The new annual charges on Tracker funds.. OUCH! (and Help??)

Digger90

I have the majority of my investments in FTSE250 trackers.

Many companies (including HL and HSBC where I have my trackers) are introducing significantly increased charges of up to 0.45% of my total fund value annually as a result of the FCA rules.

While I can understand those charges for ACTIVELY managed funds, they are ridiculous for low-cost/passively managed tracker funds.

HELP! Is there any company offering no/low cost annual management fees these days to hold trackers?

Lokolo

Digger90 wrote: »

While I can understand those charges for ACTIVELY managed funds, they are ridiculous for low-cost/passively managed tracker funds.

Why can you understand them for active but not for passive? The fee isn't going to the fund managers or the running of the fund, it is going to the platform where you can buy, sell and hold funds.

TCA

http://monevator.com/compare-uk-cheapest-online-brokers/

SnowMan

Digger90 wrote: »

While I can understand those charges for ACTIVELY managed funds, they are ridiculous for low-cost/passively managed tracker funds.

The 0.45%pa level of charge and all the extra transfer and account closure and probate and other charges are ridiculous for both active and passive funds.

All the platform does really is act as an administration service. But Hargreaves Lansdown have revenues to protect and hope customers won't be savvy enough to move away and are putting up even more barriers by the way of exit fees to keep the investors in.

You can switch to a platform with a 0.25%pa platform charge (note there is an extra charge for SIPPs with Charles Stanley and Cavendish don't currently offer one) such as Cavendish or Charles Stanley. As the clean class of HSBC trackers has a 0.1%pa lower ongoing charges figure you are facing an increased cost overall on the HSBC 250 tracker for example of 0.15%pa (= 0.25% - 0.1%).

Larger passive investors can switch to some of the fixed costs platforms such as ATS and Interactive Investor and may even see their total costs go down.

(iweb look an outside bet for being able to hold HSBC trackers at very low/nil cost).

jimjames

Digger90 wrote: »

While I can understand those charges for ACTIVELY managed funds, they are ridiculous for low-cost/passively managed tracker funds.

HELP! Is there any company offering no/low cost annual management fees these days to hold trackers?

Not sure why you think it is any easier for a platform to hold tracker funds than active ones when the work is identical for both. Active funds will charge higher management fees but these charges are not management fees but the cost to hold them on the platform.

As Snowman listed there are other options like Cavendish or Charles Stanley at 0.25%. Or depending on your holdings there is iii at £80 per year.

Which works out cheapest depends on the value of your portfolio.

Porcupine

The other option is ETFs, where you can buy them on a 'share dealing' platform rather than a 'fund' platform, and there are more 'shares' platforms that don't have annual charges (someone like iWeb, X-O or SVS). Usually there are dealing fees (eg £5 per trade), but these are one-off and make sense if you're buying more than a few hundred pounds.