S&S ISA - reviewing my options

WRabbit

I've been fortunate enough to inherit some money this year which is allowing me to clear our mortgage and also give us a nest egg.

I've had a S&S ISA for a number of years but I've been extremely passive with it and just been topping it up with £80 per month and it's been in the same funds for years. I realise this was daft of me. It was originally with the Pearl and had ended up with Henderson Global Investors.

Although I'm tucking some money away in the best paying savings accounts I also realise this would be a good opportunity to review what I'm doing with my S&S ISA as longer term investment and I'm looking to make full use of my ISA allowance over the next few years. I'm middle of the road when it comes to risk, and know it's long term.

It's currently split:
25% Henderson UK Equity Income C Inc
75% Henderson Global Equity Income Fund Share Class A (Inc) - this is ex-dividend (confession - not sure what this means)
and is just under £20000. I've already topped it up with £160 this year which is going into the Global Equity Fund.

I'm a bit lost with how to approach this although I've read some of the threads in here. Is this something I should be able to deal with myself or should I be running to an IFA? I'm willing to learn but I'm a bit fazed by it all as I know I should have been more active in managing my money.

Any suggestions for how to approach this would be appreciated.

maryjanell79

You could have a look at self-investment options such as Cavendish (not very helpful, but very cheap), rplan or Hargreaves Lansdown (both more helpful, but not as cheap.)

The self-investment option is great because you don't pay so much in charges. :-)

middlepuss

Actually, having your ISA in those two funds doesn't seem too bad to me. By holding funds like these you're invested in a fair spread of UK and global companies. As always, you'll find lots of funds that have done better than yours, but probably just as many that have done worse.

What annual charges are you paying? There'll be the annual management charges of the two funds you hold - but is your plan manager charging you something on top of that? If so, definitely move. If not, it may still be worth transferring if the company you go to rebates to you some of the annual management charges the two funds are making. Or, worth moving if you want to switch funds regularly (I wouldn't recommend this though!) and the new company would charge you lower dealing fees.

You may find that 4% or 5% of your £80 a month is going to Henderson as an Initial Charge for buying units, and you might even have a dealing fee on top of that. If so, check out Hargreaves Lansdown for example: they rebate some or all of the Initial Charges to you.

WRabbit

Thanks both. I've been looking at HL and thinking about the Vantage Lifetracker and moving into that for a passive investment strategy with an emphasis on trackers.

One of the problems I have is that I have no idea how I'm being charged at the moment. There is no intermediate plan manager, I pay directly to Henderson.

Looking at my last transaction for £80 it bought me 211.14 units at a price of 36.28. So that works out at £76.60 into the fund, so that works out at a 4.25% charge. As far as I can see from my paperwork I don't think there are any charges on top of that. Commission shows as 0%

All income from the funds is re-invested into them.


I'm planning on working on this over the weekend but I'm struggling to match up the information. Does the class make a difference? And is Ex Dividend good, bad or indifferent? Sorry if these seem really basic questions.

WRabbit

I really shouldn't have started looking at this on a Friday night as I'm managing to confuse myself further.

I've looked at the documentation for the Global Equity Income Fund online as that's the one I'm topping up.

http://www.henderson.com/sites/henderson/uk_pi/getdoc.ashx?ID=13805
Shows that the minimum investment is £100 - but I'm paying in less than that and that the initial charge is 5.25% with an annual charge of 1.5%
but
http://www.henderson.com/sites/henderson/uk_pi/getdoc.ashx?ID=12397
Shows an entry charge of 0% and ongoing charges of 1.07%

Shouldn't these figures match or am I missing something blindingly obvious.

middlepuss

Could be the minimun applies to lump sum investments.

Have a look at the H-L site. You might get some of that 5% initial charge rebated (if you stayed with the same funds). You might be able to transfer your existing holdings to H-L without selling and re-buying - if you wanted to hold on to the same funds. Can't remember if they'd also give you a rebate of some of the annual charge. Enjoy the research!

jimjames

If you are paying directly to the plan manager then you are almost certainly paying the maximum initial charge. It seems crazy but with investments (unit trusts) it is one situation when going direct is rarely worth it as you pay more.

What you do with the existing portfolio is up to you as you have already paid out the initial charges on this money although moving it to Cavendish will save you at least 0.5% pa in charges. What is more important is to move to a fund supermarket so you are no longer paying 4.25% initial charge and will immediately be investing the whole of your monthly contributions.