Q..Converting HL funds..?

C_Mababejive

Hi all,,

I have a number of funds within a HL NISA.

I recently hit the "convert to new fund" button and they sent me a list of new fund types that my existing funds will be converted into.

Im just wondering whether it would be better to sellout of all or existing funds and make my own choices or just let the automatic conversion go ahead?

C_Mababejive

bump..

I guess im wondering whether it is wise to let the platform decide which funds to convert to. Maybe they are not the best equivalents? Maybe there are vested interests??

Linton

They will convert to another class of exactly the same fund - ie you will continue to be invested in exactly the same fund as far as the investments are concerned, but with different charging.

So I dont see any risk in letting the automatic process do what it is meant to do.

bowlhead99

Generally when you look up a fund there is only one 'bundled' and 'unbundled' class that they offer (I'm not actually a customer but was looking at this when setting up the portfolio for a family member).

Obviously within the 'unbundled' you get the choice of INC or ACC and I presume they will preserve those preferences when you are converting from the old to the new, if the same type exists unbundled.

If they've already given you a list of all the types they will convert to, you can look up the fund name on their site and check it is indeed the lowest priced class that they offer. for that fund. I wouldn't expect too much in the way of vested interests and subterfuge as they are offering this as a standard function to everyone and if it was underhand everyone would be here complaining about it...

Or another way to do it would be to look up the fund at somewhere like http://www.trustnet.com where you can easily see the A class and I class and R class and Z class and see what has the lowest % Ongoing Charges Forecast and check that's the one you've been given.

Doing it manually means you are likely to be out of the market for longer once you have got the cash back and then re-ordered the fund. The advantage of doing that would be you could take the opportunity to re-balance your cash between the various funds you hold, in the proportions you really want, which may not be quite the same as they were when you started out as they will have grown or shrunk at different rates. So you may value that opportunity and perhaps even buy a different fund entirely while you're at it (the relative 'discounts' that they offer on some funds may be slightly different to what they were before compared to rival funds, now there's been a restructure of pricing).

Also if you are all in ACC funds you could make sure you move a few to INC if you want to have a bit of spare cash lying around to pay the explicit fees that they now charge you for the platform every so often, which might not have been a worry before.

So, you might benefit from getting all the cash back, taking stock of your situation and setting it all up again. But you would want to plan it all out in advance to minimise time out of the market - which could be costly or advantageous depending on what the market does in your absence but we generally like to think that funds go up all the time so you don't really want to come out at bid price, have the market go up without you, and buy back in at a higher offer price - that could be expensive!