Unwrapped Vanguard ETFs and Index Funds - Best Platform?

TCA

I'm looking into some lump sum purchases of unwrapped Vanguard ETFs and Index Funds and trying (with difficulty) to suss out platform charges.

I think my choice is between Alliance Trust, Hargreaves Lansdown and Best Invest. So if any other options, please let me know.

My findings tell me that all charge a standard dealing fee of around £12 per trade. Alliance Trust charge custody fees of £10 per quarter per fund compared to Best Invest's £12.50 quarterly fee. This is for both unwrapped ETFs and index funds. HL appear to only charge holding fees for trackers of £2 per month.

I think I'm correct in saying that no stamp duty is payable on Vanguard's ETFs and that by buying accumulation units, I could ignore any charges for dividend reinvestment? So all the considered, HL seems the clear winner for unwrapped ETFs and index funds.

I believe Alliance Trust are now RDR compliant, so can I assume their pricing won't change? And what could I expect to change with the others?

bigsy

Well, to address some of your questions, in no particular order:

- I don't believe any of these platforms are as yet fully compliant with the post-RDR world and I doubt anyone here will make accurate predictions about what charges, or changes to the charging model, may appear in the future

- the 'best' platform depends on many factors including the number of trackers held, frequency of trading/rebalancing & amount held on platform, e.g. BI charges £7.50/per trade if you hold more than £50k. You need to do your own homework

- the 'advantage' of HL disappears rapidly whenever you start to hold multiple trackers as their monthly charge is per tracker, so it is by no means a 'clear winner'. Again you need to do your own homework

- Unlike HL, neither BI nor ATS custody fees are 'per fund' but are per account held irrespective of the number of funds.

- neither BI nor HL charge for fund purchases, ATS does

- I don't believe any of Vanguard's UK ETFs are currently available in accumulation versions, all pay dividends

TCA

Thanks for the reply bigsy. I should have perhaps indicated that in all likelihood I will be an infrequent trader and that the sum involved this time round will be around the £50k mark and only comprising 2/3 index funds or ETFs.

I'm not bothered about saving a few quid on transaction fees first time out given the low volume but you have clarified the custody fees from BI and ATS, which I had incorrectly read as being per fund, not per account.

Also, the classification of trackers as funds had confused me slightly and I thought the charge per trade also applied to them via BI and HL, so thanks for pointing that out.

Now I get the gist of the current charging set-ups, my quandry is now whether to sit on the sidelines and wait for any changes re RDR or to plough ahead and invest. So was after a steer as to whether anyone had an inkling as to which way any changes would go. Wasn't expecting any accurate crystal ball gazing though. Just an idea of whether certain styles of charging had to be dropped.

snowcat53

there are inital charges for some Vanguard tracker funds.(on Bestinvest platform at least)
eg Vanguard FTSE AS fund - init charge 0.5%, TER 0.15%
but not for the Vanguard FTSE 100 ETF - init charge 0, TER 0.1%
(Both incur custody fee from BI)

Also note that if you have funds totalling over 50k Bestinvest's dealing fee drops to 7.50.

TCA

Yes, snowcat. This is where it's confusing. You read the main charges summary for Best Invest and it only states online dealing fees, not "initial charges". The devil's in the detail! Just so happens the two I'm most interested in don't have initial charges: Vanguard Ftse Developed Europe Ex-Uk Equity Index and Vanguard Ftse Developed World Ex-UK Equity Index.

You said "Both (index fund and ETF) incur custody fee from BI". From my understanding, as long as you have at least one non-commission paying fund, then you still get hit with the custody charge.

bigsy

You'll get hit with the Vanguard purchase charges on any dealing platform, it's not unique to BI.

They are clearly listed at https://www.vanguard.co.uk/uk/mvc/investments/mutualfunds#mf_fundstab

snowcat53

Thanks Bigsy - that sounds right but I hadnt checked it out.
Given the extra cost of the fund over the ETF why wouldn't one always go for the ETFn(where there's a choice)?. Even allowing for the cost of reinvesting dividend.

TCA- Yes hard to avoid the custody charge - but at least its only one.

Sippdeal is another possible, but for me not as good as Bestinvest

westy22

snowcat53

There is a useful thread on Monevator about the Vanguard ETF launch and some very valid points in the comments to that article http://monevator.com/vanguard-etfs-uk/comment-page-1/#comments

bigsy

snowcat53 wrote: »

Given the extra cost of the fund over the ETF why wouldn't one always go for the ETFn(where there's a choice)?. Even allowing for the cost of reinvesting dividend.

Well for me it all boils down to the trading cost and how I invest. The BestInvest charging structure allows me to invest monthly in a range of Vanguard funds for £15 per quarter whereas any ETFs I hold are purchased infrequently.

grey_gym_sock

HL do not currently charge for holding unwrapped ETFs. the £2 per month is only for (some) UTs and OEICS. there's a 0.5% per year fee (with caps) for wrapped ETFs. but i can't say this won't change ...

(full disclosure: i own some shares in HL.)

some ppl seem to think that ATS is now RDR & platform review compliant. though there was some debate about whether they are now rebating the full platform commission that (some) funds pay them as well as the trail commission.

bigsy

Thanks for pointing that out re HL. I had overlooked that, for their non-ISA/SIPP 'Fund & Share Account' there is no charge for holding ETFs.