Paying fund fees in cash or stock/shares?

frankmassiebonsai

Hi,

I'm a newbie to this, is it worth leaving a small amount of cash on account with my fund platform (CSD)? Or does it not make any difference if they take their fees by selling a small amount of my shares etc?

To be honest, its only tiny amounts at the moment but I'm just interested whether there's a preference or not.

Thanks

bowlhead99

As a general rule it's best not to let firms take fees by disposing of your assets at their discretion because different assets have different rates of return and some of them may cost money to sell (or a large buy/sell spread) or have an admin fee involved for giving them the hassle.

With a CSD ISA if you go 'overdrawn' due to a custody fee exceeding available cash (eg £1 cash within the ISA to pay a £25 fee) they will let you pay the whole £25 fee off relatively quickly with a debit card, so that your former £1 balance is restored and you've paid for the charge out of pocket rather than out of the portfolio.

However if you leave it too long they will formally take the £1 out of the cash within the ISA leaving the £24 debt, and while you can still pay off the £24 by debit card you might not have the subscription capacity in that tax year to put the £1 back in to the cash part of your portfolio (e.g. if you've already used up your £15k ISA allowance for the year).

frankmassiebonsai

Thanks, that's really helpful.