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SWIP FTSE All Share Index - £24 annual charge
Kua
Posts: 303 Forumite
Every forum I read (the latest I can find is from 2012) says that there is a £24 annual charge for holding this fund but I can't see any evidence of this on HL's website?
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This has now been changed as a result of FCA's platform regulations earlier this year.
http://www.hl.co.uk/lowcharges
"The £1/£2 per month "platform fee" that previously applied to most passive funds no longer exists, and all fund holdings will be subject to the same fund charge. The FCA rules say all funds must be subject to the same charges to prevent bias."
Out of interest, why this fund? It is cheap I realise that (0.09% TER) but this is a classic example of paying for what you get. It is a 3rd and 4th quartile fund.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
Yeah, this one had a horrific tracking error.0
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Can you explain?
Have a look at the fund factsheet and you can see it's not done a good job "tracking" the index lately (that's what trackers are supposed to do). Tracking error is a measure used how close (or wide) it tracks their index (which would be the UK FTSE all share in this instance), the lower the figure the better (for a passive fund).
You may need to read up a bit more about investing before doing so otherwise you could get burnt and not even know what happened.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
Have a look at the fund factsheet and you can see it's not done a good job "tracking" the index lately (that's what trackers are supposed to do). Tracking error is a measure used how close (or wide) it tracks their index (which would be the UK FTSE all share in this instance), the lower the figure the better (for a passive fund).
You may need to read up a bit more about investing before doing so otherwise you could get burnt and not even know what happened.
I understand the concept. But why in particular does this fund not track well?0 -
This has now been changed as a result of FCA's platform regulations earlier this year.
http://www.hl.co.uk/lowcharges
"The £1/£2 per month "platform fee" that previously applied to most passive funds no longer exists, and all fund holdings will be subject to the same fund charge. The FCA rules say all funds must be subject to the same charges to prevent bias."
Out of interest, why this fund? It is cheap I realise that (0.09% TER) but this is a classic example of paying for what you get. It is a 3rd and 4th quartile fund.
No longer cheap either.
L&G/Fidelity are now lower as I recall.Remember the saying: if it looks too good to be true it almost certainly is.0 -
The first thing that should alert you to a problem is the Key Investor Information Document. In particular:I understand the concept. But why in particular does this fund not track well?
That doesn't sound very tracker-like to me!The Investment Manager is free to choose how the Fund is invested within the limits of its investment policy. However, the FTSE All Share Index is currently taken into account when the Fund's investments are selected.
You might also find this article from a few weeks ago useful, the table at the bottom in particular, which shows this fund underperforming the index by over 1.5% a year on average:
http://www.moneymarketing.co.uk/news-and-analysis/investments/advisers-urged-to-look-beyond-tracker-price-war/2011581.article0 -
Unfortunately that table doesn't show which unit classes they compared. For SWIP Foundation Growth, low cost B-class units didn't exist 3 years ago but the KIID shows that class did ok in 2012 and 2013.the table at the bottom in particular, which shows this fund underperforming the index by over 1.5% a year on average
According to the prospectus this fund is priced with a dilution adjustment of about 0.6% in the price, about 50% of the time. That may affect performance over short periods, depending on whether the start or end price include an offer adjustment.0 -
Looking at discrete performance data for the B class units from Trustnet (bid to bid), it actually outperformed the index by 0.4% in 2012, lagged the index by 0.2% in 2013, which is ok as you say, but worryingly, it has underperformed by 1.3% in the year to date.Unfortunately that table doesn't show which unit classes they compared. For SWIP Foundation Growth, low cost B-class units didn't exist 3 years ago but the KIID shows that class did ok in 2012 and 2013.
According to the prospectus this fund is priced with a dilution adjustment of about 0.6% in the price, about 50% of the time. That may affect performance over short periods, depending on whether the start or end price include an offer adjustment.
Compare that with the Vanguard tracker for example, where you'll see consistent annual variances of 0.1-0.2% (reflecting the 0.15% TER).0 -
My own figure for the additional tracking difference of the SWIP FTSE all share index tracker on top of the OCF is 0.27%pa.
This is based on a regression analysis of monthly prices from December 2011 (when data is available) relative to the FTSE all share index. That takes out the effects of the swinging of the unit price which distorts the usual point to point comparisons
Note I allow separately for the fund being priced at midday by using a customised FTSE all share index (customised to the time the fund is priced). This makes comparisons between funds priced at the end of the day (such as Vanguard) and funds that are priced at 12 noon (such as SWIP and HSBC) much more meaningful.
It is also worth saying that there is a lot of swinging of the unit price taking place with the SWIP fund. This can be seen by looking at the 'fitted' price under the regression analysis with the actual price.
This swinging means that the price is swung up when more people are buying into the fund than selling and swung down when more people are selling than buying.
This swinging ON AVERAGE will result in additional underperformance, for example buy when the price is swung up and sell when the price is swung down then that is a source of an additional one off 0.5-0.7% (ish) loss.
Other popular FTSE all share fund trackers such as the HSBC, L&G and Fidelity trackers only exercise a semi-swinging policy.
As far as total cost (OCF + additional tracking difference) of FTSE all share trackers go, then the Vanguard (FTSE all share tracker) fund is a clear winner for anyone holding for (say) 3 years or more. The 3 years is to ensure that the effect of the dilution levy is relatively small. The additional tracking difference on the Vanguard fund is minus 0.08%.I came, I saw, I melted0
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