Legal & General Tracker

ermine

The dealing costs with monthly make it quite expensive if you use a platform with dealing charges

Dunstonh, you're a lovely guy and I've learned so much from your posts - I'm really not trying to pick a fight here and I'm sorry if I have given offence For clarity

with iii I purchase the very HSBC tracker I mentioned above, at £100 p.c.m purely so I have a unambiguous benchmark to see how the rest of my active share dealing is doing over time compared with that index. I pay no up front charges, no dealing charges on this particular tracker fund and no exit charges. If HSBC kick back some of their 0.27% TER for carrying them to iii or don't then that's fine by me.

If I buy shares, I pay charges of £10 + stamp duty or I can get it down to £1.50 + s.d. if I go with a batched process. I pay £10 to sell. Maybe iii cross-subsidise. Maybe they don't. My point was that if you are buying index trackers, you don't have to pay AMCs.

I really haven't got anything against HL, I've never used them. From their website they seem to be more full service, and if that's what is desired that's great. However, somebody is going into tracker investing isn't probably after a full-service offereing, and costs matter, critically, and in my opinion platforms that charge an AMC on tracker funds are necky, and shouldn't be tolerated, because other platforms don't, even on small monthly purchases. That's what competition is all about. I paid 1% on that Virgin ISA in 2001, it was one ofthe best ISA offers around at that time, but thankfully charges have been driven down, and I don't need to accept such usury these days. I'll pay it for Neil Woodford, I won't pay it for a computer tracking the index

Sorry Ermine, I'll have to dissagree.

Guess I'm more pessimistic about the likely gains from index investing, can't argue with the point that if the investment doesn't match the OP's expectations then it's not right for them. Mind you, if they do know of something that returns 100% in real terms over 10 years I'm all ears!

dunstonh

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.

I'm with you and you make it clear.

If you pick from a list of FTSE all share trackers then you are fundamentally going to get the same performance with all of them. The only difference is going to be the charges but that is only a small part of the issue.

e.g. since 19 Aug 2005 you have the following returns
Blackrock UK equity tracker D - 34.50%
L&G UK Index Retail - 32.61%
HSBC FTSE all share Ret - 32.34%
Fidelity Moneybuilder - 32.30%
Virgin UK Index - 29.98%
L&G (N) tracker - 28.25%

So, whilst 6% difference in that period is enough to look at, the funds do exactly the same thing other than charges/tracking error. The bulk of the return is down to where they invest.

Dunstonh, you're a lovely guy and I've learned so much from your posts - I'm really not trying to pick a fight here and I'm sorry if I have given offence For clarity

with iii I purchase the very HSBC tracker I mentioned above, at £100 p.c.m purely so I have a unambiguous benchmark to see how the rest of my active share dealing is doing over time compared with that index. I pay no up front charges, no dealing charges on this particular tracker fund and no exit charges. If HSBC kick back some of their 0.27% TER for carrying them to iii or don't then that's fine by me.

No fight here or anything. I am just trying to work out how a platform can make money on an investment that pays no rebate to them and you dont pay for it (either in dealing charges or platform charge). If everyone on their platform bought that fund, they would not have a penny income.

They may be running it as a loss leader like HL.

Looking at another fund, say inv Perp High Income, do they charge 1.5% AMC on that or 0.75% (or thereabouts) - you can replace that fund with most other 1.5% amc funds? If they charge 1.5% then they are getting the hidden commission from the fund house.

cloud_dog

ermine wrote: »

Guess I'm more pessimistic about the likely gains from index investing, can't argue with the point that if the investment doesn't match the OP's expectations then it's not right for them.

ermine, you raise perfectly valid points. In the context of a tracker your focus is absolutely the correct approach (other than validating how closely a tracker tracks an index).

ermine wrote: »

Mind you, if they do know of something that returns 100% in real terms over 10 years I'm all ears!

I don't think 4%-9% pa return over 11 years is too much to ask for.

In fact if I'm not able to double my money in an investment / my own investing over a 10 year time period I would be quite dissapointed.

jimjames

AMC will have an effect but ultimately the reason the investment hasn't performed that well is because the FTSE hasn't performed well over that time. You invested very close to the peak 10 years ago and it hasn't recovered back to that level yet. Any tracker would have done the same with the exception that some with lower AMC would have given a bit better return.

ermine

Looking at another fund, say inv Perp High Income, do they charge 1.5% AMC on that or 0.75%

That looks like what they do here - Invesco Perp High Income ISIN GB0033054015 is 1.5% AMC and 1% up front :eek: which would push me to EDIN if I were going that way....

dunstonh

ermine wrote: »

That looks like what they do here - Invesco Perp High Income ISIN GB0033054015 is 1.5% AMC and 1% up front :eek: which would push me to EDIN if I were going that way....

That gives me the impression that they are offering the HSBC tracker as a loss leader (like HL do).

On that Inv Perp fund, they are keeping the hidden rebate and the IFA trail as it would be around 0.75% if they were not (based on other unbundled platforms).

Plus, the 1% up front could actually be more than using an IFA on agreed fee basis. So, on the unit trust/oeic front they actually look quite expensive, bar a loss leader or two.

At the moment the business models for DIY seem to either focus their pricing more on direct assets or UT/OEIC fund but not both.

ermine

That insight is much appreciated. At the moment active funds aren't on my radar, however in a eyar or so some sort of Neil Woodford fund either as the IT or the fund you mentioned may well be. Although I'd favour the investment trust by inclination if the premium were higher than I felt okay with I would have considered this fund. And I'd have walked into the trap. I'm not rich enough to be able to make it worth an IFA's while, but at least I can query the platforms and whether it would be worth using one year's ISA to select one to suit that fund - thanks for the heads-up that there is such a serious difference!

andmas

Thanks for all the comments.

I conclude that:
1) I invested the sum at the wrong time (i.e. peak)
2) I would have had slightly better returns if I had invested in a tracker with a lower AMC / TER however that return would have been far less than the 40 - 50% return I was expecting.

It is clear that I need to get rid of the L&G tracker and it would appear the best option would be to transfer it into some new funds, to which I would invest a total of £300 per month.

On that basis can I seek advise on the following:

1) Which platform would be recommended on the basis that I would not be changing funds more than a couple of time a year. HL & iii have both been mentioned - are they comparable with charges.
2) Would it be better to invest in say 5 nr funds rather than 3 nr funds to give diversity.
3) What funds would be recommended to give an overall medium to high level of risk (probably a stupid question!)

My investment period would be between 10 and 15 years however I would need to be able to amend the monthly payments or even stop them altogether if financial restraints dictate.

Thanks in advance for all guidance

andmas

andmas wrote: »

Thanks for all the comments.

On that basis can I seek advise on the following:

1) Which platform would be recommended on the basis that I would not be changing funds more than a couple of time a year. HL & iii have both been mentioned - are they comparable with charges.
2) Would it be better to invest in say 5 nr funds rather than 3 nr funds to give diversity.
3) What funds would be recommended to give an overall medium to high level of risk (probably a stupid question!)

My investment period would be between 10 and 15 years however I would need to be able to amend the monthly payments or even stop them altogether if financial restraints dictate.

Thanks in advance for all guidance

Any advise or opinions from anyone ?

dunstonh

andmas wrote: »

Any advise or opinions from anyone ?

Board and posters are not allowed to give advice.

You are now getting into the areas where you need to decide for yourself. Not have somebody who doesnt know your risk profile, objectives, understanding of investments etc tell you to have some investment that is unsuitable.