No bid-offer spread on alot of managed funds?

itm2

I'm contemplating moving most of my ISA and other fund investments from Hargreaves Lansdown to Interactive Investors, and am researching any potential pitfalls.
To avoid HL's £25 per stock transfer out charge it would seem logical to sell the holdings and transfer as cash. Obviously that would mean I'd be out of the market for the time it takes for the transfer to complete, but the other potential complication is the bid-offer spread on the funds, which would cause a loss during the sale & repurchase process.
Looking at the 15 managed funds that I'm invested in on the HL site, it seems that all bar one seems to have no bid-offer spread at all (i.e. the buy and sell prices are identical). Can this be true, or is the spread masked by some opaque element of HL's charging regime?

grizzly1911

itm2 wrote: »

I'm contemplating moving most of my ISA and other fund investments from Hargreaves Lansdown to Interactive Investors, and am researching any potential pitfalls.
To avoid HL's £25 per stock transfer out charge it would seem logical to sell the holdings and transfer as cash. Obviously that would mean I'd be out of the market for the time it takes for the transfer to complete, but the other potential complication is the bid-offer spread on the funds, which would cause a loss during the sale & repurchase process.
Looking at the 15 managed funds that I'm invested in on the HL site, it seems that all bar one seems to have no bid-offer spread at all (i.e. the buy and sell prices are identical). Can this be true, or is the spread masked by some opaque element of HL's charging regime?

AIUI whilst there is no published spread by the Fund Managers (not the broker) they will still make an adjustment in price (including dilution levies) the published price being something of a mid price.

I have recently purchased some Artemis Funds, that still quote a spread, but the actual price was somewhere in the middle as no actual purchase fee was taken by my broker in common with most discounters.

westy22

itm2 wrote: »

Looking at the 15 managed funds that I'm invested in on the HL site, it seems that all bar one seems to have no bid-offer spread at all (i.e. the buy and sell prices are identical). Can this be true, or is the spread masked by some opaque element of HL's charging regime?

The funds with identical buy and sell prices are probably OEICs and therefore have no upfront spread - instead they have a 5% initial charge which the platform discounts away for you.

The one with a spread will be a UT but even with this you will probably have all or most of the spread discounted away by the platform.

pip895

If you buy & sell on the same day you should get the same price. The question is, is it a good idea to be out of the market for however long it takes to transfer your isa - I have heard stories of it taking weeks. One method you could go for is to find a proxy fund - VLS 80* or IP distribution could work for some, go for one that match your general risk profile. It doesn't need to be a fund you want to hold long term - just use it to manage risk during the transfer - one £25 charge isn't too much of an issue.


[Edit - *It has been pointed out that this has an initial charge - so wouldn't be a good idea for this purpose - I agree - there are lots of others that have no initial charge though.]

le_loup

If investing is for the long term, why the panic about being out of the market for a few weeks. Indeed, with the current volatility, you have a fair chance of winning!
And, it's not just the cost of transferring out, with many platforms there is a cost of swapping your single fund to the desired number of funds.

Freecall

pip895 wrote: »

One method you could go for is to find a proxy fund - VLS 80

But then the OP would end up paying the dilution levy. Not sure how that would be of benefit.

pip895

Freecall wrote: »

But then the OP would end up paying the dilution levy. Not sure how that would be of benefit.

Sorry - forgot VLS has a dilution levy - I never purchase a fund with a levy personally - pick one without, there are plenty of them about - and for this purpose the on-going charges are irrelevant.

pip895

le_loup wrote: »

If investing is for the long term, why the panic about being out of the market for a few weeks. Indeed, with the current volatility, you have a fair chance of winning!
And, it's not just the cost of transferring out, with many platforms there is a cost of swapping your single fund to the desired number of funds.

Its a risk you don't need/might not want to take.

BillJones

westy22 wrote: »

The funds with identical buy and sell prices are probably OEICs and therefore have no upfront spread - instead they have a 5% initial charge which the platform discounts away for you.

The one with a spread will be a UT but even with this you will probably have all or most of the spread discounted away by the platform.

Funds can have fees built into them, and many do, so there's no need for an additional bid / offer spread on buying and selling.

For example, a fund which tracks the FTSE can simply track the price, letting the management fund keep the dividends as their "fee".

Rollinghome

BillJones wrote: »

For example, a fund which tracks the FTSE can simply track the price, letting the management fund keep the dividends as their "fee".

You aren't referring to UT/oeic funds I assume as I'm not aware of any FTSE tracker that does that and doubt that it would be permissible. All include the dividends less fees and cost.

The sort of tricksy structured products that banks were fond of selling promising a return in line with the FTSE usually did exclude the divis, which was why they were often misleading.