H&L "Creation fees" when fund switching

mroller

I am a bit confused here.
Do you mean there are special fees for switching but no fees if you sell and buy manually?

wombat42_2

mroller wrote: »

I am a bit confused here.
Do you mean there are special fees for switching but no fees if you sell and buy manually?

There seems to be "initial fees" for buying any unit trust with HL. That can either be as a result of a new investment or a switch from another HL unit trust.

oldfella

on fundsnetwork there is no creation fee for switching into an oeic - only applies to unit trusts

mroller

wombat42 wrote: »

There seems to be "initial fees" for buying any unit trust with HL. That can either be as a result of a new investment or a switch from another HL unit trust.

Thanks, it makes sense now.
I have noticed this before as well but only on UT. I queried this with HL then they said it's for dealing costs, stamp duty bla bla... (silly reasons really)

That's why I always try to buy Oeics whenever possible.

RayWolfe

Every UT has a creation price. It is not put on by H-L but by the fund manager.

EdInvestor

mroller wrote: »

I have noticed this before as well but only on UT. I queried this with HL then they said it's for dealing costs, stamp duty bla bla... (silly reasons really)

Not so silly when you add them up - they often double the AMC.

jimatko

The issue here is that Creation price is independent of the bid price.

Creation Price is the price at which the manager can create units, this is (Value of Assets + Stamp Duty + Broker costs

Bid Price will be (Value of Assets - Broker Costs).

There is no way for HL or anyone else to reduce purchase price below Creation but as you have found out there is a cost for this.

For OEICS costs can be added to the 'single pricing' of the units.

On top of that unit trust managers can widen the bid/offer spread depending on cash flows and other factors.

wombat42_2

Why are HL not up front about what these creation charges are? Everytime time i do a HL fund switch, the price of the unit trust I have switched into gets an immediate deduction of about 1%. Shouldnt i have been informed up front in advance of the switch exactly what these fees are ? I am reluctant to now do any more fund switching with HL as getting zaped by 1% everytime is a nuiscence.

I phoned up HL about this and they said they will write to me to give an example of what these charges are for one of my charges but heard nothing yet.

dunstonh

Perhaps that is where HL recover some of the charges to offset their discounts. If they are doing this on their pension as well, then it makes it more expensive than the other fund supermarkets as they dont discount their pension much.

RayWolfe

Wombat:
Read my message above; No.16