Fund rebates - Interactive Investor as good as HL?

itm2

I currently have all of my investments (SIPP, ISA and unwrapped fund investments) with Hargreaves Lansdown. Now that HL have announced their new charging structure I'm starting to shop around for the most cost-effective home for my investments.

I seem to be locked into HL for my SIPP, as there are a few specific funds which I want to keep in the SIPP which don't seem to be available from any of the low-cost fund platforms, and I don't want to open a 2nd SIPP elsewhere and end up incurring two lots of charges.

For my ISA and unwrapped fund investments I'm quite happy to shop around however, and have been particularly drawn to Interactive Investor because of their low flat-rate fees. I have £150k in my ISA and £80k in unwrapped funds, and reckon I could save almost £800pa moving them from HL to iii.

My question is: for funds which HL has not negotiated a "special deal" with the fund manager, is it likely that iii will pass on the same level of commission rebate as HL? (the majority of my funds are not on HL's Wealth 150 list).

Or to put it another way, can I measure my cost savings by:
(a) directly comparing iii's £20 per quarter with HL's 0.45% of portfolio size? (assuming each portfolio consists exclusively of managed funds - i.e. no ETFs, IT's, etc) AND
(b) factoring in iii's fund dealing costs for my anticipated level of dealing?

Linton

iii's rebates are similar to the difference between clean and dirty funds - for some funds you seem to be better off choosing the dirty version and getting the rebate. Look on the iii website for the rebate for each of your funds. I believe iii's rebates are better than HLs now, what HL will do in the future I dont know.

You need a (c) to add in for the difference in fund charges if you cant get the same class of funds on the two platforms. This may happen if HL bring in "superclean". If exactly same fund, including class, shows as different charges on the two platforms its probably a quirk of the data as there shouldnt be a real difference.

itm2

Linton wrote: »

iii's rebates are similar to the difference between clean and dirty funds - for some funds you seem to be better off choosing the dirty version and getting the rebate. Look on the iii website for the rebate for each of your funds. I believe iii's rebates are better than HLs now, what HL will do in the future I dont know.

You need a (c) to add in for the difference in fund charges if you cant get the same class of funds on the two platforms. This may happen if HL bring in "superclean". If exactly same fund, including class, shows as different charges on the two platforms its probably a quirk of the data as there shouldnt be a real difference.

Thanks for that. I'll need to go through the list fund-by-fund.

Do you happen to know what HL mean when they quote "fund manager's other charges" (e.g. 0.16% in the case of the M&G Global Dividend Fund). Are these charges to be added to the "net annual charge" which they quote on the line above, and would I expect to incur the same charge if I bought the identical share class from iii ?

itm2

(and I know that I'm looking at HL's current charges, rather than those which will be in effect from March 1st)

jimjames

If anything the rebates from iii will be better than HL. HL (despite their claims to rebate up to 0.5%) have now admitted the average is 0.17%.

iii and others such as Cavendish rebate 0.5% and I'd expect the same to apply once RDR is in place - the full rebate is given and any platform fees are then applied. HL still seem unclear on the level they will rebate where they get more than the fund manager

dunstonh

Different platforms will have different rebate levels on retail funds.

My question is: for funds which HL has not negotiated a "special deal" with the fund manager, is it likely that iii will pass on the same level of commission rebate as HL? (the majority of my funds are not on HL's Wealth 150 list).

Do note that most, if not all, platforms are likely to get superclean deals. Some may be unique to one platform but some will be same or similar across a number of platforms. It is not just platform either. IFAs and other intermediaries are expected to get superclean pricing deals as well irrespective of platform used.

itm2

It looks like I'll need to go through the portfolio fund-by-fund when HL announce the charges for each and see which ones are worth moving out. It's hard to see Cavendish, Charles Stanley, etc competing with the flat rates being offered by Alliance Trust and iii at the moment, at least not for a portfolio of any size.

grey_gym_sock

itm2 wrote: »

Do you happen to know what HL mean when they quote "fund manager's other charges" (e.g. 0.16% in the case of the M&G Global Dividend Fund). Are these charges to be added to the "net annual charge" which they quote on the line above, and would I expect to incur the same charge if I bought the identical share class from iii ?

yes, you add it on. it's the difference between the AMC and the TER.

so if the AMC is 1.5%, and "fund manager's other charges" is 0.16%, then that implies the TER is 1.66%.

and yes, "fund manager's other charges" will be the same for the same share class with different platforms. you might see fractionally different numbers, but that's because it can vary over time, not because it differs on different platforms.

juliamarsh

itm2 wrote: »

I currently have all of my investments (SIPP, ISA and unwrapped fund investments) with Hargreaves Lansdown. Now that HL have announced their new charging structure I'm starting to shop around for the most cost-effective home for my investments.

