Legal & General Tracker

andmas

In March 2000 I invested £5,000 in Nationwide Tracker Fund (ACC) with Nationwide Unit Trust Managers Limited. In February 2008 this became a Legal & General L&G (N) Tracker Trust (Acc).

I have not made any further investment in the fund.

The value of the Legal & General L&G (N) Tracker Trust (Acc) as at 31 March 2011 was £6,257.06 (4580.5743 units at 136.60p per unit). Unit price as at 20 June 2011 is 132.10p so the fund has a current value of £6,050.94.

The total gain of £1,050.94 over 11 years gives an average return per year of only 1.91% - this seems very poor and I would be grateful to receive the opinions of forum 'experts'.

I am also looking at investing around £300 per month in a stocks and shares ISA (probably H&L Vantage although opinions on others appreciated). I would split the £300 into three differing funds.

I would appreciate advise on whether I should stick with the (I believe) poor performing L&G tracker or transfer to the new ISA (assuming that that is possible).

Thanks in advance

TrickyDicky101

Is that the FTSE All Share tracker? Is it within an ISA in Nationwide? If so I believe that is a very poor way to hold the L&G tracker because FMC under Nationwide is 1% whereas under L&G with them directly it is just 0.5%. Being a tracker it will move in line with the index it tracks (or very nearly so).

ermine

I have a S&S ISA with iii.

You can buy this eqivalent FTSE all-share fund from HSBC for no up front costs and a TER of 0.27%, or the A version for a similar TER

That's it on costs, no annual holding fees or annual charge etc. They also do a regular subscription system. You'd have to check that the other funds you want are available.

H&L saying they want to charge you 0.5% p.a. for holding some funds is rude in my view, but maybe this would appear as an annual internal fund charge or poorer TER on the same funds in my ISA. Nobody should even think of paying annual holding charges for trackers IMO

dunstonh

H&L saying they want to charge you 0.5% p.a. for holding some funds is rude in my view,

How would you pay them then?

andmas

TrickyDicky101 wrote: »

Is that the FTSE All Share tracker? Is it within an ISA in Nationwide? If so I believe that is a very poor way to hold the L&G tracker because FMC under Nationwide is 1% whereas under L&G with them directly it is just 0.5%.

Yes it is an ISA in Nationwide (I believe that the (N) in the fund name signifies Nationwide). If the same tracker direct with L&G is 0.5% AMC then I've been paying Nationwide 0.5% per year for nothing - that really is annoying. It has a TER of 1.15% which I see is significantly more than the TER of 0.27% for the similar product from HSBC advised by ermine.

I assume that to change from the existing tracker to another ISA tracker or other fund I will need to sell the the units and transfer the cash from the sale to the new Fund Manager (HSBC, H&L, iii, etc)?

On the basis that I will need to sell would the recommendations be to stick with a tracker fund (such as HSBC) or split the cash into the funds from three different sectors that I intend commencing with a monthly investment of £100 each?

ANGLICANPAT

My OH put £6k in L&G UK Index Trust (R) in April 1999 and this January statement shows it being worth £8749 , so not that sparkly either. Weve been told these L&G funds are pedestrian and for 'lazy' investors, so I think we'll be looking for a replacement shortly , probably an actively managed fund but possibly if keeping a tracker, look for the cheapest running costs available.

ermine

How would you pay them then?

iii seem to have found a way, it's free market competition and all that. Presumably they make the rest of their wedge from the share dealing charges. It is necky IMO to charge an annual fee for something as tedious as tracker funds, low charges is the very reason why you buy tracker funds. An initial charge is one option, that's pretty much how platforms deal with share purchases, again, execution-only platforms that charge you so much per holding per year are taking the mickey.

Other funds, fair enough, and if you want to pay for a full-service platform good for you, but index trackers on full-service? What this whole market needs is a good hefty kick to sort out the way it treats charges to be transparent so you can compare one thing with another.

cloud_dog

andmas wrote: »

The total gain of £1,050.94 over 11 years gives an average return per year of only 1.91% - this seems very poor and I would be grateful to receive the opinions of forum 'experts'.

