ftse all share tracker

psychic_teabag

I thought BestInvest charged an annual fee ("custody charge") if you held shares / ETFs. £12.50 per quarter on an ISA, or something like that. (And so higher than HL's 0.5% which is capped at £45 IIRC). You just pay that once for any number of non-commission-bearing things as you like, such as Vanguard tracker funds.

psychic_teabag

moneylover wrote: »

JamesD, would the BlackRock UK all sharetracker be as good as the HSBC one? It would work out cheaper than paying the dreaded £2 a month (I think) on my £3000 holding
I've lost the plot a bit on the LUK2 is this a well thought of ETF do you know - I have never heard of it.... why would it reduce the effect of the .5%? Many thanks

According to http://monevator.com/2011/11/29/blackrock-index-trackers/ the breakeven point for the BlackRock tracker is £8000 : above that, it's cheaper to pay the £24pa to get the lower TER ; below that, the extra TER still works out at less than £24pa. BUT it has a bid-offer spread, unlike the HSBC one. (Think of it as an initial charge, if you like.)

(The monevator site is a good read for passive investing.)

For the LUK2 thing : it's leveraged, so it moves twice as fast as the normal version, so you only need to buy half as much to get the same exposure. Since you only buy half as much, the 0.5% fee is half as much. (But are dealing fees then more significant ?) But I think I read somewhere that leveraged ETFs are only intended to be used for short-term trading, not long-term holding.

gadgetmind

Yes, £60pa for an ISA and £120pa in a SIPP for anything that triggers the custody charge, which includes Vanguard, shares, etc. But I don't think this applies for "unwrapped" investments, and £3k doesn't desperately need wrapping.

I just pay the fee and enjoy the freedom but I've moved a few pots onto BI so I can afford to.

Fidelity seem to allow HSBC and shares in an ISA with no fee, so might be an even better option, and you might be able to go via Cavendish and get trail on any (spit) funds refunded.

JamesU

moneylover wrote: »

How have you built up your knowledge of ETFs? There are some weird ones out there. I would like to start with maybe one that tracks ftse and S&P

On FTSE all share etfs there are a few compromises such as FTSE all share XASX (db-x tracker) and LFAS (Lyxor). Alternatively people mix FTSE 100 and FTSE 250 etfs from various providers (replicated or synthetic etfs at X% ter) to obtain the balance and risk required, but this approach excludes FTSE small caps where there is no dedicated etf available as far as I know.

A good match for S+P 500 is the HSBC etf HSPX which is LSE listed, can be traded in GBP, is replicated and has a low ter of 0.09%.

I would be inclined to stay clear of leveraged etfs such as LUK2 (punt on FTSE 100 x2 long) without experience.

If you want to try your hand at trading etfs short term for free, just pick five etfs of interest and enter the UK monthly stock challenge, going long or short on them, for a bit of fun and experience, deadline for Feb 2012 monthly challenge is Monday 30th Jan:

http://www.stockchallenge.co.uk/

If you are not sure what etfs to start out with, just plug in ISF (FTSE 100), LUK2 (FTSE 100 x2), XUKS (FTSE 100 short) HSPX (S+P 500) and say, H50E (EuroStox 50) for a bit of fun and practice.

If you want to understand and DIY research etfs with a view to a long term portfolio (but do first assess etf trading costs, provider options, and %ter relative to UT trackers and provider first to ensure costings are acceptable, on lower value trades etfs will not be cost effective), some info as below from a previous post:

http://forums.moneysavingexpert.com/showpost.php?p=39005064&postcount=3

For choosing etf asset allocation, portfolio diversity and some of the main etf providers, this book can be considered essential reading:

http://www.amazon.co.uk/Financial-Times-Guide-Exchange-Traded/dp/0273727834/ref=sr_1_1?ie=UTF8&qid=1291296781&sr=8-1

Screens such as below for searching full range of etf providers and etfs:

http://www.trustnet.com/
http://etfdb.com/screener/
http://www.etfexplorer.com
http://www.indexuniverse.eu/europe/data.html

Research etfs of interest on the etf provider websites:
e.g. Ishare, dbx-tracker, lyxor, etfs, powershare etc etc based on what providers are chosen in the screens above.

Supplement research with keyword etf searches for articles/reviews etc:

http://seekingalpha.com
http://www.morningstar.co.uk
http://www.investorschronicle.co.uk/
http://www.iii.co.uk/


JamesU

jamesd

Yes, the BlackRock tracker is as good as the HSBC one, better for the value you have because of the lower cost.

I'm comfortable enough with LUK2 to have something over £8,000 invested in it at the moment but for me that's in part because I want the leverage. The 0.5% charge reduction happens because you're getting twice as much movement, effectively money invested, for your money.

