Question on initial charges for funds

thesaver79

Hi All,

I think I know the answer to this question already, but I would like to double check.

If a fund has a Fund Manager's initial charge, does that apply for any new investment in that found, even if it's a top up or a regular investment? Therefore, if I deposit 5000 altogether or 1000 every week, do I end up paying the same initial commission?

Thanks!

Lokolo

New or top up, you pay it.

thesaver79

Thanks a lot. I'm going to drip feed into my fund over the next few weeks

colalba

As has been said the initial charge applies equally to lump sum or regular investment but you should be able to avoid the initial charge completely by using a discount broker who will rebate it (usually around 4 or 5%).

Hargreaves Lansdown is one but there are many others around who many be cheaper for annual charges.

I'm sure one of the regular contributors could list the top discount brokers for you or a search of the forum on "discount broker" will probably yield lots of information. Worth it to save 5%.

thesaver79

colalba wrote: »

As has been said the initial charge applies equally to lump sum or regular investment but you should be able to avoid the initial charge completely by using a discount broker who will rebate it (usually around 4 or 5%).

Hargreaves Lansdown is one but there are many others around who many be cheaper for annual charges.

I'm sure one of the regular contributors could list the top discount brokers for you or a search of the forum on "discount broker" will probably yield lots of information. Worth it to save 5%.

No rebates on the Vanguard Lifestrategy funds I'm afraid- as far as I know!

westy22

Strictly speaking the charge on the Vanguard LS is a dilution levy and not an initial charge - but it is charged on each and every purchase.

colalba has a valid point for true initial charges though - easily avoided in most cases.

colalba

thesaver79 wrote: »

No rebates on the Vanguard Lifestrategy funds I'm afraid- as far as I know!

You are correct on these funds.

maryjanell79

Going from what colalba said....

These guys have a charges calculator to compare discount brokers: http://www.rplan.co.uk/compare

Don't think they provide or calculate Vanguard funds though. But worth checking out the calculator as it's quite competitive.

Totton

You are correct on these funds.

I guess the advantage would be that you do not need £100,000 to buy the fund as you would if you went direct to Vanguard :-) As mentioned, no need to pay any initial fee other than the odd occasion, for example if you want a Jupiter fund which is often charged at 0.25% rather than a full discount being applied. Note that dilution levies as in Vanguard and Troy, are paid into the funds assets rather than to the fund company as with any initial fee.