This thread appears to have side-trcked on to the issue around the additional AMC from the Nationwide version of the fund.

Would the OP be happy if the investment was worth hundreds of pounds more? Possibly not considering the timescale involved.

The OP invested in a tracker at or near the height of the 'Tech Boom' (can't find a chart to confirm atm), in a very broad investment tracker, and their investment has tracked the index to where it is today.

The OP would have been better off if the tracker had a lower TER but I think this probably reinforces the risk associated with trackers and 'invest and forget' strategies rather than just focussing on AMC considerations.

ermine

This thread appears to have side-trcked on to the issue around the additional AMC from the Nationwide version of the fund.

Yes and no, inasmuch as if the OP was paying 1%FMC to Nationwide for 11 years then that was a big part of their problem. That adds up, not neessarily linearly but their result now would be a lot better and they wouldn't be posting on this board hacked off at the low return.

I had a Virgin FTSE all-share tracker ISA I bought shortly after the tech boom in disgust as losing so much money through churning my portfolio. What I didn't realise is that index investing must be kept low rent because the historical equity performance over inflation is quite low - Barcap estimate it as 0.6% for the last 10 years. That Virgin tracker had charges of 1% which was good in 2001, but it's rotten now. It went nowhere, because of that, whereas though it was a rough decade for the index, the index was higher when I bailed out than it was when I bought the ISA.

The takeaway from that is if you are going to become an index investor you must shoot all the hangers-on that want to attach themselves to your low-powered investment vehicle. That means ISA platforms charging you annual charges to hold trackers, that means trackers with high TERs. You have to unhitch all these bad guys and run the tightest ship you can, else they'll drag you down.

dunstonh

ermine wrote: »

iii seem to have found a way, it's free market competition and all that. Presumably they make the rest of their wedge from the share dealing charges. It is necky IMO to charge an annual fee for something as tedious as tracker funds, low charges is the very reason why you buy tracker funds. An initial charge is one option, that's pretty much how platforms deal with share purchases, again, execution-only platforms that charge you so much per holding per year are taking the mickey.

Other funds, fair enough, and if you want to pay for a full-service platform good for you, but index trackers on full-service? What this whole market needs is a good hefty kick to sort out the way it treats charges to be transparent so you can compare one thing with another.

The OP want to pay £300pm. The dealing costs with monthly make it quite expensive if you use a platform with dealing charges.

cloud_dog

ermine wrote: »

Yes and no, inasmuch as if the OP was paying 1%FMC to Nationwide for 11 years then that was a big part of their problem.

Sorry Ermine, I'll have to dissagree.

ermine wrote: »

That adds up, not neessarily linearly but their result now would be a lot better and they wouldn't be posting on this board hacked off at the low return.

Yes it adds up and the OP would have been better off, as I said in my post but, the question is........ How much better off?

Lets assume £700 increased value from lower TER over 11 years......... the question that is the crux of the posts is.... Would the OP be satisfied with an increase of £1750.94 after 11 years of ivestment?

(I haven't worked through the real benefit of lower TER so the above amount is just a guess).

If the OP comes back and says 'Yes, if the investment was worth £1750.94 after 11 years of investment' then you are correct, if they come back and say they would have hoped the investment might have increasede by between 50% and 100% after 11 years then the issue and therefore the original post / enquiry is not about AMC but the vehicle / strategy used in the investing.

ermine wrote: »

The takeaway from that is if you are going to become an index investor you must shoot all the hangers-on that want to attach themselves to your low-powered investment vehicle. That means ISA platforms charging you annual charges to hold trackers, that means trackers with high TERs. You have to unhitch all these bad guys and run the tightest ship you can, else they'll drag you down.

I dont dissagree with what you say hear.

The point I was trying to highlight to the OP was that AMC is not everything. The OP could have gone away from this thread with the understanding that the root cause of their poor returns is down to AMC only.