H-L introduces a Tracker Platform Charge

Rollinghome

Not sure if it's been mentioned, but the new fee option to be offered by Alliance Trust Savings from 8 October may be of interest to those escaping from Hargreaves Lansdown.

For an increased admin fee of £120 pa they'll waive the normal £12.50 dealing fee for a maximum of 20 deals pa while rebating both trail commission and platform fees. Attractive alternative for those with a reasonable sized portfolio who trade more than 6 but not more than 20 times a year.

See http://candidmoney.com/articles/article261.aspx

grey_gym_sock

SnowMan wrote: »

I am still not sure I understand how it works, but ignoring the 2 week averaging does it work like in this spreadsheet (which is a fund that starts at zero increases in size and then reduces to zero) so the total stamp duty payable is 85, which is also 0.5% of all subscriptions into the fund, so explains the Vanguard charge?

that looks right ... note that it's not just that the overall total SD is 0.5% of all subscriptions; also, the total SD on every line is 0.5% of subscriptions on the line ... you don't have to have assume any particular history of a fund to get that result.

the 2-week averaging could make the result slightly different.

if a fund invests net new cash more quickly (e.g. daily), and it has net outflows later in the 2-week period, which force it to sell the assets it just bought, there can be double charging: both ordinary SDRT on the assets bought and sold again, and schedule 19 SDRT on the subscriptions which appear (on a 2-week view) to be matched with redemptions.

on the other hand, if a fund takes longer than 2 weeks to invest extra cash (or usually keeps a small float of cash), it can pay less total SDRT, by never actually investing new cash during a 2-week period, and just using it to pay for net outflows in a subsequent 2-week period.

gadgetmind

Compare and contrast BestInvest's view of the Newton Emerging Income fund.

https://select.bestinvest.co.uk/investment-guidance/investor-insights/2012/the-newton-emerging-income-fund-launches-this-week-to-much-fanfare

nicknameless

SnowMan gets a 'big up' here re the HSBC C Class trackers although the likely availability of these, or not, via HSBC's Global Investment Centre is still uncertain it seems?

http://monevator.com/c-class-hsbc-index-funds/

For someone with a small investment in non C Class HSBC trackers via the GIC, who is plannning monthly drip feed on an ongoing basis, is there a good reason to hold off further investment until the availability of these new trackers becomes clearer?

SnowMan

nicknameless wrote: »

SnowMan gets a 'big up' here re the HSBC C Class trackers although the likely availability of these, or not, via HSBC's Global Investment Centre is still uncertain it seems?

http://monevator.com/c-class-hsbc-index-funds/

For someone with a small investment in non C Class HSBC trackers via the GIC, who is plannning monthly drip feed on an ongoing basis, is there a good reason to hold off further investment until the availability of these new trackers becomes clearer?

It seems fairly certain that the class C trackers will be made available on the HSBC Global Investment Centre (GIC), and from what I and The Accumulator were told over the phone either in mid November or before the end of the year.

What is very uncertain is whether there will be an additional charge for holding the HSBC class C trackers on the GIC. I was told there wasn't going to be any additional platform charge, whereas The Accumulator when he rang HSBC was told HSBC hadn't yet decided on the platform charge.

If you already hold HSBC trackers on the GIC then I can't see any problem drip-feeding money in now into the old classes rather than awaiting developments (you will be aware that you can't set up regular payments on the GIC but you can make one off contributions of £100 on say a monthly basis).

It is hard to imagine another platform is going to offer the Class C trackers at a total cost materially less after taking into account platform charges than the existing 0.25% amc old class on the GIC (especially for low or medium value funds).

If the GIC do offer the class C trackers without platform charge on the GIC then having existing old class funds on the GIC should leave you in a good position to switch over to the class C units.

You could always ring the GIC and ask about the HSBC tracker class C units (and report back of course).

SnowMan

Looks like HL are changing their terms and conditions to make it easier for them to increase their fees without allowing investors to leave without penalty. This was sent with the Investment Times that they sent me (even though I closed my HL account some time ago because I don't think they can be trusted to behave fairly).

For example in the amended Vantage terms and conditions in A7 they say

We can amend these terms , including our fees and charges , by giving you reasonable notice of the change. We will only amend these terms for a good reason including.....

They list a set of reasons which include

To reflect the way that our services are used and ensure that the cost of these services are allocated fairly among our clients

They then go on to say

If we make any change for a reason not set out above which results in extra costs to you , you will be entitled to end your contract with us without charge

I wonder whether they are trying to create a scenario where they can increase charges as part of their RDR strategy and not give investors the option to leave without penalty (for example by waiving re-registration fees).

So they might argue that trackers (such as a Vanguard fund with the £24pa platform fee) pay them less in charges than expensive active funds. And so increase the platform fee and give no opportunity for investors to re-register that Vanguard fund elsewhere (without incurring either re-registration fees or costs in selling and rebuying including loss of the stamp duty levy where applicable). They may try to argue that they are using this 'allocated fairly' term above to refuse the fee free re-registration.

I don't think it will hold up if someone took a complaint to the Financial Ombudsman in that scenario on being refused a fee free re-registration in the event that HL increase charges significantly. However it will perhaps give them a slightly better chance of success and could be used in their response to complaints to defend not allowing investors to re-register away fee free.

robmatic

This is one reason why I've stopped using HL - I don't think they are either good value or trustworthy anymore.

grey_gym_sock

but then does any provider give a watertight guarantee that fees will only rise for a reason you find acceptable?