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Fund charges query
gizz_mo
Posts: 110 Forumite
Hello MSE'ers
I'm looking for some help with explaining how the new fund charges work in the following ISA situation:
About 10 years ago I invested in a stocks and shares ISA through Best Invest. The first year I only used half the allowance of £3,000 and purchased a Henderson Global Investors Fund. The second year I invested the full £7k allowance in 4 funds which were purchased for me on the Fidelity Funds Network, again through Best Invest.
Years later I started a new S&S ISA on iii and have been managing that one myself for the last 3-4 years ( rather successfully turning £30k into £41k - not a bad return if I may so myself.
With the new fund platform charges I am a little confused as to how this now works with my old ISA. Am I essentially getting charged twice, once by Best Invest and again by Fidelity for their funds, and Henderson for theirs?
Best Invest charge 0.4% of holdings and Fidelity charge 0.35% - so does that mean I am essentially paying 0.75% on these funds?
As I already pay the iii £20 quarterly charge for my more recent ISAs I am considering transferring my holdings from Best Invest to iii. This would limit my charges to the annual £80 imposed by iii which i can use for trading credit. iii also give £120 trading credit for transfers in. But again I am not sure how that works either - do I transfer them from Best Invest or from Fidelity and Henderson respectively?
Hopefully I have been clear in my explanation, and I am hoping someone can provide me with some clarification.
Thanks in advance
gizz
I'm looking for some help with explaining how the new fund charges work in the following ISA situation:
About 10 years ago I invested in a stocks and shares ISA through Best Invest. The first year I only used half the allowance of £3,000 and purchased a Henderson Global Investors Fund. The second year I invested the full £7k allowance in 4 funds which were purchased for me on the Fidelity Funds Network, again through Best Invest.
Years later I started a new S&S ISA on iii and have been managing that one myself for the last 3-4 years ( rather successfully turning £30k into £41k - not a bad return if I may so myself.
With the new fund platform charges I am a little confused as to how this now works with my old ISA. Am I essentially getting charged twice, once by Best Invest and again by Fidelity for their funds, and Henderson for theirs?
Best Invest charge 0.4% of holdings and Fidelity charge 0.35% - so does that mean I am essentially paying 0.75% on these funds?
As I already pay the iii £20 quarterly charge for my more recent ISAs I am considering transferring my holdings from Best Invest to iii. This would limit my charges to the annual £80 imposed by iii which i can use for trading credit. iii also give £120 trading credit for transfers in. But again I am not sure how that works either - do I transfer them from Best Invest or from Fidelity and Henderson respectively?
Hopefully I have been clear in my explanation, and I am hoping someone can provide me with some clarification.
Thanks in advance
gizz
0
Comments
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It depends on whether Best have changed your old funds to the new clean class. They will have to change by 2016 and the old class will then be obsolete.
You need to look up the total expense ratio (full charges) from the factsheets of each fund (pay attention to the suffix which identifies the class).
For old funds, say the manager TER was around about 1.5-1.6%. Best got a cut of that so that was all you paid, unless Best gave you a rebate of their cut (I don't think they did). On these old style funds Best should not be taking a further charge.
For the new class the manager TER is now more like 0.8-0.9%, and on to that you add the Best charge of 0.4%.
Generally most funds end up costing you around the same, a few cheaper, a few more expensive. Except the discount brokers can save you a lot on large portfolios where you can get a fixed price like II compared to the % charge boys. On smaller portfolios the saving may not be big enough to worry you if you like the service or research.0 -
ps if you want to transfer, you get transfer forms from where you want to transfer to eg II, fill them in and send them to where you are transferring from eg Best.0
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Thanks Talexuser.
As an example one, of the funds is Invesco Perpetual European Equity. Its held on Fidelity Funds Network but was purchased through Best Invest.
So in this scenario, assuming they are the new clean funds, I understand the TER would be applied by Invesco, but does Fidelity charge too? So am i being hit by charges from Invesco, Fidelity and Best (if they have been moved to the new clean funds)?
I'm thinking it makes sense to just consolidate all my holdings in iii and at least remove the charges from Fidelity and Best - since I already pay the iii fixed fees. Do you think that makes sense?
Thanks again for your help.0 -
you should only be paying 1 platform to hold the same fund, so not both fidelity fundsnetwork and bestinvest. it sounds like your invesco fund is on fundsnetwork, rather than bestinvest's own platform (unless it's been moved).
in any case, consolidating on iii sounds sensible. as you say, you already pay the fixed fees; and that cuts out the percentage to fidelity or bestinvest. it's only if you trade more frequently that iii could become more expensive.0 -
The old IP Euro ACC has a TER of ~1.71%. if you hold this that is what it costs you since IP give a slice to Fidelity and Best, unless Best give you a rebate on some of their cut. Some discount brokers would give you 0.5% of this back on the old funds, which make them very comparable to the new clean funds in charges.
Fidelity has a new clean class Y IP Euro ACC which has a TER of ~0.96%. On top of this is the Best 0.4% which just uses the Fidelity platform.
The Fidelity 0.35% is if you hold the funds direct through Fidelity instead of through Best.
II would be cheaper (compared to the 0.4%) if you don't do a lot of churning, or at least just use the free transfers every quarter. Otherwise free dealing might be better if you swap around a lot.0 -
Thanks Talexuser. I havent really done anything with my old Isa since the first investments were made, but I do intend to be more proactive with it now going forward.
Thankfully it hasnt done too badly, but that has been more through luck than anything else. I am going to consolidate everything on iii, and switch to the cleaner funds.
I am grateful for your help. Thank you.0
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