How do you set up a S and S Tracker ISA?

bugbyte_2

Hi,

I have several cash ISA’s but with the low rates currently available I am looking to diversify into an S and S ISA – specifically a tracker. Fidelity have a World Index Fund and an UK one that tracks the FTSE all share. Both have a Total Expense Ratio (TER) of 0.3% The other option is HSBC’s FTSE 100 tracker with a TER of 0.27%. I would like to save between £100 to £300 per month.

Being an untrusting newbie who expects to get wacked by some massive management charge, platform charge or exit fee or such like can I ask:

Apart form the TER, is there any other expense such as a monthly trading fee or anything else that I need to know about with Fidelity?

How do you actually invest in a HSBC Tracker? - There is no simple big red button on their website – and what fees do they charge? (I’m a First Direct customer BTW).

Thanks in advance!

jimjames

You can buy it here

http://www.cavendishonline.co.uk/investments/

No up front charges and just the standard annual management fee from HSBC.

bugbyte_2

So no trading fees etc. Some companies have an ISA exit fee of between £50 to £100. Do Cavendish?

jimjames

bugbyte wrote: »

So no trading fees etc. Some companies have an ISA exit fee of between £50 to £100. Do Cavendish?

Not that I'm aware of (i'm with them) but best for you to check their T&Cs to confirm that

bugbyte_2

Just set up an S and S with Cavendish, could not be simpler. I asked them about fees and they assured me there was no other fees apart from the TER payable to the fund manager, which in the case of HSBC was only 0.27% for FTSE 250 and Americas, and 0.41% for Pacific (I spread my investments as wide as possible!). There was no platform or closing fees or anything else. They also trade every day which some platforms don't. They don't allow you at present to add individual shares to your S and S portfolio, so Falkland Oil will have to wait!

stinktankcynic

Hi, I'm thinking of using the method you state in the next tax year. I understand using a broker you can get a decent discount on some funds and trackers than if you went direct. Lower charges and discount. With the broker you mention, you can still only invest with one fund provider over the tax year? But you can have a couple of funds of say £2k with them. Is that the way it works?
If so, any ideas of what is a good stocks and shares isa fund and what providers are highly rated?

Thanks STC

bugbyte_2

I have three funds with Cavendish - HSBC Tracker Index 250, Americas and Pacific all in the same ISA so yes you can 'fund' different funds in the same tax year. The tracker index's I have are very simple passive ones - i.e. the fund manager does nothing. This makes the management fee cheap. For the above I pay 0.27% to 0.49% Total Expense Ratio (TER - amount you pay per year) and no initial fees. Having also looked at funds with initial fees, Cavendish do appear to discount them down to 0% which is good.

innovate

stinktankcynic wrote: »

If so, any ideas of what is a good stocks and shares isa fund and what providers are highly rated?

No offense (to you, or the knowledgeable MSEers posting here) but you wouldn't seriously invest into funds that someone mentions to you on an internet forum that you only just joined?

You need to do your research, you need to create your portfolio, one that suits your circumstances and your outlook.

You also need to understand the basic of what you can do through a broker / platform. E.g. no decent platform would only offer you the choice of funds of just one firm; you can have all sorts of funds in a decent ISA (you may not want all sorts, but you'd want the choice).

If all this overwhelms you, you should seek the advice of an IFA. But if it doesn't you should start reading up about investing. There are many good books out there on the subject, but for a quick start you could use http://monevator.com/category/investing/passive-investing-investing/ . Don't expect for all of it to sink in in half an hour, take your time.

stinktankcynic

bugbyte wrote: »

I have three funds with Cavendish - HSBC Tracker Index 250, Americas and Pacific all in the same ISA so yes you can 'fund' different funds in the same tax year. The tracker index's I have are very simple passive ones - i.e. the fund manager does nothing. This makes the management fee cheap. For the above I pay 0.27% to 0.49% Total Expense Ratio (TER - amount you pay per year) and no initial fees. Having also looked at funds with initial fees, Cavendish do appear to discount them down to 0% which is good.

Thanks for the reply. You have three funds, but all are HSBC?
Can you buy through a broker in the same tax year, two or three funds from different providers? I thought this was not allowed?

innovate

stinktankcynic wrote: »

Can you buy through a broker in the same tax year, two or three funds from different providers? I thought this was not allowed?

There are certain financial products that cannot go into an ISA, but there is no rule that you have to take all your investments from one firm.

You will be doing yourself a massive favour if you read up about the basics before you home in on selecting funds.

stinktankcynic

innovate wrote: »

No offense (to you, or the knowledgeable MSEers posting here) but you wouldn't seriously invest into funds that someone mentions to you on an internet forum that you only just joined?

You need to do your research, you need to create your portfolio, one that suits your circumstances and your outlook.

You also need to understand the basic of what you can do through a broker / platform. E.g. no decent platform would only offer you the choice of funds of just one firm; you can have all sorts of funds in a decent ISA (you may not want all sorts, but you'd want the choice).

If all this overwhelms you, you should seek the advice of an IFA. But if it doesn't you should start reading up about investing. There are many books out there, but for a quick start you could use - link deleted.

I agree with you. I have checked a couple of funds and looked at performance graphs for some in connection with the FTSE etc. I have come to look at brokers to first provide a cheaper solution and discount and second, to look at some funds and performance. It does not overwhelm me as such. Investing in a euro/UK tracker through the broker rather than going direct reduces the annual fee a little, the broker also lists the providers and funds available. Choosing a provider and checking the underlying shares is easy, but time consuming. I will have a read of the link. I have read a little, some have said the funds I have are costly or not good. And have sold or moved to others via brokers. This has made me look at where I will put my money next year. Thanks.