H-L introduces a Tracker Platform Charge

koru

gadgetmind wrote: »

They have at least given notice, but one does wonder what percentage of their customer base have seen it.

Anyone holding small amounts of HSBC trackers needs to move to Fidelity, Bestinvest, etc. though they should expect to have to move again.

Bestinvest charges a custody fee on funds that do not pay it commission. This is £60 per year, or £120 per year within a SIPP. So, they will only be cheaper if you have several tracker funds.

Does Fidelity not make any charge for holding funds that pay no trail commission?

koru

fieldofdreams wrote: »

I'd welcome the forums thoughts on this but as far as I can see for those currently investing relatively low amounts with HL it may be better to move to manage funds?

EG

I have approx £1000 invested in both Aberdeen Emerging markets and HSBC FTSE All Share Index.

Aberdeen has a TER of 1.89%
HSBC has a TER of 0.27%

So, this would mean annual charges of approx:

Aberdeen : £18.90
HSBC: £2.70 + £24(12 * 2 monthly charges ) = £26.70

However, up the amounts to £2000 and it tips the other way

Have I got this about right? Please bear in mind Ive only started looking at fund charges in detail since the latest HL announcement

Many thanks

Yes, I think you have it right. This removes the cost advantage for tracker funds unless you have an investment in each fund of several thousand pounds. Arguably, people with smaller investments might be better switching to actively managed funds for now, although of course you are then dependent on the ability/luck of the fund manager. I presume that when RDR comes into force, it is likely that small holdings in active funds will start to incur platform fees or something similar.

A holding of £500 is already going to be unprofitable for the likes of HL, because they will only be earning trail commission of 0.5%, which is £2.50 per year. Perhaps they also get some platform commission, but they probably are not earning more than four pounds per year on a £500 holding in a fund. That can't be enough to cover their costs in administrating this. As other people have said, this makes visible the fact that small holdings are currently being subsidised by the large amounts of commission being earned on big holdings.

gadgetmind

koru wrote: »

Bestinvest charges a custody fee on funds that do not pay it commission. This is £60 per year, or £120 per year within a SIPP. So, they will only be cheaper if you have several tracker funds.

Bestinvest do not (yet!) apply this fee to HSBC trackers. They do for Vanguard, but I'm better off paying the fee rather than suffering the higher TER and tracker error of HSBC.

Does Fidelity not make any charge for holding funds that pay no trail commission?

Fidelity don't let you buy Vanguard (or shares or ETFs!) in their SIPPs but do have HSBC trackers, and don't charge extra for anything. Yet.

DYOR and note I have thus far been focussing on SIPPs as moving our ISAs is a job for next month. What joy!

psychic_teabag

koru wrote: »

I am no big apologist for Hargreaves Lansdown, but it is worth pointing out that the new platform fee will not apply until 31 December 2011.

31st December seems an odd choice, as opposed to 1st Jan.

C8 in (latest) T&C says that annual charges are calculated monthly, in arrears. If the monthly platform fee is also collected in arrears, then maybe the 31st is the first time the charge becomes payable, for fees accrued during December. So the charging period might begin on 1st December ..? [But if that was the case, we've not had 30 days notice - even if I were to dump all trackers within the next 30 days, I'd still incur a charge.]

SnowMan

For those with relatively small amounts in trackers hit by the HL platform fees (e.g.the HSBC tracker range) transferring to Fidelity looks a good option as gadgetmind says.

Would be worth considering switching to the Fidelity Moneybuilder range rather than the HSBC range as you would expect these to be less prone to the introduction of fees in the future being Fidelity's own funds. Of course if you go for the HSBC funds via Fidelity Funds Network you would presumably be able to switch subsequently to the Fidelity trackers if Fidelity introduced new fees for the HSBC funds and not their own funds.

The Fidelity all share tracker (Moneybuilder UK index) has a TER of 0.3% so is pretty similar to the HSBC all share tracker equivalent (TER 0.27%).

competitionscafe

If you use a mix of trackers and managed funds then Fidelity via Cavendish makes sense as you will get a rebate on the managed funds and apart from a one off £25 charge, no additional charges (for now). If you use only trackers, then going direct to Fidelity will avoid the one-off charge.


