Unit Trust ISA vs Investment Trust ISA

Hitting

Are total annual management charges for an Investment Trust ISA less than a Unit Trust ISA?.....and generally how do they compare?

bowlhead99

Fees for both types vary but the management fee or ongoing charges forecast for an actively managed unit trust will be *broadly* similar to the same ratios on an investment trust. How much the manager wants to charge is up to them. With UTs for example the manager will charge a lot less if he is just following an index than if he is dealing with active decisions on lots of investee companies and bonds or properties.

Investment trusts (unless you are buying via a savings/investment plan directly with the fund manager) are bought and sold on the stock exchange during its operating hours. Your stockbroker will charge a fee for doing the trade and you'll also incur stamp duty of half a percent on the purchase cost (a one-off when buying any shares or additional shares, not something that's recurring annually on your whole balance). Sometimes the broker who runs your electronic account will have a minimum quarterly or annual fee just for providing the service, some do not.

Unit trusts and OEICs aren't traded on a market but orders for subscriptions and redemptions are made in advance to buy or sell at the next dealing point. To provide access to the platform on which they are held, platform providers usually have an annual fee which historically was percentage based, on the value of your fund investments, but there are an increasing number now with relatively nominal fees for ongoing admin and then charging per buy-or-sell transaction, resulting in an overall charge that's structured a bit more like the charge for dealing shares or ITs on an exchange.

If you are new to the game, investment trusts are a bit more complicated, for example the fact that they are traded on a market in real time so the buy or sell price can be influenced a lot more by market sentiment than an oeic or UT whose units are (usually) created or redeemed at close to the value of the underlying assets.

dunstonh

Hitting wrote: »

Are total annual management charges for an Investment Trust ISA less than a Unit Trust ISA?.....and generally how do they compare?

Impossible to answer as there will be ITs that are cheaper than UTs/OEICs and vice versa.

ITs have no FSCS protection, dealing costs, can trade at a premium/discount, can borrow (gearing) and are generally considered higher risk on a like for like basis then the UT/OEIC equivalent. Mainly due to the higher knowledge and understanding required and gearing.

Inexperienced investors typically would not go for ITs without significant reading and understanding taking place.

Hitting

My position is: I have a couple of ITs outside an ISA,which have performed reasonably well, and now I want to consider converting them to an ISA, by simply changing status of said ITs to an ISA or selling ITs and buying a UT based ISa with the proceeds!......I'm interested in knowing which will have greater running costs?

dunstonh

and now I want to consider converting them to an ISA, by simply changing status of said ITs to an ISA or selling ITs and buying a UT based ISa with the proceeds!.

You cant change the status. You have to sell them and rebuy them inside an ISA.

I'm interested in knowing which will have greater running costs?

Depends on what UTs you decide to compare with the IT. You tend to find the closest comparable ones nowadays see UT/OEICs slightly cheaper but mostly in the same ballpark but some ITs maybe cheaper.

ColdIron

You cannot convert your ITs to an ISA by 'by simply changing status' because an ISA is not a status. An ISA is a type account that attracts (mostly) no tax on the investments contained within it

It's going to involve a sale and purchase whatever you do regardless of whether you choose to buy, ITs or UTs/OEICs

As has been explained the 'running costs' will vary, there is no hard and fast rule

george4064

There is no definite answer to your question, as different platforms levy various charging structures resulting in different (higher/lower and calculated this way or that way) ultimate charges.

jimjames

Hitting wrote: »

Are total annual management charges for an Investment Trust ISA less than a Unit Trust ISA?.....and generally how do they compare?

An ISA is a wrapper. It can hold shares, ITs or UTs inside it so the question doesn't make sense. It's like asking if a car is faster than a bike.


Check the charges on the investments you want to compare and then you'll know. There isn't a simple yes or no answer.