I seem to be locked into HL for my SIPP, as there are a few specific funds which I want to keep in the SIPP which don't seem to be available from any of the low-cost fund platforms, and I don't want to open a 2nd SIPP elsewhere and end up incurring two lots of charges.

For my ISA and unwrapped fund investments I'm quite happy to shop around however, and have been particularly drawn to Interactive Investor because of their low flat-rate fees. I have £150k in my ISA and £80k in unwrapped funds, and reckon I could save almost £800pa moving them from HL to iii.

My question is: for funds which HL has not negotiated a "special deal" with the fund manager, is it likely that iii will pass on the same level of commission rebate as HL? (the majority of my funds are not on HL's Wealth 150 list).

Or to put it another way, can I measure my cost savings by:
(a) directly comparing iii's £20 per quarter with HL's 0.45% of portfolio size? (assuming each portfolio consists exclusively of managed funds - i.e. no ETFs, IT's, etc) AND
(b) factoring in iii's fund dealing costs for my anticipated level of dealing?

The cheapest option for you sounds likely to be Interactive Investor, with a portfolio that size their flat fee will save you a lot of money, especially if your investments grow further which is what we are all hoping for! They are cheaper than Alliance Trust who have just hiked their fees again and they rebate 100% of their commission to the customer. Don't forget too that your £20/quarter charge includes 2 free trades/quarter so 8 per year, and if you decide to move to them and they receive your transfer forms before 28th Feb they will give you £120 in cash, and if you move 12 lines of stock to them you get a further 12 commission fee trades (3 per quarter on top of the 2 free ones they give you already). I am not convinced that HL's 'special deals' will be that special, and tellingly they are refusing to announce what they will be before 1st March (when Interactive Investor's offer will have ended!) so customers are unable to make an informed decision about their individual circumstances. Even supposing they had a 'special deal' on, say, £40,000 worth of your investments, it would be unlikely to amount to more than 0.1% cheaper than other brokers, which would be £40, so you would still be quids in for moving! Have a look at your funds on Interactive Investor's website, their rebate levels are clearly displayed, and if there are any funds you can't find ring up and ask them, they are really helpful and you may find they do in fact trade them. I only hold 3 funds out of 56 that they don't trade, 2 are HL's own multimanager funds and the other is an Invesco Perpetual Pension Fund. Like you, a couple of these are in my HL SIPP and ideally I want to keep them, well at least the Invesco Perpetual one although I will look into it further before deciding. What is the problem though with opening a second SIPP elsewhere? That is what I intend to do, I will transfer all the holdings I can to Interactive Investor, then if I decide to keep a couple of holdings with HL at least I will only have to pay the 0.45% fee on a small portfolio. You will incur charges whether you have 2 SIPPs or 1, but when added together they will likely be a lot less than leaving the whole lot with HL! Do ring and ask Interactive Investor whether they trade those funds you can't find though, as there were a few I couldn't find which they did in fact trade. If you have shares and ITs take a look at SVS Securities, they have no fees and a flat £5.75 dealing charge, but they don't do funds. I am also writing to HL to complain about being charged fees to leave and request a fee free exit, there are several useful links on the forum about that. Best of luck with it all!

Freecall

juliamarsh wrote: »

transfer forms before 28th Feb they will give you £120 in cash

Is this correct? I thought that they were just giving a dealing fee credit (they call it 'commission').

koru

Freecall wrote: »

Is this correct? I thought that they were just giving a dealing fee credit (they call it 'commission').

Current deal is this plus £120 in cash (for new customers). Note that they have always have some sort of incentive for nearly two years. I would guess there will be a new deal after Feb, which might extend the current deal or might be more or less generous.