Hargreaves Lansdown Charges for Funds?

MoneyBob

At the time of writing, Hargreaves Lansdown charge 0.45% capped at £200* per year across all holdings in an account for:

"Shares, investment trusts, ETFs, gilts & bonds"

But they charge 0.45% without cap for:

"funds"

Is an ETF not a fund? I'm sure I'm missing something obvious- go easy on me - how do I tell which of the listed investment options are which?

* Which means a pension pot valued at any value over £44.4k consisting of only those listed items costs the same £200.

dunstonh

Is an ETF not a fund?

Its a direct holding quoted on the london stock exchange. So, its not a fund. It may look and smell like one in places but there are certain important differences in addition to how they are traded.

EdGasket

I'd say it most definitely IS a fund; that is what the F in ETF stands for. The fact that Hargreaves Lansdowne makes some distinction themselves so they can charge more on other types of fund does not mean that an ETF is not a fund.

EdGasket

INVESTOPEDIA EXPLAINS 'Exchange-Traded Fund (ETF)'

An ETF is a type of fund which owns the underlying assets (shares of stock, bonds, oil futures, gold bars, foreign currency, etc.) and divides ownership of those assets into shares. The actual investment vehicle structure (such as a corporation or investment trust) will vary by country, and within one country there can be multiple structures that co-exist. Shareholders do not directly own or have any direct claim to the underlying investments in the fund; rather they indirectly own these assets.

Read more: http://www.investopedia.com/terms/e/etf.asp#ixzz3dtf4E5YI
Follow us: @Investopedia on Twitter

dunstonh

Read more: http://www.investopedia.com/terms/e/...#ixzz3dtf4E5YI

Using that link, it confirms that: "An ETF, or exchange traded fund, is a marketable security". Investment funds (mutual funds) are not.

Investment funds or funds is a generic term to cover various types of mutual funds (borrowing the US phrase which has been creeping into the UK for some years). I imagine that HL have chosen to shorten it to funds on their webpage to use some common sense rather than to string it out by listing all the different types that make up "mutual funds".

All that being said, there is absolutely no reason why HL charges differently for the assets. I believe they may be unique in that respect (if there are others, then its rare). I suspect it just ended up that way for them as they had two previous models and have tried to retain that whereas most other platforms dont differentiate in overall platform charge (with dealing charges being the only difference)

MoneyBob

Thanks all.

So it turns out almost all of my investment selections are 'funds' in HL's meaning of the phrase and so I'm currently, always going to be paying out 0.45% on top of the fund fees. That's going to add up over the 20 years or so I have remaining before I draw on my pension.

Is there another platform I should be looking at instead perhaps?

bigadaj

MoneyBob wrote: »

Thanks all.

So it turns out almost all of my investment selections are 'funds' in HL's meaning of the phrase and so I'm currently, always going to be paying out 0.45% on top of the fund fees. That's going to add up over the 20 years or so I have remaining before I draw on my pension.

Is there another platform I should be looking at instead perhaps?

Yes, compare fundplatforms.com is a site you could have a look at,also monevator.

Choice is between percentage based charging, which is down to 0.25% in my experience, or fixed fee. Simplistic assessment is that swap over point in value comes in a round portfolio value of circa £30-40k.

MoneyBob

Do the comparison sites take into account that Hargreaves Lansdown (and presumably some but not all others) have negotiated both fund buy-in discounts, and ongoing discounts?

bigadaj

MoneyBob wrote: »

Do the comparison sites take into account that Hargreaves Lansdown (and presumably some but not all others) have negotiated both fund buy-in discounts, and ongoing discounts?

It's a bit unclear. HLs claim to have negotiated discounts seems to be not as comprehensive as they claim, it appears they have been successful in certain cases but not as many as they'd like you to think.

We're well past the time when you should be paying an initial charge on any funds; this excludes things like vanguards dilution levy as this upfront charge goes into the fund, as it's designed to stop people timing the market and trading in and out, and is typically only around 0.1% in any case.

dunstonh

Do the comparison sites take into account that Hargreaves Lansdown (and presumably some but not all others) have negotiated both fund buy-in discounts, and ongoing discounts?

Most platforms have superclean funds. Although the funds available in superclean form vary across the platforms. Others may have some that HL have not got. Remember that HL are not the biggest.

Also, remember that HL are one of the more expensive fund platforms. Getting near double the cost compared to some others available. Superclean with them is effectively subsidising their more expensive platform charges.

naedanger

dunstonh wrote: »

Also, remember that HL are one of the more expensive fund platforms. Getting near double the cost compared to some others available.

Can it not be much, much more than double the cost of some other platforms, e.g. for those with substantial investments in unit trusts?