Initial Savings on Funds

MeOnMonSavExp

Can anyone give me a dummy’s guide to the initial savings structure offered by people like Hargreaves Lansdowne for buying into funds?


With some funds there is a full saving, some offer varying sizes of discount and some little or no discount.



I haven’t got far enough into my research yet to decide whether the size of the saving would have a material effect on my choice of fund – although I can’t imagine it would have no effect.


Does anyone have a view on how I should read the size of the initial saving?

grey_gym_sock

you would hope for a saving which is the same size as the initial charge, reducing the effective initial charge to nil. though with some funds, you might be left paying 0.25% or 0.5%. and other funds don't have an initial charge, so nothing to discount.

different brokers/platforms are pretty similar on initial savings nowadays. you're only likely to pay a large initial charge if you go directly to the fund manager.

there is more difference between brokers/platforms on on-going charges.

most funds pay them commissions (using part of the annual management fee), and brokers vary in how much of this commission they rebate to you (if any).

or some brokers may instead give you access to "clean" fund classes, which don't pay them commission and have a lower annual management charge. instead, the broker will charge you directly. this could work out better or worse for you.

the FSA is supposedly going to force all brokers to move to the latter, more transparent, charging model.