The AMC on the Fidelity Moneybuilder is 0.1%
http://www.cavendishonline.co.uk/investments/isas-oeics/fidelity-fundsnetwork/fund-discounts/?trans=ISA%20Transfer&prov=Fidelity

vs 0.25% on the HSBC trackers
http://www.cavendishonline.co.uk/investments/isas-oeics/fidelity-fundsnetwork/fund-discounts/?trans=ISA%20Transfer&prov=HSBC


Bestinvest gives a TER of 0.29% for the HSBC tracker and 0.30% for Fidelity, so almost identical:

https://select.bestinvest.co.uk/fund-factsheets/hsbcukin/hsbc-ftse-all-share-index-r/overview
https://select.bestinvest.co.uk/fund-factsheets/Fund-Factsheet-Overview.aspx?InvestmentCodeName=fidemonx

10 year performance:

dunstonh

koru wrote: »

I am no big apologist for Hargreaves Lansdown, but it is worth pointing out that the new platform fee will not apply until 31 December 2011.

And the date ties in with the removal of commission on ALL funds which occurs from the start of 2012.

So, does that mean that from that point, every fund you buy at HL will incur a £2 charge as they will all be non commission payers?

tushingham

Thanks to all who have contributed to an excellent and informative thread so far.

In terms of communication from HL I think this is poor by their standards although I did note this at the end of an email from them today:

Investment Times - important information in your next copyWe make no charges to buy and sell funds, and no further charges to hold over 2,400 funds within the Vantage Service. At the end of this year we're amending the charges for the minority of funds that do carry an extra fee, and extending it to a small number of funds for which we currently do not make a charge. This will allow us to offer a broader range of funds in future and keep our charges competitive.The Investment Times contains full details, please look out for your copy and, if you haven't received it by the end of November, please contact us.


***Can anyone offer advice on my situation?***
I have £3600 approx cash currently in HL s&s ISA account and was looking to add my remaining allowance this year (£5340) as a lump sum before moving to a more sensible approach of monthly contributions from next year onwards for the either half or full s&s isa limit each year for hopefully many years.
I was going to invest in 4-5 trackers via HL in a passive strategy similar to that discussed in other threads (been following gadgetmind, saveonarola and others' posts with interest!) and look to expand my portfolio in future. Have read tim hales book in details a couple of times.

These new charges have stopped me in my tracks a little. I'm tempted to invest as planned and sit and wait to see what happens with other platforms next year but cant figure out if I'd be much better off elsewhere for the amount I'll be investing this year (£9k total over 4 or so tracker funds). There have been some pointers about costs of other platforms but wasnt sure how they work and if some are SIPPs rather than ISAs. If someone has looked into it already and can given me some pointers for my own research then that'd be great.

Thanks in advance

t

Rollinghome

dunstonh wrote: »

And the date ties in with the removal of commission on ALL funds which occurs from the start of 2012.

So, does that mean that from that point, every fund you buy at HL will incur a £2 charge as they will all be non commission payers?

I don't follow. Do you mean the start of 2013? The new HL monthly charges start at the end of next month.

I'm not sure they have a clue what they'll be doing yet. This doesn't seem to sit with their recent changes on ISA charges for stocks including ITs which is 0.5% but capped at £45 pa. There's no cap on these new charges for UTs.

SnowMan

I have decided I don't trust HL at all, and I'm quite appalled by the way they are behaving in particular their lack of communication by not writing to all affected and the lack of adequate notice.

The introduction of multiple platform fees is ridiculous as far as I am concerned especially as it can mean fees going up by a factor of 30 or more for some people with small amounts of money in a number of tracker funds. But they still aren't going to write to those investors and tell them about the changes according to the Investment Times. Quite unbelievable.

I don't wish to stay with a company I don't like and don't trust. Their promotion of the Wealth 150 smells a bit also. Not knowing when they will try and implement their next major increase is an obvious concern also.

So I am cashing in all my funds from the Vantage Fund and Share Account (i.e. non ISA).

I've also got a smaller amount in a Vantage ISA account; I am already in the process of transferring that to Fidelity.

I did look at re-registering the non-ISA funds with Fidelity, which you can do if the amount is above 40K apparently, but it seems to take a long time (could be up to 6 months). Even if I can force HL to waive the re-registration fee I think it is going to be simpler just to cash it in. Will just accept I am going to lose or gain while the money is out of the market.

Will probably plough it back into HSBC trackers via the HSBC Global Investment Centre at some point, you can't transfer direct into there at the moment so will have to cash it in first.

Do you just send HL a letter saying you want to close your (non-ISA) account and can you ask them to make a payment by BACS to your account and give them details? Has anyone got any experience of this and know how long it takes? All I can find is what it says in A29 of the terms and conditions.