How to work out charges?

dunstonh

perhaps you could explain how a fund manager can run a fund for £13,000 a year?

Already have.

doughnutmachine

mania112 wrote: »

If no one knows the true cost of a fund, what else should we tell the OP than the cost shown (which in reality will be less, more than likely).

You can always peel it back to expose more costs (and you're right, we will never know what they are) but the same could be said about directly purchasing a share - the PLC will always remove the costs of running the business before announcing profits/dividends.

The point is if a unit is valued at £1.00 and the retail cost is 1%, you'll be left with 99p - there's nothing more you can add to that without guessing.

we could maybe tell them the likely cost?

the fund mentioned by the OP has a total value of £8m. I see no way that the total charges will be £13,000 a year. it's likely to cost more than that just to post annual statements to the investors each year....

doughnutmachine

dunstonh wrote: »

Already have.

you might have given an explanation.... but it's not very convincing....

the factsheet itself said that this 0.16% didn't cover all the fees. But you say it does?

dunstonh

you might have given an explanation.... but it's not very convincing....

That is your problem. Not mine.

the factsheet itself said that this 0.16% didn't cover all the fees. But you say it does?

Where did I say it did?

doughnutmachine

dunstonh wrote: »

Where did I say it did?

In your first post on this thread:

"I have just checked FE (effectively the paid for version of trustnet) and there are three versions of this fund in the retail market. The most expensive is the ZP version at 0.16%."

Since the OP asked for total charges I thought you might actually have been giving total fees. What do the other two versions of the fund charge?

geelamch

Looks to me as though that there is a good point here,lots of good advice given out on this site.
There appears to be a group of posters who are becoming critical of any view other than that expressed by them.
I do look forward to reading the advice given by posters and have made some decisions by considering their views,however the site has now been taken over by the elite who must be making£££££ s every day,how they find the time to critique these posts escapes me.
My salary is 42000 but I always go above 50000.that makes me feel good ,costs me family time.i imagine the main posters on here must be in excess of £100000 a year.anything less and they should be financially embarrassed.
I am the" poor boy" of my family so to speak but that is my decision to spend 10 years in the army so maybe I missed the boat for a few years. my brothers say I am doing great. yet posting on this site has now become a portal for posters to say why people have made all the wrong decisions. why not get back down a scale ,back to basics.
This originally gave great advice to pension starters ,a wee bit of tax avoidance and some good schemes. Seems to have lost its way.criticism and critique are worlds apart.

dunstonh

doughnutmachine wrote: »

In your first post on this thread:

"I have just checked FE (effectively the paid for version of trustnet) and there are three versions of this fund in the retail market. The most expensive is the ZP version at 0.16%."

Since the OP asked for total charges I thought you might actually have been giving total fees. What do the other two versions of the fund charge?

Way to go on selective copy and paste. How about copy and pasting the rest of the post that made it clear there may be other charges.

There appears to be a group of posters who are becoming critical of any view other than that expressed by them.

So, why have you thanked someone who has done just that?

kidmugsy

dunstonh wrote: »

Not really. A lot of internal pension funds from insurance companies are run on a budget ... Plus, the internal fund range is often run on the basis of cross subsidy.

It's not often that I find something said by dunstonh to be unpersuasive, but this is an exception. Having a budget doesn't make real costs evaporate. Ask Mr Osborne. Cross-subsidy lets them have charges so low that they'd barely feed the office cat? Coo!

dunstonh

kidmugsy wrote: »

It's not often that I find something said by dunstonh to be unpersuasive, but this is an exception. Having a budget doesn't make real costs evaporate. Ask Mr Osborne. Cross-subsidy lets them have charges so low that they'd barely feed the office cat? Coo!

Most of the insurance company internal funds have figures like very small amounts in them relative to the main managed fund which is usually a billion plus. The managed fund is multi-asset and very frequently just a fettered fund of fund. The investment decisions on say the European equity part of the managed fund will be similar or same as those made on the European fund. They wont have to run the processes twice. Once a single sector fund gets big enough in its own right, then it may get more individual control compared to the main managed fund.

The cost will almost certainly be covered by the main fund with room to spare allowing the single sector fund to have fewer direct costs.

I just looked at an insurer and found their managed fund was £4,311.8 million. Their European equity fund had just £37.9 million. If you put the European equity content of the main fund at around 12% then it comes to £517.41 million. More than thirteen times the size of the single sector version. Both funds have an identical charge.

bigfreddiel

dunstonh wrote: »

What performance fees?



TER has gone.

okay for TER read Ongoing Charge or AMC - Annual Management Charge

Now this was the point you missed, these finance bods will hide behind obtuse definitions so when you ask about fees they will say there are none - great you say - then you find you've been stung for a fee - now thats because you never asked about fees as well.

so thats just one area of confusion


Performance fees are on the KID - usually none, but its a charge taken from a fund under specific circumstances

these circumstances will be hard to find tho - so you'll find yet more fees eating into your portfolio of funds

now there is a simple way to avoid all these fees/charges or whatever they're called

just buy shares and re-invest the divis

all you need are 15-20 equities one or two per sector - that gives you the optimum performance/risk ratio

this will work - but you'll find that the 'professionals' will never advise this approach - its to simple - takes 1 minute to describe so bang goes their £600 fee for advice.

as a professional in any line of business you must use loads of jargon, tables, graphs, etc to make it look difficult so as to justify high fees- in reality its all very simple and you just need a bit of dedication and legwork by your good self

to prove my point look at weather forcasting and the great storm of 1987 - no one saw that coming despite he experts - hehehehe!!!

here's a bit:

"During the evening of 15 October 1987, radio and TV forecasts mentioned strong winds but indicated heavy rain would be the main feature, rather than strong wind. "

cheers

fj