Fund initial charges on regular investments

viola_brandywine

I am planning to set up some regular investments to funds in an ISA but I am not sure I entirely understand the charges. I can see that if you invest a lump sum of £1000 with a 5% initial charge then you pay £50 initial fee (along with any annual charges).

If you choose to set up a regular investment of £50 per month, what do you pay in terms of this initial fee? Do you just pay 5% of it with every investment?

Sorry if this is obvious. I have tried to research it but I'm still confused!

Thanks.

Lokolo

You pay 5% everytime you buy.

However, most fund supermarkets reduce the initial cost down to 0% or near enough.

Aegis

viola_brandywine wrote: »

I am planning to set up some regular investments to funds in an ISA but I am not sure I entirely understand the charges. I can see that if you invest a lump sum of £1000 with a 5% initial charge then you pay £50 initial fee (along with any annual charges).

If you choose to set up a regular investment of £50 per month, what do you pay in terms of this initial fee? Do you just pay 5% of it with every investment?

Sorry if this is obvious. I have tried to research it but I'm still confused!

Thanks.

Yes, but most funds are available through companies like Hargreaves Lansdown with no initial charges payable, so don't ever settle for a 5% initial charge!

viola_brandywine

That's great, thanks for your replies Lokolo and Aegis. I was thinking of going through HL or iii so that has helped me make up my mind.

cashbackproblems

I use HL for funds and iii for shares

viola_brandywine

I'm torn between them - it seems that I could put £20 into each fund with iii or £50 with HL. I plan to put £100 per month in to start with so I could spread it around more with iii (I have more than 2 funds in mind to invest in).

cashbackproblems - why do you prefer HL over iii for funds?

gadgetmind

HL are great for funds, but do note that not every funds is an OEIC; there are still some Unit Trusts lurking, which will hit you with bid/offer spread. Look at the buy/sell price and the fund type and avoid UTs unless you're sure you know what you're doing.

I'm told that Alliance Trusts Savings refund all trail commission, and I know there are lower AMC/TER investments than funds, but my own situation is rather complex and I'm doing everything other than funds outside of an ISA. Others can maybe advise better.

However, what is very very clear, is that losing 5% on day 1 should be avoided at all costs, and you should also minimise annual charger and maximise how much of the trail commission that goes into your pocket.

viola_brandywine

Thanks gadgetmind. My current ISA investment is in a Legal & General unit trust. It has performed well up to now because I started at the right time. I need to transfer this ISA to a new one but I'm not sure what will happen to the current investment when I do this (I'm waiting for a response from L&G). I plant to start with Invesco Perpetual High Income and Aberdeen Emerging Markets.

Totton

Hi,

gadgetmind wrote: »

HL are great for funds, but do note that not every funds is an OEIC; there are still some Unit Trusts lurking, which will hit you with bid/offer spread. Look at the buy/sell price and the fund type and avoid UTs unless you're sure you know what you're doing.

Don't get hung-up in whether a fund is an OEIC or a Unit Trust. OEICS are priced differently for starters plus if you go to a fund supermarket the initial fee (or spread between the buy and sell price) is usually rebated hence there is no real difference between either. Some would say that Unit Trusts are more transparent that's all.

Regards,
Mickey

Totton

For ISA purposes, if staying with L&G you should be able to switch funds within the ISA wrapper. If moving to H&L then give them a ring as you will probably need to sell the funds with L&G and then transfer the capital to H&L as an ISA transfer. It's not difficult, just may appear to be so.

HTH,
Mickey

ruperts

I'm quite sure the initial charge is just initial and with iii's fundbuilder I don't think you don't pay any more each time you put more money in. Ask me at the end of the month and I'll know for sure as that's when my second round of payments go in. There is certainly no obvious mention of any further charge so I'll be at least a little perplexed if there is one.

Hargreaves Landsdown gets rave reviews on here on a regular basis. As an iii user it suprises me a bit as there seems to be very little difference between the two. I wonder if those people talking HL up so often are also shareholders?