Fundsmith - which one?

economic

ColdIron wrote: »

This might be viable if you are happy to only hold a Fundsmith product in your ISA. Any other investments will have to be held unwrapped. You could open another ISA next year for them but then you couldn't contribute any more to the Fundsmith one. Not an arrangement that would suit everyone I suggest

The higher OCF makes up for an overt platform fee, flat fee providers may work out to be cheaper. Many platforms will not charge entry or exit fees and Fundsmith does not charge a performance fee to anybody

my only S&S isa is with TD direct and i am yet to contribute this years allowance. I plan to use this year allowance in fundsmith.

TD charge a platform fee for funds of 0.3%. There are no buy or sell costs and i dont think there is a bid/ask spread either. however surely it makes sense to just buy directly with fundsmith? how does the isa work exactly if i go directly with fundsmith?

ColdIron

economic wrote: »

surely it makes sense to just buy directly with fundsmith?

Well that depends upon what works best for you and you circumstances. Price is not the only metric, but let's do the maths:

The I class at TD will cost you 0.95% + 0.3% = 1.25% or about £250 all in on £20,000 for a year. If they do allow you to purchase the T class at 1.05% + 0.3% I can't think of a good reason to do it. If you went to Fundsmith directly it would cost you £210 all in. You have to ask yourself whether that £40 of saving adequately compensates you for running multiple portfolios, the difficulty of rebalancing, the inconvenience of only being able to contribute new money to one or the other etc. Remember that the value of your portfolio will easily move up or down more than £200 on any one day

Is that £40 pa a deal breaker for you once you factor everything else in?

economic

ColdIron wrote: »

Well that depends upon what works best for you and you circumstances. Price is not the only metric, but let's do the maths:

The I class at TD will cost you 0.95% + 0.3% = 1.25% or about £250 all in on £20,000 for a year. If they do allow you to purchase the T class at 1.05% + 0.3% I can't think of a good reason to do it. If you went to Fundsmith directly it would cost you £210 all in. You have to ask yourself whether that £40 of saving adequately compensates you for running multiple portfolios, the difficulty of rebalancing, the inconvenience of only being able to contribute new money to one or the other etc. Remember that the value of your portfolio will easily move up or down more than £200 on any one day

Is that £40 pa a deal breaker for you once you factor everything else in?

ok understood. yeh i think i prefer to invest through TD in that case.

the question is though which one should i invest in - T or I? they are both offered. one has a lower annual charge but higher price and the other is the opposite.

ColdIron

economic wrote: »

the question is though which one should i invest in - T or I? they are both offered. one has a lower annual charge but higher price and the other is the opposite.

I don't know why TD offer the T class. Unless they waive their platform fee, which I very much doubt, go for the cheapest one. The price per unit is irrelevant to you

economic

ColdIron wrote: »

I don't know why TD offer the T class. Unless they waive their platform fee, which I very much doubt, go for the cheapest one. The price per unit is irrelevant to you

why is the price per unit irrelavant? the cheaper the unit the better no? more units per buck invested.

economic

the other thing i am thinking (and granted it maybe not for everyone) but to replicate the funds top 10 holdings myself by buying individually. does he discloase all the holdings? (in which case i may replicate all or chose to not have some i dont like).

i personally invest in single stocks as well which have done well - so i know what i am doing. the great benefit is that theres no platform fee, mgt fee and i have full control if i dont like a particular company. i get the benefit from having confidence at least in the ones fundsmith has chosen and i choose to own.

buying costs would be a small fraction of the first years annual charge. granted most of the stocks are foreign so i would pay a 1.5% conversion fee but this is easily covered within 2 years of owning vs owning the fund itself.

ColdIron

economic wrote: »

why is the price per unit irrelavant? the cheaper the unit the better no? more units per buck invested.

If I offered you a gallon of beer at £1.00 a pint or £0.50 per half pint would you go for the latter deal because there were more units involved?

economic

ColdIron wrote: »

If I offered you a gallon of beer at £1.00 a pint or £0.50 per half pint would you go for the latter deal because there were more units involved?

but i thought the units were the same/identical in terms of size and content?

badger09

ColdIron wrote: »

I don't know why TD offer the T class. Unless they waive their platform fee, which I very much doubt, go for the cheapest one. The price per unit is irrelevant to you

Apologies for hijacking, but IWEB apparently offer I R & T classes in both Inc & Acc versions, all in Sharedealing, ISA & SIPP accounts. No platform charge.

https://iwebfunds.webfg.com/

How does one decide which to buy?

ColdIron

economic wrote: »

but i thought the units were the same/identical in terms of size and content?

Why would they be? One has had more charges deducted from it than the other

If I offered you two classes of beer, one where I took one gulp out of your glass and another where I took two would you say that they would be identical once I was feeling a bit squiffy