Rubbish Halifax funds - what to do?

newfoundglory

In 2007 I invested £1,200 in a Halifax FTSE 100 tracker. The performance of this was not great, and in early 2011 I "switched" to more adventurous funds from Halifax (including smaller companies, special situations etc). It seemed a worthwhile gamble at the time, as the annual management charges were the same !!

Over the last 18 months the performance of this has been appalling, but has improved recently and over the last 6 months.

The investment is now worth approx £1,350 - with hindsight, a savings account would have produced more interest than this over a 5 year period.

The problem - when I opened the fund in 2007, Halifax did not have any entry or exit charges. What was not clear was that when I switched funds in 2011, and what I have recently discovered, is there was to be a 5% exit charge - reducing by 1% each year until it reaches 0.

So - I am faced with sticking with these under-performing managed funds for at least another 3.5 years (with a 1.51% AMC), or pay 4% to get out now.

Any thoughts on what might be the best option?

Consumerist

newfoundglory wrote: »

. . . Any thoughts on what might be the best option?

Much depends on your attitude to risk and whether you want to be in for the long haul. Will you, for example, want to buy a property within the 3½ years remaining term.

Historically, the stock market has done better than savings accounts over the longer term.

Do you think we are likely to climb out of recession in the next year or two so that you might reap the rewards of being invested when (if ?) an upturn comes. In this case you may have already suffered the pain with the chance of gain to come in the long run.

If, however, security of your capital is of prime importance, or you're likely to need it before the 3½ years are up, then you should consider, perhaps, an ISA first and then the best savings rate you can get.

If you're thinking of getting out of the bond then why not wait until the next anniversary when the penalty drops again; you can look again at how the bond is performing at that time and decide whether it's worth paying the exit penalty.

dunstonh

the best option was never to invest with Halifax in the first place. They have never had any desirable funds. Investing 100% into a FTSE100 tracker was not a great move (eggs all in one basket and a real basket case for the last 20 years) and then jumping around the risk scale whilst focusing only on short term returns means you are not at all invested in the right place.

Are you sure about the charges? The 5 year step down penalty applied to their investment bond but not ISA. It did not reset on fund changes either. I have transferred money out of Halifax many many times but never seen an exit charge on their ISA.

newfoundglory

Yes, I realise that Halifax was a total mistake - hence my desire to sell up and get out.

I think the decision to increase the risk was the right one. Not only did I reduce significantly the amount of European exposure, i'm pretty sure i've got a better return than I otherwise would have had.

I want to continue investing, just not with Halifax.... I do have it in the ISA wrapper, but its not clear from the fund information if the exit charge applies to the ISA or not, so I will have find out next week.

ses6jwg

You should open a stocks and shares ISA elsewhere and transfer into that, then sell the fund whenever you want.

newfoundglory

Can I transfer my ISA?
• If you want to transfer your ISA to another manager without losing any tax relief, you will need to contact your new manager who will then contact us. We will then sell the shares in your ISA and pay the proceeds to the new manager, although we will deduct any amounts owed to us and HMRC before transferring your investment.

Not sure transferring would solve anything.

jimjames

newfoundglory wrote: »

Not sure transferring would solve anything.

Why is that?

Transferring will allow you to choose far better funds with lower TER and potentially get refunds of your annual charges. To me that sounds like it will solve a lot of your issues.

The first thing to check is if the charges do apply to you or not.

N1AK

jimjames wrote: »

Why is that?

Transferring will allow you to choose far better funds with lower TER and potentially get refunds of your annual charges. To me that sounds like it will solve a lot of your issues.

The first thing to check is if the charges do apply to you or not.

The transfer wouldn't dodge the exit fee. They could just as, or more easily, sell the fund with Halifax and open up a separate ISA/Fund elsewhere (it's not like the amount is near the ISA limit anyway).


As to the newfoundglory's original question. Personally I'd advise cashing out and putting the money in savings. From the very limited amount I know about them from this thread they seem to be acting first and thinking second. Obviously if you want to continue to 'dabble' and are willing to risk the money to do it then good luck

newfoundglory

Well... dunstonh... you are right! After the questioning about why I wanted to sell yada yada, I asked if there would be "any additional charges" to sell and was told no! So it seems that the exit fee does not apply to ISA's.

So happy days.

Unfortunately, I called HSBC and asked if they would transfer it to the Global Investment Centre into funds of my choosing, and they told me they don't accept transfers from other providers at this time!!

Surely this can't be right ?!?!?!

dunstonh

Unfortunately, I called HSBC and asked if they would transfer it to the Global Investment Centre into funds of my choosing, and they told me they don't accept transfers from other providers at this time!!

Surely this can't be right ?!?!?!

The branch network may not be able to do things that you can do direct or via other distribution channels. Be wary if you are looking to use the HSBC portfolio funds. Out of the frying pan into the fire is what comes to mind there.

newfoundglory

Well, World Selection isnt for me if thats what you are referring to. Risky and really high charges too, over 2% in some cases!!

I actually called the investing number, who told me it wasn't possible to transfer. Odd. I thought they were wrong.

So, then I called the general banking line asking for a S&S ISA transfer form... who called around... and then came back with no, we don't transfer at this time.

Very strange indeed.