Investment Noob - Cavendish/Fund Questions

Dird

I've been reading Investopedia & looking at some of the funds on Cavendish & have built up some questions I was hoping some on here may have answers/insights about.

1) A lot/all the funds have a monthly £50 minimum...what if you don't pay it? Or is it just saying you can't ever put in less than £50 in one transaction?
2) AMC - is it taken monthly pro-rota or an annual charge on a specific date?
3) I assume 0.2% service fee = paid when buying into a fund? 0.05% ongoing charge = monthly?
4) If I sell stake in a fund then put the money in a different fund do I have to pay the 0.2% service fee again?
5) How long would it take to get some of the money back out after buying into a fund? Or get it back to invest in a new fund (presumably 2-3 days less than cash in bank?)
6) Does people paying in affect the advertised growth%? e.g. £100m fund is otherwise break even on performance but new/existing people add another £50m to the pot over the year...would they class this as 50% growth?
7) basic tax payer: s&s isa or not? If ISA maxed out then portfolio grows 5%, what happens to that 5%? Or is your S&S ISA effectively £0 as it's all invested in funds/bonds?
8) Many on here seem anti-active because of the fees but if an active fee had 8% gains and 1% TER vs a passive at 4% with 0.1% TER then the active wins that year right?
9) Why is the 3-year Mean Return so tiny compared to 3 year delta/cumulative?
10) Why are some TERs massively different to the AMC (e.g. 0.4% -> 0.8%)? Is there some hidden fees not displayed?

Thanks for any insight :shocked: now to read a couple chapters of Investments 9th Ed :f

Linton

I know nothing about Cavendish in particular but.....

2) The money will be taken as needed to run the fund. The published value is an average and can vary over time.

6) No - the published growth figures are what you would have got had you invested in the fund.

7) Once money is in an ISA, investment gains remain protected in the ISA.

8) Yes - what you as an investor are interested in is net growth. In your example the Active fund wins by 4%. Note that published gains take into account fund charges.

9) Mean return is per year - cumulative figure is total over the period.

bigfreddiel

I think you need to do a lot more research, especially on how to use web based apps.

Why do I say this?

Well you've posted the same query three times, so buying funds or shares with a web app may prove a total disaster, you could end up with three times what you intended! Good luck anyway

fj

dunstonh

1) A lot/all the funds have a monthly £50 minimum...what if you don't pay it? Or is it just saying you can't ever put in less than £50 in one transaction?

Depends on the platform. Some are £50 per fund. Some £50 total. Although if you are paying just £50 then you would be daft to use anything other than one fund.

3) I assume 0.2% service fee = paid when buying into a fund? 0.05% ongoing charge = monthly?

Most will take it from the cash account on a given date in the month. If you dont have anything in the cash account they will usually sell units.

) If I sell stake in a fund then put the money in a different fund do I have to pay the 0.2% service fee again?

The charge has nothing to do with the funds you hold. Its the total value.

5) How long would it take to get some of the money back out after buying into a fund? Or get it back to invest in a new fund (presumably 2-3 days less than cash in bank?)

About 15 days. Most funds are T+2. Some T+3. Plus, you may deal later in the day and have to wait to next day to trade. So, T+3 to buy, T+3 to sell and then 3 days to get to bank account.

10) Why are some TERs massively different to the AMC (e.g. 0.4% -> 0.8%)? Is there some hidden fees not displayed?

Some assets are more expensive than others. Some funds trade more than others. Some fund houses run more efficiently than others. Some fund houses decide to run at a different profit margin to others.

Why do washing machines cost a different amount when they all wash clothes. These things are not all equal.

Dird

bigfreddiel wrote: »

Well you've posted the same query three times

lol it kept asking me to enter Poll information (must have clicked the textbox by mistake) so I clicked back...didn't realise it had posted despite the lack of poll info being added

dunstonh wrote: »

Some assets are more expensive than others. Some funds trade more than others. Some fund houses run more efficiently than others. Some fund houses decide to run at a different profit margin to others.

Oh OK so it's extra fees you don't see such as charges to buy the stocks and kickbacks for the good info?

george4064

1) A lot/all the funds have a monthly £50 minimum...what if you don't pay it? Or is it just saying you can't ever put in less than £50 in one transaction?

Its saying you cant put in less than £50 in one transaction.

2) AMC - is it taken monthly pro-rota or an annual charge on a specific date?

