Why are some ISA investments not available with some brokers?

gadgetmind

Porcupine wrote: »

One route is any platform that allows you to buy shares, because then by definition investment trusts are available.

Not necessarily.

For instance, on Best Invest, not all ETFs are available, but they are jolly good about adding anything you want that isn't on their current list.

I've also found FTSE listed preference shares not available on Hargreaves Lansdown (unless I pay them £75 to get their call centre wallah to place the trade) yet Halifax share dealing will happily trade them online.

HL also let you trade ORB bonds, and some gilts, which many DIY platforms don't, but they won't touch non-ORB senior bonds, so you need another broker for those.

I'm sure it will all settle down, but it's currently a real mishmash.

EdGasket

Whenever there is a share or fund that I believe is ISA eligible but does not appear as an option in a S&S dealing screen, I email the broker and ask them to add it or explain why it is prohibited. In every case (mostly ETF's but also one share) they have added the share/fund to the list of eligible ISA investments. I just think their lists are incomplete sometimes.

Porcupine

gadgetmind wrote: »

Not necessarily.
...
I'm sure it will all settle down, but it's currently a real mishmash.

ETFs and preference shares are a slightly different thing, of course, but my point was that investment trusts are companies listed on the LSE, many of them in the FTSE350. So anyone who allows you share dealing should give access to those.

Outside that, it gets more complicated. eg lots of ETFs and some funds are domiciled in Ireland or Luxembourg. Is it less likely that these will be available? iWeb for instance has Aberdeen's funds listed in London but not in Luxembourg - which is confusing because it can be quite difficult to tell them apart at times. I don't know if currency conversion complicates things too (some of those funds are in USD or EUR or JPY or whatever).

Thanks for the tip about asking for additions, I'll remember that. Though I suspect you might have a harder job to add a complete fund house they don't already carry.

rdtrdt

EdGasket wrote: »

Whenever there is a share or fund that I believe is ISA eligible but does not appear as an option in a S&S dealing screen, I email the broker and ask them to add it or explain why it is prohibited. In every case (mostly ETF's but also one share) they have added the share/fund to the list of eligible ISA investments. I just think their lists are incomplete sometimes.

This has generally, but not always, been my own experience.

IWEB seems to have made an over zealous interpretation of RDR. The result is that it's supposedly not offering any funds that still have provision for an initial charge to be made by the fund manager, even if (post-RDR) no such initial charge is ever actually imposed by the fund manager.

For example, prior to 6/4/14 (ie. new RDR rules), Lindsell Train Global Equity B class was available to buy on IWEB. From 6/4/14 onwards, this ability was removed. If you tee up a Buy trade for this fund on IWEB's dealing screen you'll see the message: "Following changes to FCA regulations, new investment in this share class is unavailable. Please check if there is an alternative share class in this fund.". ie. IWEB is suggesting you buy the clean class.

However, as far as Lindsell Train is concerned, the B class is the standard clean share class of this fund. The problem is that, because the B class was created prior to RDR, and has the provision for an initial charge [see the KIID here: http://documents.financialexpress.net/Literature/10847963.pdf ], IWEB assumes this means a charge will be imposed, and therefore assumes it's non-RDR compliant and thus refuses to offer the ability to buy the fund.

Lindsell Train says no investor in Lindsell Train Global Equity B class has ever had an initial charge imposed and no charge will be imposed. Other platforms, such as A J Bell and Charles Stanley offer the B class of this fund for purchase without any problems and appear in no doubt that its RDR-compliant. Lindsell Train could constitute a new squeaky clean class that removed the B class's initial charge provision, but this would cost money to do, and since all the other brokers don't have a problem with the B class, it would not be cost effective to do that solely to placate IWEB.

I presume there are other funds that fail IWEB's self-imposed squeaky clean test and so are unavailable at IWEB while remaining available everywhere else.

Which is a shame, as IWEB is the cheapest platform to hold funds.

Chickereeeee

I dont think so (re Lindsell Train) as I have seen other funds that have non-zero initial charge in the KIID (zero in the market onfo page) but ARE on iWeb.

I don't think an initial charge makes a fund 'unclean' anyway, does it?

C

Edit - I asked about the LT UK Equity fund, which they also said was dirty. I explianed that I had bought it only last week on the Youinvest platform (A J Bell, as is iWeb) and they said they would check and add it.

rdtrdt

Chickereeeee wrote: »

I dont think so (re Lindsell Train) as I have seen other funds that have non-zero initial charge in the KIID (zero in the market onfo page) but ARE on iWeb.

I don't think an initial charge makes a fund 'unclean' anyway, does it?

C

Edit - I asked about the LT UK Equity fund, which they also said was dirty. I explianed that I had bought it only last week on the Youinvest platform (A J Bell, as is iWeb) and they said they would check and add it.

I had a 5 month discussion with IWEB last year re its decision to classify LT Global Equity as 'dirty'. This also involved LT staff themselves (speaking to both Cofunds and to IWEB), in an attempt to get to the bottom of this and have IWEB reconsider its decision.

The effort was concluded when I finally had a detailed conversation with a back-office compliance type staff member at IWEB, who confirmed that IWEB was applying eligibility criteria for funds beyond that required for RDR compliance. LT Global Equity did not meet that criteria, hence they chose not to offer it. NB speaking to back office staff at IWEB is very difficult; all communication is channeled through front office staff; this appeared to be why it took 5 months of going around in circles before I could speak to an IWEB organ grinder. It's little comfort that LT staff faced exactly the same problem when they tried to talk to IWEB.

Per your reference to LT UK Equity, I also highlighted to LT staff last year during my discussions with them that, April 6 onwards, IWEB appeared to have also excluded LT UK Equity (I didn't pursue the specifics of this, since LT UK wasn't a fund I was seeking to purchase at that time). If it's still excluded, I assume it would be for the same reason as LT Global's exclusion.

I worked around the problem by buying LT GLobal on another platform. If IWEB was to change its over zealous stance, I'd consider moving this holding to IWEB, as it would be cheaper to hold it there. This holding will be added to over the years ahead, so there would be transaction fees generated, but IWEB has excluded itself unfortunately.

Best of luck with getting IWEB to add the UK Equity fund. If you succeed, ask them to add the Global Equity fund too! Maybe the policy brickwall I bumped up against has changed or will in the future, as it seems a bit bizarre to me and out of step with other brokers!