Hargreaves Lansdown unveils new Wealth 150+ list

koru

Rollinghome wrote: »

Most (but not all) Unit Trusts have dual-pricing with spreads. Most OEICs (but not all) have single-pricing with no spreads. Some funds have a dilution levy which is something else again.

They are supposed to cover the cost to the fund of buying and selling assets to create units. Funds that don't have dual pricing still have trading costs but they aren't so obvious and investors who hold for the long term will pick up the costs of those who frequently buy and sell.

So are these spreads going into the fund to cover costs, rather than being income for the fund manager? If so, then that's not too bad. In fact, positively beneficial if you are a buy and hold investor.

le_loup

Then there are other "funny" things like Creation Price, which is different some days compared to others.

zagfles

Chickereeeee wrote: »

The 'spread' is not the same as the 'initial charge', although the effect is similar. All three platforms (actually the fund rather than the platform) have the same spread, and all three have zero initial charge.

You just pay more for a fund unit than you can [FONT=&quot]immediately[/FONT] sell it for, on all three..

That's not my experience with HL, with dirty units anyway. They quote buying and selling costs the same as the fund manager does, and they also quote a discount on the "initial charge" even if the initial charge is included in the buy-sell spread. The rate you get is always the buy price minus the discount they say you get (though, like here, the "initial charge" always seems to be a bit less than the buy/sell spread).

For instance, the last time I bought Artemis "dirty" units there was a 6% buy/sell spread. HL said there was a 5.25% initial charge and a 5.25% discount. Sure enough, the price I paid for the units was the buy price on that day divided by 1.0525. Which was the sell price plus about 0.73%

So if HL say there's an initial charge discount, the price you pay is the buy price minus the discount they quote. The prices they quote on their website are the prices before the initial charge discount is applied.

That's how it's always worked with dirty units anyway. If I were to buy "Artemis Strategic Assets class I Acc" units with HL I would expect to pay 78.62 for the units. But it would seem with Fidelity or II I'd pay 79.41 as they don't quote an initial charge discount?

gadgetmind

jimjames wrote: »

With the HL platform fee, a total of 0.9% doesn't look bad at all.

It's about 3x what I'm prepared to pay, which is why I currently have three transfers away from HL in progress.

armageden

Porcupine wrote: »

What is puzzling is the SLI fund is soft-closed. Usually closed funds are not permitted on marketing lists like the W150 - which causes HL to write coded 'research' that says things like 'this fund has topped the table for the last 5 years but it's not one of our favourite funds'. So either HL have decided to give a gift to existing fundholders (as one of whom I'm not complaining) or it's to be reopened. I can't work out which.

Also noticed this & secure messaged HL to check the SLI funds re-instatement status.Got a quick response informing me that the fund manager,[Harry Nimmo], had reopened the fund for inward investment, in addition to the usual fund sales pitch.
As a fund holder i agree with HL that it's a good investment but the advise is inconsistent.Had a phone conversation with an HL investment adviser about 6 weeks ago & this was one of my holdings that he suggested getting rid of as it was not on the Wealth 150 list, " i could do better elsewhere ".
As soon as i reminded the adviser that the Managers decision was based on optimal Fund size & not inferior performance,he back tracked & sung it's praises.
Make of the above what you will,but for a long time i have been concerned about the reasoning behind some of the wealth fund list inclusions,or in this case exclusions.:)

grizzly1911

zagfles wrote: »

That's how it's always worked with dirty units anyway. If I were to buy "Artemis Strategic Assets class I Acc" units with HL I would expect to pay 78.62 for the units. But it would seem with Fidelity or II I'd pay 79.41 as they don't quote an initial charge discount?

Buying through Cavendish (fidelity), no initial fee, the price I have purchased at has been somewhere in the middle of the spread. They do reflect the fact no initial fee is taken.

koru

le_loup wrote: »

Then there are other "funny" things like Creation Price, which is different some days compared to others.

Ah, that appears in the following Skandia guide, which I found enlightening:
http://www2.skandia.co.uk/Adviser/KnowledgeDirect/Investments/Collectives/All-you-need-to-know-about-price-spreads/

So, the creation price reflects the full costs of purchasing the underlying shares/bonds and to this can be added an initial charge (if there is one) which is profit for the manager or (pre-RDR) is used to pay initial commission to the intermediary. The actual bid-offer spread will usually be smaller, because it only needs to cover the costs of any net additions or liquidations in the fund.

Nevertheless, it is worrying that there is so little publicity of these transaction costs. Anyone who does a switch from dirty to clean (selling the dirty fund and buying the clean version of the same fund) could easily lose 1-2% as a one-off hit. (Presumably if there is a conversion by the fund manager, the conversion is done based on the ratio of the bid price for both classes, so there's no spread.) That's on top of the problem of being out of the market for at least a day, because you can't buy the clean fund until after the dirty fund has sold, so if the market goes up, you will miss out on the appreciation.

jrawle

I checked the impact of the new pricing on my portfolio of funds.

With the old pricing, I was paying 1.55% per year. With the new "inclusive" funds, that's down to 1.41%. If I switch to "unbundled" funds, it'll be 1.38%.

Some of the net management charges are lower with the unbundled funds, and three of them still have loyalty bonuses of 0.05 or 0.1% (presumably where HL have negotiated a discount but there isn't a separate class of unit?)

The fund managers' "other expenses" vary in some cases between the two classes of fund. It's usually very minor, but in one case jumps from 0.02 to 0.25. I may query this with HL.

I guess I'll convert my units for the small saving, and because I can then pay the platform fee by adding cash to my fund and share account, thereby increasing the value of my ISA. As things stand, the loyalty bonus will more than cover the platform fee.

dunstonh

The fund managers' "other expenses" vary in some cases between the two classes of fund. It's usually very minor, but in one case jumps from 0.02 to 0.25. I may query this with HL.

It is important to note that in the unbundled world, most platforms and distribution use the ongoing fund charge (what used to be the TER). Be wary if you are still using the AMC to ensure you are comparing like for like.

jrawle

dunstonh wrote: »

It is important to note that in the unbundled world, most platforms and distribution use the ongoing fund charge (what used to be the TER). Be wary if you are still using the AMC to ensure you are comparing like for like.

Surely they are presented in the same way in the tables on the HL website?