For a fund, you will encounter 2 types of AMCs. First one is the fund managers AMC (L&G, BlackRock etc.), this is taken from the fund price on a daily basis. The other AMC is the platforms fee, this can be a fixed fee or calculated as a % of your ISA value. This fee is invoiced and collected from your account depending in what has been setup on your account with the platform provider.

3) I assume 0.2% service fee = paid when buying into a fund? 0.05% ongoing charge = monthly?

I dont know what you mean by this..

4) If I sell stake in a fund then put the money in a different fund do I have to pay the 0.2% service fee again?

Again, not sure what you mean...

5) How long would it take to get some of the money back out after buying into a fund? Or get it back to invest in a new fund (presumably 2-3 days less than cash in bank?)

It depends if you are withdrawing the money out of the ISA or if youre keeping it as cash or reinvesting, if paying out you will have to wait about 2 to 3 working days after the fund has traded before you can withdraw. If you are reinvesting, the money will be ready as soon as the trade is done (usually the afternoon on the next working day you submitted the trade, on the same day the fund dealt)

6) Does people paying in affect the advertised growth%? e.g. £100m fund is otherwise break even on performance but new/existing people add another £50m to the pot over the year...would they class this as 50% growth?

Nope, funds are called 'open ended' which means that new units are created when someone buys into the fund, and equally units are cancelled when someone sells units. This mechanism means that the actual price and therefore performance of the fund is purely based on the performance of the underlying holdings and the fund managers AMC (remember this affects the fund price).

7) basic tax payer: s&s isa or not? If ISA maxed out then portfolio grows 5%, what happens to that 5%? Or is your S&S ISA effectively £0 as it's all invested in funds/bonds?

Always utilise your S&S ISA as much as you can, you'll thank yourself later.

8) Many on here seem anti-active because of the fees but if an active fee had 8% gains and 1% TER vs a passive at 4% with 0.1% TER then the active wins that year right?

Thats correct. There are valid arguments for both sides, nothing wrong with going for a mixture of the two.

9) Why is the 3-year Mean Return so tiny compared to 3 year delta/cumulative?

Often fund performance is annualised, which pretty much tells you th average yearly performance. As a basic example, if a fund goes up 6% a year for 3 years running, ita cumulative 3 yr performance is 18% and its 3 yr annualised performance is 6%.

10) Why are some TERs massively different to the AMC (e.g. 0.4% -> 0.8%)? Is there some hidden fees not displayed?

Some funds have performance fees, check the fund's factsheet and KIID for more information. Also, some platforms show the TER including their platform AMC, again you need to check this.

Dird

george4064 wrote: »

3) I assume 0.2% service fee = paid when buying into a fund? 0.05% ongoing charge = monthly?
I dont know what you mean by this..

It's the platform fees you mentioned in 2)

george4064 wrote: »

9) Why is the 3-year Mean Return so tiny compared to 3 year delta/cumulative?
Often fund performance is annualised, which pretty much tells you th average yearly performance. As a basic example, if a fund goes up 6% a year for 3 years running, ita cumulative 3 yr performance is 18% and its 3 yr annualised performance is 6%.

But one example on Cavendish shows a 3 year cumulative figure of 73.81% (understandable) but then a 3 year Benchmark delta of 15.85% and a 3-year Mean Return of 1.616%

bigfreddiel

Dird wrote: »

lol it kept asking me to enter Poll information (must have clicked the textbox by mistake) so I clicked back...didn't realise it had posted despite the lack of poll info being added

Well just be very careful when you start using your chosen investment platform.

Good luck. Fj

Linton

Dird wrote: »

It's the platform fees you mentioned in 2)


But one example on Cavendish shows a 3 year cumulative figure of 73.81% (understandable) but then a 3 year Benchmark delta of 15.85% and a 3-year Mean Return of 1.616%

Are these specific funds or general pupose examples? Please supply a link.

Dird

Linton wrote: »

Are these specific funds or general pupose examples? Please supply a link.

Specific funds: http://www.cavendishonline.co.uk/investments/fund-research/
If you select any portfolio & click performance you'll see the 3 differing 3 year values

Linton

I have no idea what the 3-year mean return means. Suggest you ask them.

The rest seems pretty clear. The cumulative and annual figures tie in, and the benchmark figures refers to the average cumulative performance of the particular sector the fund operates in, or an index that the fund tries to beat.