, go search what he said.

I don't know on the DIY side. On the IFA side it is Skandia as they have the Class D Blackrock index trackers (most carry the more expensive Class A version). I would think on the DIY side that the OP is better off with an unbundled platform if he doesnt want commission paying investments that are better suited on a bundled platform.

jimjames

Noktok wrote: »

Am I right in thinking that Hargreaves Lansdown levy higher than average annual charges for tracker funds?

If so, where would be the best place to go to start a tracker-oriented portfolio?

No, this is incorrect.

The annual charges for tracker funds are no different on HL to any other provider except for a very small number of funds (Fidelity being one) that charge an annual fee in addition to the manager charge.

HSBC and L&G funds do not have this cost and I have all my HSBC funds with HL.

dunstonh

HL offer a few limited trackers as loss leaders but not all of them.

psychic_teabag

There's a comparison of discount brokers here : http://www.candidmoney.com/actionplans/actionplan3.aspx

Noktok

Thanks all, particularly for the tip about the cheap HSBC funds. I will have a look at them.

While searching old posts I found out that the commission system is getting overhauled in a year or two. I'm concerned that any tracker funds I pick now on the basis of their TER will inevitably end up with higher charges in the near future anyway. If that's the case, then H-L is looking even less attractive for trackers.

dunstonh

I'm concerned that any tracker funds I pick now on the basis of their TER will inevitably end up with higher charges in the near future anyway

If bundled platforms are banned then the cost of tracker funds will go up via platforms whilst managed funds will come down in cost. We should know June/July time if they are going to be banned.

The FSA is stuck between two positions. unbundled platforms are more transparent for costs and no bias can exist but bundled platforms are nearly always cheaper (at the moment) but get hidden payments from fund houses to market their funds. They have cross subsidy which is not liked. Plus, many of the bundled platforms do not rebate all of the trail commission and use that to cross subsidise. When commission ceases on new fund purchases after 2012, unbundled platforms will have to increase charges to make up for that (or accept the loss of 0.5% - which on £14 billion pounds of income is no small amount). Unbundled platforms wont be affected by that.

it is too close to call at the moment. Morally, unbundled is best. Price wise, bundled is best (if you ignore the marketing from that platform)

jimjames

Noktok wrote: »

I'm concerned that any tracker funds I pick now on the basis of their TER will inevitably end up with higher charges in the near future anyway. If that's the case, then H-L is looking even less attractive for trackers.

I can't see any reason why HL is looking less attractive for trackers. If you can find a cheaper platform for funds than HL that is available to retail investors then I'd definitely be interested to hear about it. So far all mention about other platforms has referred to products that are not available to retail investors making their own choices; all seem to be for IFAs only which is of no use to anyone else.

What may or may not happen in a few years time shouldn't necessarily affect any decisions now. If HL suddenly become uncompetitive then there is the option to transfer the ISA to someone else who gives better value at that point.

smallfry27

jimjames wrote: »

I can't see any reason why HL is looking less attractive for trackers. If you can find a cheaper platform for funds than HL that is available to retail investors then I'd definitely be interested to hear about it.

I found BestInvest worked out cheaper for the trackers I wanted.