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Funds fees query
Comments
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freemoneyrocks wrote: »Hi all
I've been investing in Invesco perpetual's high income fund for approx 18 month. I started this on a recommendation knowing little about investment funds. As the pot of money grows I've become more and more interested in the fees being incurred. This fund has a TER of 1.69% which seems very high when compared to the fees bring quoted on here for some tracker funds.
What is the difference between this fund and a tracker fundand and am I being stitched up on the fees?? Presumably the idea is that IP manage the fund and outperform the trackers to justify the fee??
just remember the TER doesn't include dealing charges. you should allow an extra 1% for that.
it's widely believed that on average that active management isn't worth the extra fees compared to a tracker.....
yes, some active funds will outperform the market but most wont0 -
just remember the TER doesn't include dealing charges. you should allow an extra 1% for that.
it's widely believed that on average that active management isn't worth the extra fees compared to a tracker.....
yes, some active funds will outperform the market but most wont
This discussion has been done to death, but if you pick the top 50 or so funds in a sector, only around 1/3 of them are trackers.0 -
Thanks all for your inputs. I think i'm going to continue with the Invesco funds for a while as they seem to be doing ok. I think I might add a tracker fund into the pot to balance things out a little. At the moment most of my investments are in the UK so I want to dabble in IP's US and European funds to spread things out.
On the fees front, I buy via Comshare who also pay a rebate but I'm not sure of the % off the top of my head.0 -
I pay into Invesco Perpetual High Income and didnt really give the TER much thought but i realise it can make a big difference long term, as pointed out depends on performance. Im looking at adding some HSBC trackers from HL when if i get a pay rise this year.
Also with HL do they refund u the 0.25% every year or just one off? Cos they refund the initial charge of 4/5%.
ALso if you pay monthly i dont think there are any buying charges.0 -
cashbackproblems wrote: »Also with HL do they refund u the 0.25% every year or just one off? Cos they refund the initial charge of 4/5%.cashbackproblems wrote: »ALso if you pay monthly i dont think there are any buying charges.0
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This discussion has been done to death, but if you pick the top 50 or so funds in a sector, only around 1/3 of them are trackers.
but a lot of people still seem to be ignorant of the fact that the Total Expense Ratio only covers some of the fund costs
Are there not a lot more actively managed funds compared to trackers? Yet trackers still account for a third of the top funds?
By the time the fund manager takes his 2.5% each year there isn't a lot left for the investors0 -
By the time the fund manager takes his 2.5% each year there isn't a lot left for the investors
You do realise that the returns are net of charges?
That is probably why most people dont care. Would they prefer 529.82% having paid more to get that or 217.70% having paid less to get that.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
There are literally thousands and thousands of actively managed funds. Just because one does better than a tracker isn't a strong argument for saying active management is better than trackers.
I do suspect that the tracker you refer to does not include dividend reinvestment? While the actively managed fund you refer to does include dividend reinvestment?
Obviously if you can refer me to some strong academic evidence that active management is worth the fees I'll sell all my shareholdings and pop down to the nearest IFA.0 -
There are literally thousands and thousands of actively managed funds. Just because one does better than a tracker isn't a strong argument for saying active management is better than trackers.
I do suspect that the tracker you refer to does not include dividend reinvestment? While the actively managed fund you refer to does include dividend reinvestment?
Obviously if you can refer me to some strong academic evidence that active management is worth the fees I'll sell all my shareholdings and pop down to the nearest IFA.
Ha!
That's a debate that has been going on for years and will continue to do so. It's one of those debates where you can start off with the result you want, and put together some half-4rsed data to prove your point.
For example, find a period in which Financial and Mining companies have done well, and no 'managed' fund would probably beat a FTSE100 tracker. And vice-versa.
Personally, I happen to believe that a 'managed' fund will always do better in the longer term. This is because and index tracker will have exposure to the whole shooting match - good and bad. Almost any 'idiot' can spend time on a bit of fundamental research and eliminate the obvious 'dogs' - and hence produce a significant %age gain.
Now whether or not that activity is 'worth' the fees they charge is quite a different debate. A debate best carried on in the Ferrari showrooms and over a gin & tonic on a yacht in Cannes.
But if my investment provider returns me 5% net, and drives a Merc, am I interested in the other one who returns me 4% but rides a bike?0 -
I do suspect that the tracker you refer to does not include dividend reinvestment? While the actively managed fund you refer to does include dividend reinvestment?
You suspect wrong. Both used the total return. There wouldn't be any point using different methods.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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