A look at the charts comparing it to the FTSE and tracker funds will reveal that LUK2 tracks well.

If you're interested in reading more about tracking error issues for ETFs you might try these:

ETF tracking errors vary widely - mentions the tracking error of the BlackRock tracker unfavourably.
Most equity ETF tracking error can be ignored - worth noting its observation that even direct ownership of a shares in an ETF can still lead to problematic tracking errors sometimes.
Path-dependence of Leveraged ETF returns - an academic paper that explains why leveraged ETFs used to have an issue and how they can reduce it - given its age many ETFs may well have already implemented the adjustments it mentions.

Use Google to search for the title of the stories if you don't get the full version of those on the FT. There definitely are sometimes potential issues with tracking errors, but this one doesn't seem to be one that suffers particularly badly from it. You still might prefer not to use it if you just don't want to use leverage or if you think that market conditions won't be ones which it works particularly well in - high volatility and low value moves tend to maximise tracking errors for leveraged ETFs.

Just keep it simple and use a tracker fund is what I suggest for you for the moment, particularly if you have any reservations about ETF tracking errors or use of leverage.

psychic_teabag

gadgetmind wrote: »

Fidelity seem to allow HSBC and shares in an ISA with no fee, so might be an even better option, and you might be able to go via Cavendish and get trail on any (spit) funds refunded.

Yes, I've moved a chunk of my HL ISA to Cavendish + Fidelity : partly because of Best's ISA exit fee - with all the imminent changes for RDR, I didn't want to end up somewhere I'd have to pay to get out of. Also, BestInvest charge their custody fee for some gilt trackers, IIRC, whereas Fidelity don't.

Note that Cavendish have a one-off setup fee. If you just use trackers, you might not get your money's worth. And someone (dunstonh ?) pointed out that if you end up moving again because of RDR changes, you again might not get your money's worth. Cavendish are currently waiving their entry fee (previously until 15th Jan, now 1st Feb - might be extended again ..?) so I figured I had nothing to lose.

Finding the Fidelity dealing interface a bit disappointing after HL, but it's not as if I'll be spending much time there. (Track portfolio elsewhere.)

middlepuss

psychic_teabag wrote: »

Finding the Fidelity dealing interface a bit disappointing after HL, but it's not as if I'll be spending much time there. (Track portfolio elsewhere.)

I agree with you about Fidelity's website - awful compared to HL's.

I haven't switched to avoid HL's HSBC tracker fee: it's not much; it's a hassle to switch; there's a risk that being out of the market could more than wipe out any savings; but most of all, who's to say the firm you transfer to won't in the near future introduce a similar - or higher - charge for holding a tracker.

moneylover

middlepuss wrote: »

I agree with you about Fidelity's website - awful compared to HL's.

I haven't switched to avoid HL's HSBC tracker fee: it's not much; it's a hassle to switch; there's a risk that being out of the market could more than wipe out any savings; but most of all, who's to say the firm you transfer to won't in the near future introduce a similar - or higher - charge for holding a tracker.

well, I only have £3000 in my ftse all share tracker so if it went up say 4% and I made, say, £120 less tax, then another £24 off it is quite a lot and I have got to pay £24 even if it goes down.

I think all the posts are going to be several hours wonderful investigation and I am definitely going to get the recommended book. For now I will stick with HSBC tracker (moving it from H-L) and continue to keep it out of a wrapper, I am lower rate tax payer retired and there is no point (apart from tax return) putting it in an ISA wrapper that costs me good money. I will stick to my cash ISAs for now and in later years use funds that dont cost in an ISA. Many thanks.

fimonkey

I haven't seen anyone here mention interactive investor. Why is that?

Easy internet access, friendly on the phone. I'm no big trader just a novice trying to lear - but their portfolio builder (£1.50 per trade, bought on the 23rd of each month) for shares which can be held in an ISA suits me fine.

I moved my HSBC all shares tracker from H&L to my ISA with ii. I will be adding £200 every other month to it through their funds builder, which will cost me £1.50. No other charges (other than the AMC which is reflected in the unit price). Plus transfer before end of Feb and ii will give you 0.5% of the balance you transfer to them.

Only mistake I made was to get stung by H&L's transfer fee's. I transferred 3 different trackers - in hindsight (as pointed out by an MSE forum member) I would have been better off selling them then re-buying them through ii.

If only one person learns from my mistake(s) then that's good.

gadgetmind

fimonkey wrote: »

I haven't seen anyone here mention interactive investor. Why is that?

I think they are quite expensive for a SIPP but I'm going to consider using them for my ISA in April.