Help buying an index tracker

musashi10

Hi, I am investigating buying a tracker, but it's quite confusing.

What I want is an index linked tracker that tracks the Ftse 100.

The confusing parts I have is, is the service fee seperate from the TER?

when I look at funds it also has a buy price and a sell price. How does this work with a tracker?

Does anyone have a recommendation as to the best platform and product to use for this?

Thank you

ColdIron

Not an answer to your question but a single FTSE100 tracker is not very diverse and you might be better with an all share tracker at the very least. I would first identify exactly which tracker(s) I want and only then look for the most suitable provider

musashi10

Ok thanks. On the cavendish website it as a cost breakdown of (for hsbc)

AMC (0.1%) then TER (0.17%)

Then service charge of (0.25%)

Do I add the 0.17 and 0.25% to get my total annual charge?

musashi10

Yes I see your point about all share. But if I have understood it correctly the bid price determines how many units you get into the total fund pot???

To buy into HSBC all share tracker I think is +£4.00, to buy into ftse 100 tracker is +£1 something.

The 10 year performance is slightly better for the all share, but I would get more "unit" (if I have understood correctly) for the ftse 100 and therefore more capital growth?

kidmugsy

You could get wider coverage than the FTSE 100 by using
http://www.aberdeenuktracker.co.uk
and keep costs very low by investing through its management company's Share Plan - see top entry on p44
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats31Dec2013.pdf

Alternatively, Royal London do a cheap UK tracker - see whether you can buy it cheaply directly from them.

Linton

musashi10 wrote: »

Ok thanks. On the cavendish website it as a cost breakdown of (for hsbc)

AMC (0.1%) then TER (0.17%)

Then service charge of (0.25%)

Do I add the 0.17 and 0.25% to get my total annual charge?

There are two sets of charges:

1) Charges made by fund managers. These are taken by the fund manager from the fund, so you never see them directly. The fund manager charges can be expressed as the AMC or TER, the latter including some extra things than are included in the AMC. Recently charges have been expressed as OCF, which I believe is similar to the TER.

2) Charges made by platform
This is the 0.25% and covers the costs of running the website, help desk etc. You are charged directly for these, the money is taken from your fund/share account or possibly another nominated account. There will be additional charges for certain specific activities such as buying or selling etc.

Both charges result in a loss of return for you. You can compare such charges to the difference between the cost of the raw beans and the iron ore and the charge Tesco makes for a tin of beans. Such charges make things more expensive than they otherwise would be were you to make the tin of beans yourself.

Perelandra

musashi10 wrote: »

Ok thanks. On the cavendish website it as a cost breakdown of (for hsbc)

AMC (0.1%) then TER (0.17%)

Then service charge of (0.25%)

Do I add the 0.17 and 0.25% to get my total annual charge?

Yes.

Funds with a separate service charge quoted on Cavendish are "Clean" funds- these are funds where the platform (Fidelity) don't get any payment from the fund provider (HSBC) and so make a separate charge (the Service Fee).

musashi10

Thank you for the replies. I actually found that going to fidelity direct cuts out a lot of the charges!! straight 0.25% annual fee all in from what I understand

1 question about stocks and shares isas because I have read conflicting things.

If I this year invest £50/m using this allocation of stocks and shares isa in hsbc ftse 100 index, next year I want to also invest in say hsbc pacific fund, could I invest in them both under the isa in the same year? (as long as within allowance)

what about if I later wanted to buy individual stocks and shares also?

Thanks

ChopperST

In line with the RDR review Fidelity will be charging 0.35 not 0.25 as of the 9th February so I would get your account open before then to remain on the old charging structure for the next 12 months or so before you get migrated to the clean class fund charges.

Why do you only want to invest in the UK?

You are missing the US, Europe, Pacific, Japan etc..

You can buy as many funds as you like each tax year as long as you stay within your allowance.

musashi10

HI,

I don't want to invest only in the UK, I want to invest in emerging markets also, but you have to start somewhere, and this is the first one I would like to invest in.

musashi10

Are there any world wide trackers you can recommend for me to look at?