Charges on trackers - how do they work?

Shaolin_Monkey

Jevvers wrote: »

Ok, I'm really sorry but I'm going to need bashing over the head with this one: so I effectively sell all my L&G units, creating a lump sum which I can then use to buy into the market at HSBC. So any gain I have made from pound cost averaging is effectively cashed in at this point (and reinvested)?

If that is right then the risk I'm trying to calculate is that of cashing in all those units which we bought when they were v cheap vs the potential for the market to rise further. We have £60k in there so it's a big deal for us.

Don't over think it You would effectively be swapping like with like. Any gains you've made by buying cheap units in the past is currently reflected in the value of the funds with L&G (you bought more units as they were cheap), and would be carried across to HSBC.

Jevvers wrote: »

Riiight, thanks, got it. I now understand about the units and their value.

Next question is: so HSBC doesn't have to be both ISA provider and fund manager? I could buy hsbc's tracker via another ISA provider if I wanted to? (And vice versa?)

Yes, you can buy them through "fund supermarkets' etc. This can give you a wider choice e.g you could contribute some to HSBC FTSE All Share, some to Vanguard FTSE All World etc. Be aware of platform charges though.

Jevvers

Ok, have taken the first step which was to cancel the L&G dd so that we don't pay in any more in this tax year. Next job: researching the options.

stinktankcynic

I'm interested in this. I'm also part with L and G. If the fee is 0.56 it may look more than some of the lower ones, such as HSBC and the black rock ones. But I notice with some others you may have to pay a fee of around £48 a year and an annual fee of 0.5% on all funds you hold in the platform. I checked HSBC and axa this evening. I also read online that the revenue are looking at taxing any cash backs given by brokers etc. So my question would be, is a tracker at 0.56 or 0.84 % without other platform type fees that bad? Considering the tax implications in future and platform fees.

Jevvers

I just found out that HSBC are introducing a 0.39% fee in May, grrr. I may end up going back to L&G! I didn't think 0.56 was actually that bad but it makes sense to get a tracker with fees as low as possible seeing as it shouldn't take much management....

grey_gym_sock

if you don't have a large amount in trackers, then you want to avoid charges in £, and get the lowest available % charges.

there are a few places, e.g. cavendish online, where you can still hold the HSBC "retail" trackers for no extra charges. e.g. the all share tracker for about 0.27% TER.

though more changes in charges are likely to follow, due to the platform review.

Perelandra

Jevvers wrote: »

I just found out that HSBC are introducing a 0.39% fee in May, grrr. I may end up going back to L&G! I didn't think 0.56 was actually that bad but it makes sense to get a tracker with fees as low as possible seeing as it shouldn't take much management....

I believe that the 0.39% fee applies if you buy the tracker directly through HSBC, not through another broker.

I buy my HSBC trackers through Cavendish- as grey gym sock mentions- where I pay the lower retail fee. I'm not expecting the fee to go up by that 0.39%.

Perelandra

grey_gym_sock wrote: »

if you don't have a large amount in trackers, then you want to avoid charges in £, and get the lowest available % charges.

there are a few places, e.g. cavendish online, where you can still hold the HSBC "retail" trackers for no extra charges. e.g. the all share tracker for about 0.27% TER.

though more changes in charges are likely to follow, due to the platform review.

It's going to be interesting to see if the Cavendish/Fidelity model changes. I would imagine that the Cavendish side will be relatively unchanged by RDR, but I'm imagining that the platform side won't be good news for index tracker buyers.