Lindsell Train Global Equity

Trinityx

Hello,
I would like some help to understand the difference between the Income and Accumulation version of this fund. I am looking at the Class D on Hargreaves Landsdown.

Now, I understand that with an income fund, the dividends are paid to me. I understand that with an accumulation fund, the dividends get reinvested but the growth of the fund is also based on the growth of the share price.

However the income fund seems to be doing better, so what stops me from going for the income fund and reinvest the dividends myself?

Is there a disadvantage to doing that?

soulsaver

Check if the reported fund performance is stated as 'income reinvested'.
Is the difference significant? You'll possibly incur charges to reinvest yourself.

AnotherJoe

I'm not seeing an Acc for for this on HL.

Sally57

I hold the Class B share in this fund with Fidelity.

What is the main difference between the Fidelity B Class and the HL D Class?

dunstonh

Sally57 wrote: »

I hold the Class B share in this fund with Fidelity.

What is the main difference between the Fidelity B Class and the HL D Class?

Class D has an OCF of 0.57%
Class B has an OCF of 0.77%
Class A has an OCF of 1.27% (no longer available unless direct or with rebates)
Class C is in USD rather than GBP. It has an OCF of 0.77%

HL is showing the Class D version as the main unit but also lists the old class A income units. I suspect that is where the op is making the mistake. Although HL is not showing an Acc version. Nor does FE.

Sally57

dunstonh wrote: »

Class D has an OCF of 0.57%
Class B has an OCF of 0.77%
Class A has an OCF of 1.27% (no longer available unless direct or with rebates)
Class C is in USD rather than GBP. It has an OCF of 0.77%

HL is showing the Class D version as the main unit but also lists the old class A income units. I suspect that is where the op is making the mistake. Although HL is not showing an Acc version. Nor does FE.

Has the Class D a lower OCF because HL obtain a discount for this fund from Lindsell Train?

If so, and the B & D share classes are identical apart from the OCF's then its best to invest through HL rather than Fidelity for this fund?

ColdIron

I think the OP might be trying to compare the CF Lindsell Train Global Equity (Inc only) and one of the CF Lindsell Train UK Equity funds (Acc and Inc)

If you look at the total return, the the global income fund indeed seems to be doing better but that's hardly a surprise given recent events. That and it's a completely different fund

Rollinghome

Sally57 wrote: »

Has the Class D a lower OCF because HL obtain a discount for this fund from Lindsell Train?

If so, and the B & D share classes are identical apart from the OCF's then its best to invest through HL rather than Fidelity for this fund?

It's a class with a lower OCF, rather than a discount, that LT will agree to make available to certain platforms. There may be an agreement on marketing or on the volume of sales.

It would be cheaper to buy on HL rather than Fidelity if their platform fees were the same. But accessing the Fidelity platform via Cavendish costs 0.25% whereas HL will normally cost 0.45% (plus other charges not made by Fidelity). So it works out the same. Presumably though most people wouldn't open an account on the basis of charges for a single fund.

Trinityx

So the Class D is lower because HL gets a discount. That is what HL states anyway. HL says the ongoing charge for the UK fund is 0.72% minus an HL discount of 0.20%. That brings the charge down to 0.52%.

Thanks for pointing out the fact that I was actually looking at two different funds though.

So here is the question: why would the fact that me reinvesting the dividends cost me more? I can't see any charges in regards to buying fund units, I only get a flat fee from HL of 0.45%. And HL only charges me if I tell them to automatically reinvest.

ColdIron

Trinityx wrote: »

So the Class D is lower because HL gets a discount. That is what HL states anyway. HL says the ongoing charge for the UK fund is 0.72% minus an HL discount of 0.20%. That brings the charge down to 0.52%.

HL are being little disingenuous here and are presenting themselves in the best possible light

Thanks for pointing out the fact that I was actually looking at two different funds though.

You're welcome

So here is the question: why would the fact that me reinvesting the dividends cost me more? I can't see any charges in regards to buying fund units, I only get a flat fee from HL of 0.45%.

The total return of an Acc or Inc fund will be the same. If you want to have the dividends reinvested in the same fund you would usually choose the Acc unit class. You can't do this with the LT global fund. If you ask HL to automatically reinvest dividends from the Inc fund then they make a small charge for this

There is a charge for income reinvestment of 1% of the value of the trade, subject to a minimum charge of £1 and a maximum of £10 (income reinvested once it reaches a minimum of £10 per holding, or your chosen level).

And HL only charges me if I tell them to automatically reinvest.

Are you asking HL to automatically reinvest?

bowlhead99

Trinityx wrote: »

.

So here is the question: why would the fact that me reinvesting the dividends cost me more? I can't see any charges in regards to buying fund units, I only get a flat fee from HL of 0.45%. And HL only charges me if I tell them to automatically reinvest.

The general comment that getting dividends which you have to manually reinvest may cost you more money than having a solution which never sends you any dividends, is something that can be applied to many investments on many fund platforms or stockbrokers. A number of charging models make you pay for each transaction that the platform provider carries out for you. And not everyone is familiar with the charging models of all the various providers that you might happen to use.

And even without the explicit charge for a re-investment of dividend received, it's generally true to say that having money that's been freed up from an investment by way of dividend and needs to be manually re- invested, so is meanwhile sitting in cash, is a slight drag on returns because money in the cash account generally earns less of a return than money in an investment fund.

In your particular case, HL do not charge for extra subscriptions into an open ended fund like the Lindsell Train ones. The fee they charge to automatically re invest is usually for holdings which are traded on a stock exchange like a share in an individual listed company or in an investment trust. In those cases they will pool your money with other people who want to reinvest on the same day and charge a fixed discounted price when their broker buys more shares with all the customers' cash. But for open ended funds they don't charge to reinvest manually anyway.

The reason they can afford to not charge you when you want to do a fund sale or purchase or reinvest your dividends into a fund is because their fee structure lets them take almost half a percent of your asset value off you every single year, which is more than enough from the people with large accounts - as they're making money hand over fist from those people, it subsidises the smaller investors where they might have to so lots of work for little reward.