Rebalancing "Locked" Dirty Class Funds

ChopperST

Generally I rebalance every April at the start of the tax year but I'm in a bit of a quandry what to do to get myself back to my original allocation.

I'm invested in the following accumulation trackers.

HSBC - FTSE All Share
HSBC - Pacific Index
HSBC - Japan Index
HSBC - American Index
HSBC - European Index

These are held in a S&S ISA with Fidelity who I am quite happy to stick with as I have a relatively small portfolio. All of these investments are locked to the old charging structure but all have a monthly contribution via a monthly saving plan.

Now Fidelity are a bit sneaky here. I can sell funds and they remain under the old charging structure, however if I try and buy a lump sum it will migrate the funds to the new charging structure. The same is true if I try and amend the MSP to allow the differentials to rebalance over time.

I see that I have two options - just sell some of the units to decrease the amount held and bring the overall percentage down which is an option for two of the funds, however the third one (American Index) is off about 9% of what I would like it to be and therefore requires a purchase to rebalance.

The second option is going off the back of the monevator article (http://monevator.com/why-investors-should-be-wary-of-discounted-funds) at the weekend is to sell up into cash and open a new S&S ISA next year with Charles Stanley with a fresh allocation from scratch which I would be able to do as my porfolio is only £7k in size.

Any thoughts welcome.

sterlingstash

I will be interested in peoples replies as I am in the same boat with an £18k portfolio and ongoing MSP. I think I'll leave that going to gain from the lower charges under the 'old arrangements' until they have to be converted,.

To rebalance, I was thinking about making a lump sum investment into the most suitable clean class tracker funds. I believe these are 'C' class funds and so should be differentiated from the dirty ones we currently hold and continue to accumulate with the MSP. Woulnd't these have different ISINs and hence not affect the existing holdings?

Other option is starting a new ISA for my wife in April with someone else (as unfortunately we stopped her Fidelity MSP just before the fee change announcements) and use that as a rebalancing vehicle.

sterlingstash

Also Chopper, given that going through Cavendish means a 0.25% platform fee rather than the 0.35% fee as per Monevators illustrations, wouldn't that make even the new Cavendish/Fidelity charging structure cheaper than Charles Stanley? 41% under Cavendish rather the 51% direct vs 45% with Charles Stanley.

ChopperST

I'll have a quick look now and do some sums.

My gut is telling me to sit tight as it is a relatively small sum but its really investing into the future as this is a 25 - 30 year portfolio so it makes sense to be as cheap as possible from the start. I could just about start afresh switching in April by selling and buying back in. In 12 months time that would be above my ISA allowance and I would have to use a switching service with further charges.

Hooloovoo

ChopperST wrote: »

Now Fidelity are a bit sneaky here. I can sell funds and they remain under the old charging structure, however if I try and buy a lump sum it will migrate the funds to the new charging structure. The same is true if I try and amend the MSP to allow the differentials to rebalance over time.

My understanding, which may well be incorrect, is that any new purchases outside of an MSP must be into clean classes, but it wont force a switch of existing funds.

So you can make a one-off lump-sum investment in HCAIA whilst still holding HSAMI.

It's not until 2016 (or whatever date the final deadline is) that everyone will be forced to switch all existing holdings into clean classes.

I haven't tried this myself yet. Can anyone confirm if it is correct?

ChopperST

That would make more sense - perhaps I have got it wrong.

Ill give Fidelity a ring after work. They are usually pretty good on the phone (another reason I don't want to leave a I am happy to pay for good customer service).

westy22

Yes, I can confirm that. I have recently switched some money from one fund into a 'clean' version of a fund that I already held. I now have 2 holdings in that fund; one the original dirty class and the new money in the clean class.

ChopperST

Should have topped up before April but I'm a creature of habit.

Hooloovoo

westy22 wrote: »

Yes, I can confirm that. I have recently switched some money from one fund into a 'clean' version of a fund that I already held. I now have 2 holdings in that fund; one the original dirty class and the new money in the clean class.

Good to know!

I'm in the same situation as ChopperST. I'm now "locked" into my MSP and so I can't update it for the new 2014/15 allowance. I'm intending to "top up" the difference using the clean classes and keep the majority of my holdings in the dirty (cheaper!) classes until I'm forced to switch holdings.

Subject to meeting minimum lump-sum funding requirements of course. I might not be able to do it and will just have to open a small cash ISA for the difference, or something.

ChopperST

Hooloovoo wrote: »

Good to know!

I'm in the same situation as ChopperST. I'm now "locked" into my MSP and so I can't update it for the new 2014/15 allowance. I'm intending to "top up" the difference using the clean classes and keep the majority of my holdings in the dirty (cheaper!) classes until I'm forced to switch holdings.

Subject to meeting minimum lump-sum funding requirements of course. I might not be able to do it and will just have to open a small cash ISA for the difference, or something.

When I spoke to Fidelity last week they advised they can take smaller lump sum investments over the phone then you can online.

Hooloovoo

ChopperST wrote: »

When I spoke to Fidelity last week they advised they can take smaller lump sum investments over the phone then you can online.

Thanks.

The ISA limit is rising £240 from £11520 to £11760.

I don't know if they will allow a lump-sum investment that low, even over the phone. I'll probably either just ignore the increase, or open whatever the best cash ISA is with £240.