Anyone been to an IFA and not been advised to buy Unit Trusts?

Meeper

darkpool wrote: »

so you agree that the fund managers were fully invested in banks before the credit crunch, and people should pay 3% a year for that?

"fully invested"? You'll have to explain what you mean by that.

Some fund managers, depending on their mandate, had exposure to some banks.

Where is your 3% coming from?

Meeper

darkpool wrote: »

i still think 3% is nearer the mark when you factor in dealing charges and stamp duty....

How much do you think dealing charges and stamp duty cost?

gadgetmind

darkpool wrote: »

You really think many of the big fund managers jumped out of the banks before the credit crisis? i would doubt it.

Their performance figures for that period suggest that nearly all of them completely failed to predict the severity of the crisis and they petty much all dropped with the market.

Of course, you might have got lucky and picked a fund that was positioned differently, or more likely picked a few funds just to be safe, and tracked the market but with higher costs.

As it happens, I did have a few bob in Personal Assets, but I wish it had been more. Of course, in the good years, everyone else screams past PNL and a few months later the "smart money" goes running off in luke-warm pursuit.

darkpool

Meeper wrote: »

How much do you think dealing charges and stamp duty cost?

stamp duty is 0.5%, dealing is expensive because of all the soft commission the brokers pay the fund managers. say another 1% in total...

you do agree it is an extra charge not included in your rates?

darkpool

gadgetmind wrote: »

Their performance figures for that period suggest that nearly all of them completely failed to predict the severity of the crisis and they petty much all dropped with the market.

yeah, that's my understanding of it. so you wonder what the fund management industry do deliver for their fees. maybe some nice shiny brochures? or good salaries for people working for them?

gadgetmind

darkpool wrote: »

yeah, that's my understanding of it. so you wonder what the fund management industry do deliver for their fees. maybe some nice shiny brochures? or good salaries for people working for them?

There are a few good niche/specialist funds around, and I do hold a few myself, but I do wonder if their long-term aggregate performance isn't pretty much a high-fee tracker.

I'm moving towards using a core of low-TER trackers with a well-researched geographical spread and then a few other investments alongside to reduce volatility and to access those few areas that trackers don't quite reach.

I might even keep hold of my M&G Global Basics and First State Global Listed Infrastructure just to show how open minded I am.

I also have a modest portfolio of around twenty FTSE Blue Chips but I wouldn't recommend this approach to anyone who didn't have both a substantial cash buffer to cope with lean dividend periods AND the ability to understand the capital gains implications of corporate actions.

Meeper

darkpool wrote: »

stamp duty is 0.5%, dealing is expensive because of all the soft commission the brokers pay the fund managers. say another 1% in total...

you do agree it is an extra charge not included in your rates?

Nope, afraid not.

When you buy units from a fund manager you're not charged SDRT. When units are surrendered the fund manager is charged SDRT.

The total costs associated with the fund management are included in my 1.8 - 2.2% spread earlier, as are the dealing charges because there is no "soft commission" paid by brokers to the fund managers on my platform as the dealing charges are rebated to the portfolio in order to reduce the total annual cost.

So, my 1.8 - 2.2% spread is accurate as a total cost.

Next!

darkpool

Meeper wrote: »

Nope, afraid not.

When you buy units from a fund manager you're not charged SDRT. When units are surrendered the fund manager is charged SDRT.

The total costs associated with the fund management are included in my 1.8 - 2.2% spread earlier, as are the dealing charges because there is no "soft commission" paid by brokers to the fund managers on my platform as the dealing charges are rebated to the portfolio in order to reduce the total annual cost.

So, my 1.8 - 2.2% spread is accurate as a total cost.

Next!

so when the fund manager buys shares does he have to pay stamp duty or dealing costs? are these fees not paid by the investors as indirect costs?

Meeper

darkpool wrote: »

so when the fund manager buys shares does he have to pay stamp duty or dealing costs? are these fees not paid by the investors as indirect costs?

Nope, these are included in the overall fund charges levied by the managers, inclusive of rebates obtained, and all included in my total spread of 1.8 - 2.2% per annum.

I've said it twice now, are you going to ask the same question again?

gadgetmind

darkpool wrote: »

so when the fund manager buys shares does he have to pay stamp duty or dealing costs? are these fees not paid by the investors as indirect costs?

On UK shares, yes stamp duty is unavoidable unless you use more complex instruments that equity holdings. The Vanguard UK tracker charges you this 0.5% explicitly rather than hiding it in tracking error, which is nice.

I don't think funds are allowed in include SDRT in the TER so it's always going to be a hidden performance drag unless you pay it up front.

BTW, this Guardian article quotes a figure of "as much as 3% a year".

http://www.guardian.co.uk/money/2011/feb/05/fund-management-price-war

The table there also shows how the average UK equity fund performed versus the index over the last five years. Of course, your IFA wouldn't pick an average fund!