Independent Financial Advisers fees vs Novice Investor!

darkpool

dunstonh wrote: »

1 - that IFA remuneration is linked to passive or active investment management (it isnt. If you agree say 0.5% p.a. for an IFA for services provided then it is taken irrespective of tracker or managed)

By refusing to consider all managed funds you will compromise your portfolio.

but IFA commission is only one part of the annual fees paid by a UT investor.

Oh well, I guess it's my loss if i don't have any UTs.

darkpool

Ark_Welder wrote: »

I do note that Which? are now suggesting that the average annual fund charges are nearer to being 2% - a tad different to their previous suggestion.

Personally, I'm not a fan of the FTSE100 because of the sector concentrations and the inclusion of non-UK companies that have a low free-float - even if their weighting reflects this. Recent articles in the FT suggest that some of the reasons why these companies are listing in London are because their shares will have to be bought by index trackers. But, that's my choice for me to make, just as it is for others.

Congratulations on finding an internet article that says annual costs are 2%. I thought you did not trust magazine sources? Can we both agree that portfolio turnover costs are hidden and not obvious to the average UT investor?

"Also not included in TERs are the costs associated with buying and selling shares within a fund’s portfolio. Alan Miller, a former fund manager at New Star, recently estimated that these costs would add a further 1 per cent a year to the average TER on a unit trust or Oeic in the UK all companies sector, based on the average portfolio turnover rate of 57 per cent."

Ark_Welder

darkpool wrote: »

Congratulations on finding an internet article that says annual costs are 2%.

A magazine from which you have quoted earlier in this thread and elsewhere.

darkpool wrote: »

Can we both agree that portfolio turnover costs are hidden and not obvious to the average UT investor?

The figures are available in the long-form of the annual reports - the place that I do go for reliable information.

jem16

darkpool wrote: »

you understand that UTs that follow a particular stockmarket are unlikely to beat it due to the fees they have?

In certain markets yes. In others no.

However that's where your argument falls down. For you it's all or nothing. Seems to be no in between.

Totton

I'd just like to add that all of my big gains in % terms have come from so called expensive funds such as Jupiter Financial Opps, M&G Global Basics, Neptune Global Equity & Troy Trojan etc. It seems to me that when 'average' fund costs are quoted the point is missed that some of those OEICS are simply excellent ways to grow your capital or earn a decent income. If you leave your hard earned money in a poor fund then that's a different problem, at the moment I feel much safer in my sole OEIC and other IT's than I would in any of the trackers out there.

fairleads

jem16 wrote: »

Performance returns are always quoted after all fees have been deducted. Surely you know that?

Not so. In the case of many unit trusts returns are, more often than not, based on the difference between the bid to offer price. Whereas investors purchase at the (higher) offer price and sell at the (lower) bid price.

jem16

fairleads wrote: »

Not so. In the case of many unit trusts returns are, more often than not, based on the difference between the bid to offer price. Whereas investors purchase at the (higher) offer price and sell at the (lower) bid price.

Not the performance figures I look at.

From Trustnet,

http://www.trustnet.com/Investments/Perf.aspx?univ=U

All prices in Pence Sterling (GBX) unless otherwise specified. Price total return performance figures are calculated on a bid price to bid price basis (mid to mid for OEICs) with net income (dividends) reinvested. Performance figures are shown in Sterling unless otherwise specified.

dunstonh

With some research software it is possible to define how you want returns to be be shown and you can select things to include initial charges, natural trail or explicit trail etc. So, it can depend on your source. The free sources to the public tend to be without bid/offer or initial charges.

brianh

I'm not an expert in this field which is why I previously used IFAs. I often say the result has always been "I've lost money and they have gained". I'm sure there are better IFAs out there than I have used (wouldn't be difficult) but my experience led me to use a Funds Supermarket. I can't say I have done terribly well with the DIY approach (last decade has been difficult) but I feel more comfortable with this approach.
Any poor decisions are mine and avoids that bad feeling when paying for poor advice that has cost you. This pyschological issue is worth considering in any decision about using an IFA.

gl196

3% fee a year plus fund manager fees would easily wipe out most, if not all, of your expected return