RDR - How will it work in practise

pip895

I have just bought a fund through HL - on the bottom of the trading form appears a new bit of information.
"HL currently receives commission of 1.200% per annum" !!
The fund currently has an annual charge of 2%. No LB.
Does this mean
1.that after RDR I will get back that 1.2% in return for an as yet unspecified platform charge - say 0.5% So that on this fund I will be 0.7%/anum better off? or

2. Does it just mean that I will be given the option of moving to a "clean" version but with the possible inclusion of charges to do so and if I do nothing will HL still receive their 1.2% or perhaps the fund manager gets to keep it?!

Must admit its a bigger % than I was expecting - It makes the fund manages charges look almost reasonable although I note there is also "Fund manager's other expenses" which is a 0.2% on top making a total 1% annual charge post RDR.

Lokolo

Numero 2.

Legacy funds can continue to run for a certain period. I cannot remember the year, April 2015 or 2016 after which they have to have the clean version.

pip895

Lokolo wrote: »

Numero 2.

Legacy funds can continue to run for a certain period. I cannot remember the year, April 2015 or 2016 after which they have to have the clean version.

I was afraid that might be the case :undecided


There was a suggestion that they might go for a 100% rebate trough LB as an interim.


While we are on the subject of :eek: charges can anyone tell me how performance charges are levied? Are they included in the graphed data in the same way as other management charges? Some at 20% above index are very steep. Is the charge levied in one go or incrementally? Sorry if this is a stupid question - I have usually avoided any fund that levies a performance fee but now I have a couple and really need to know what to expect - I have read through the prospectus and still cant work it out.:o

dunstonh

2. Does it just mean that I will be given the option of moving to a "clean" version but with the possible inclusion of charges to do so and if I do nothing will HL still receive their 1.2% or perhaps the fund manager gets to keep it?!

Legacy accounts have until 2016 to be changed. You can still remain on retail funds rather than clean funds after that point but you need to be charged explicitly and commissions rebated.

If HL are getting 1.20% on that fund, then the good news is that the platform charge will be lower than that.

Must admit its a bigger % than I was expecting - It makes the fund manages charges look almost reasonable although I note there is also "Fund manager's other expenses" which is a 0.2% on top making a total 1% annual charge post RDR.

Are you sure HL are getting 1.2% and that isnt the net effective AMC? (btw, most of the industry has moved to ongonig charges which replaced TER and use the ongoing charge as the figure. Not the AMC)

pip895

dunstonh wrote: »

.
If HL are getting 1.20% on that fund, then the good news is that the platform charge will be lower than that.

Good News

dunstonh wrote: »

.
Are you sure HL are getting 1.2% and that isnt the net effective AMC? (btw, most of the industry has moved to ongonig charges which replaced TER and use the ongoing charge as the figure. Not the AMC)

The note:-


"HL currently receives commission of 1.200% per annum"


Appeared on the bottom of my purchase contact note. Incidentally - IF the information was available else ware - i.e. that I could see before purchase, I couldn't find it.

dunstonh

What fund is it?

Lokolo

Hmmm very odd. I noticed that in the contract note.

My fund is 1.5% AMC, 0.2% rebate. The contract note says HL take 0.8%.

0.7% cost
0.2% rebate
0.6% HL keep

But the clean version of the fund costs 0.75%, so not sure how HL keep an additional 0.05% in the dirty version?

dunstonh

Clean funds can often work out more expensive than retail funds net of rebate. Platforms have often been able to get improved terms. They lose those improved terms on clean funds.

Porcupine

Interesting. Just checked back through my history and it's been there since about August. Varies from 0.3% (Blackrock tracker) to 0.75% for Unicorn UK Income, others mostly at 0.5%. So a HL platform fee would probably mean an increase in costs for me.

Archi_Bald

Porcupine wrote: »

Interesting. Just checked back through my history and it's been there since about August. Varies from 0.3% (Blackrock tracker) to 0.75% for Unicorn UK Income, others mostly at 0.5%. So a HL platform fee would probably mean an increase in costs for me.

Mine says HL currently receives commission of 0.000% per annum for Vanguard Lifestyle funds.

Would be nice if that meant they will continue to charge £2/month for VLS.

grey_gym_sock

1.2% is an unusually high commission. are HL giving some of it back as a rebate (so-called "loyalty bonus")?

although the platform review allows HL to keep legacy charging going until 2016 (your option (2)), they've said that they'll actually apply option (1), i.e. legacy business will get full rebates less their (so far undisclosed) new explicit charge.