Cavendishonline move to clean share classes and explicit platform fee.

grizzly1911

Email received form Cavendish today.

Not sure I like the way they will recover the platform fee.

I would have preferred it netted out against rebates in the interim and offset against income in the future in the first instance. I guess that would be difficult to administer.

"FundsNetwork moving to clean share classes


On Monday December 16th 2013 FundsNetwork made changes to the platform that will allow you to invest in unbundled funds. Consequently Cavendish Online FundSupermarket clients will no longer be able to make new investments into the bundled versions of the funds.

What is the difference between bundled and unbundled funds?
Historically you would have invested in bundled funds, where the fund managers charge, trail commission and service fee were bundled together within the Annual Management Charge (AMC). For a typical managed fund the AMC is 1.5%, made up of 0.75% fund managers charge, 0.5% trail commission that Cavendish Online arrange to rebate back you our clients in full and a 0.25% service fee. The service fee is paid to FundsNetwork for providing the platform service.

The unbundled version of the same managed fund will typically, but not always, have an AMC of 0.75%, this being the fund managers charge. Trail commission will not be applicable to unbundled funds, therefore there is no trail commission to be rebated back to you. FundsNetwork will still need to charge you a service fee for providing the platform and this will now be charged as a separate, explicit fee of 0.25% of the value of your unbundled fund holdings. This will be charged on a monthly basis by selling sufficient units to cover one twelfth of the annual service fee. These units will be sold from your largest fund holding although you can nominate a specific fund if you prefer.

With effect from December 16th 2013 any new investments will be placed into unbundled funds. You will not be able to place those new investments into the bundled version of the same fund.

What are new investments?
A purchase, either into an existing fund that you hold or a new fund that you do not currently have a holding in.

Switching into a fund.

Transfers and re-registrations into FundsNetwork. FundsNetwork stated that at some time in the first quarter of 2014 it will implement a revised approach that will re-register bundled funds into their unbundled equivalents. Until that time, any requests to re-register bundled funds will be made into the same bundled fund.

Increasing the amount invested into a Monthly Savings Plan (MSP) or adding new funds to an MSP. Any existing MSPs will continue to be invested into bundled funds up until April 2016, as long as you don't make any changes to them. After April 2016 all MSPs will be invested into unbundled funds.

What will happen to my existing bundled investments?

Any existing bundled funds that you hold will not be affected by these changes. However, before April 2016 your bundled funds will need to be converted to unbundled funds and we will update you before then to inform you how this can be achieved."

westy22

The £45 annual service fee charged by FundsNetwork will also be waived for Cavendish clients so that is good news.

jimjames

I was really disappointed to see the section that says charges will be taken from the largest fund.

I'm hoping there will be an option to pay the charge by DD so that the funds inside the ISA can be maximised. Other providers can do that so hopefully Fidelity will allow it too.

I'm with Cavendish but on the Cofunds platform so it will be interesting to see what options that offers.

westy22

jimjames wrote: »

I was really disappointed to see the section that says charges will be taken from the largest fund

Yes, me too - particularly as my largest holding is Fidelity UK Smaller Companies which is closed to new funds and I don't want to reduce my holding.

I am looking into having a Cash Park, as FundsNetwork call it, and see if I can stick a few quid into that and then ask them to take any fees from that. It is made worse by being a monthly fee deduction; it would be better paying these relatively small amounts 6 monthly or even annually.

bigadaj

Interesting that all these things are continually being tweaked, I've been looking to move to cavendish as my largest holding is still with close bros and I'm aware I'm not getting a good deal at the moment.

As there still seems to be some uncertainty on rdr2 then I've held off on this, also as cavendish don't hold all the funds I have so some will go into cash and need to be reallocated, and also because whilst I'm currently on cofunds they tell me I'll have to move onto funds network on transfer with a several week delay if I transfer in specie.
At least there's no fee for transfer on these platforms, unlike hl.

My secondary holding is with charles stanley direct so that I can hold vanguard. All is fine with them apart from the odd way in which they take their fee, you just get an email saying the fee is late, and that it's initially being taken from the fund, though this will be replaced when paid by debit card. I paid and though I'd stick enough iN to cover the next six monthly charge only to get an email to say they couldn't accept the excess and returned it so will go back though this again ina few months no doubt, apart from that it seems good in terms of being transparent, though slightly painful to mAke out a Separate manual payment.

Archi_Bald

jimjames wrote: »

I was really disappointed to see the section that says charges will be taken from the largest fund.

you can nominate a specific fund if you prefer

Rollinghome

Archi_Bald wrote: »

you can nominate a specific fund if you prefer

They say: "These units will be sold from your largest fund holding although you can nominate a specific fund if you prefer."

Which seems to allow the possibility of nominating a fund for taking the fees that's held outside your ISA.

Perelandra

So, this shouldn't affect me until 2016 then. My ISA is in index trackers, where the current bundled fee is lower than the combined 'clean' class AMC + platform fee.

Although the rebalancing might become tricky.

westy22

Rollinghome wrote: »

They say: "These units will be sold from your largest fund holding although you can nominate a specific fund if you prefer."

Which seems to allow the possibility of nominating a fund for taking the fees that's held outside your ISA.

I haven't yet found an easy way of making such a nomination on the website though! I suppose I will have to send a secure message nominating a specific fund if the Cash Park option doesn't work.

buffman

Westy22 please let me know how you get on as I would like to do the same as you. Thanks

jimjames

Archi_Bald wrote: »

you can nominate a specific fund if you prefer

Yes, I noticed that. It was more frustrating that it is from inside the ISA so reducing your balance - taking from taxed money outside would help keep the tax free ISA balance as high as possible.