Best Invest announce RDR pricing structure

JasonPr

koru wrote: »

I am an existing client who will be paying a lot more if I stay with them. I e-mailed asking about exit fees and they replied saying, simply: "Of course if you decide to transfer away from our Platform there will be no exit fees levied."

I received a similar response. I'm surprised by how candid their response was:

Unfortunately the 'Passive' investor has lost out in the new RDR2 Pricing Structure, this is generally industry wide. Of course if you wish to transfer your assets to another provider exit fees will be waived.

koru

JasonPr wrote: »

Can anyone explain why ETFs attract a custody charge while funds have a percentage fee?

I don't understand the rationale of different pricing but BestInvest is the second company to do this, so there must be some explanation.

I think it is just a historic carryover.

Funds have always had percentage fees, taken at source by the fund manager, part of which was passed on to the intermediary. This never really made much sense, because it is just as much work for the intermediary to purchase and hold, say, £1,000 or £100,000 of Perpetual Income fund for a client. But on £1000 the intermediary earned £75 pa and on £100,000 they earned £7500. Most intermediaries are "hooked" on these high charges for bigger investments, so they have stuck with them, now that they have to come up with separate fees of their own.

But most of them accept that they just can't get away with doing the same on shares. Shares and ETFs have never generally had percentage fees for holding them. However, it would seem that BI plan to do this for anyone foolish enough to invest in shares with them if they don't have this "passport".

SnowMan

gadgetmind wrote: »

I'm still researching ETFs. but these are already on my list.

VWRL - All World, TER 0.25%
VUKE - FTSE 100, TER 0.1% (yes!)
VFEM - Emerging markets 0.45%
MIDD - FTSE 250, 0.4%
ISP6 - S%S 600 Small Cap

I already old SLXX and ISXF, which are corporate bonds.

koru wrote: »

The BlackRock Emerging Markets Equity Tracker Fund D has an OCF of 0.28%, which is way cheaper than 0.45%.

VFEM is 0.29% not 0.45% see here. It reduced at the end of last year

gadgetmind

SnowMan wrote: »

VFEM is 0.29% not 0.45% see here. It reduced at the end of last year

Thanks, I spotted that after posting but was ramming this PM and didn't have chance to correct.

gadgetmind

JasonPr wrote: »

I don't understand the rationale of different pricing but BestInvest is the second company to do this, so there must be some explanation.

Because they are Exchange Traded, they tend to be classed as equities rather than funds. As equities have trading fees and funds generally (but not always) don't, the platform makes money from you buying/rebalancing rather than just on holding.

coastline

On the subject of switching to ETF's....can anyone give a few details on withholding tax.
Is it straight forward to place most ETF's in an ISA and leave the rest to your provider.

http://monevator.com/withholding-tax-on-dividends/

koru

http://monevator.com/etfs-and-the-peculiar-effects-of-withholding-tax/

koru

SnowMan wrote: »

VFEM is 0.29% not 0.45% see here. It reduced at the end of last year

Even so, I think Black Rock D class usually beat ETFs, outside of core UK indexes, don't they?

BlackRock US Equity Tracker Fund D 0.17
BlackRock Continental European Equity Tracker Fund D 0.18
BlackRock Japan Equity Tracker Fund D 0.18
BlackRock Pacific ex Japan Equity Tracker Fund D 0.24

SnowMan

koru wrote: »

Even so, I think Black Rock D class usually beat ETFs, outside of core UK indexes, don't they?

It's quite close if you allow for slightly different indices being tracked (and the European ETF including the UK)

BlackRock US Equity Tracker Fund D 0.17

Vanguard (VUSA) and HSBC (HSPX) S&P500 ETFs are 0.09%

BlackRock Continental European Equity Tracker Fund D 0.18

Vanguard (VEUR) FTSE developed Europe (including UK) ETF 0.15%

BlackRock Japan Equity Tracker Fund D 0.18

Vanguard (VJPN) FTSE Japan ETF 0.19%

BlackRock Pacific ex Japan Equity Tracker Fund D 0.24

Vanguard (VAPX) FTSE developed Asia Pacific exc Japan ETF 0.22%

snowcat53

Very useful posts -thanks
Looks like I may be converting my funds into ETFs. Although I will effectvely lose on the intial (diluition) charges I had to pay on buying some of these funds, and also pay dealing charges for now buying the ETFs, it seems cheaper long term.

Does anyone know if there are ETF equivalents (or near equivalents) for the following tracker funds?

- HSBC or Vanguard FTSE all share index
- Vanguard UK govt bond index fund
- Vanguard U.K. Investment Grade Bond Index Fund
- Vanguard U.K. Inflation-Linked Gilt Index Fund
- Vanguard Pacific Index exc Japan Fund - (edit- just spotted - VAPX i preume)

Presumably the ETFs are all available on BI?

cheers