HL Loyalty Bonus

TheShape

I've invested in the Blackrock Consensus 100 fund in my LISA at Hargreaves Lansdown.

HL offers an ongoing saving of 0.13% on this fund. Seems a good idea to invest in this over a fund with a higher ongoing charge such as VLS100 etc as I'm going to save on fees. But am I?

This saving is paid as a loyalty bonus so I now have a total of £0.75 cash in my account paid in three transactions in March (£0.10), April (£0.21) and May (0.44).

What is the use of this loyalty bonus? It says I can transfer it to my Capital account but I can't make a fund purchase for £0.75.

Also, why no bonus in June? Is the loyalty bonus not ongoing?

I am considering switching funds in my SIPP from VLS100 to Blackrock Consensus 100 so it would be useful to understand the fund discount before doing so.

Thanks in advance for any help/explaination.

Alexland

There may be a delay applying the bonuses to your account. It's not urgent so be patient.

https://www.hl.co.uk/investment-services/vantage-service/frequently-asked-questions#

New rules introduced by our regulator, the Financial Conduct Authority, mean that all loyalty bonuses earned on fund units purchased after 1 April 2014 must be reinvested back into further units. We cannot pay this money out to you and it cannot be used to cover fees.

You have three options for loyalty bonuses paid on fund units bought after 1 April 2014:

1) Automatically reinvest into your largest holding, subject to a minimum investment of £10.

2) Automatically reinvest into one of your existing fund holdings, subject to a minimum investment of £10.

3) Hold the loyalty bonus on your account and reinvest into a fund of your choice, subject to a minimum investment of £10.

You can amend your instruction for how loyalty bonuses are treated by going to the 'Cash' tab of the account where the units are held, and then the 'Income and loyalty bonus' section. Next, click 'More detail, options and how to deal' in the 'Loyalty bonus, balance and settings' box. Then click 'Options' and follow the onscreen instructions.

Alex

TheShape

Thanks Alexland,

I started digging around a little more and found the best place to see the loyalty Bonus is on the My accounts and dealing screen where I can click the Loyalty Bonus tab and see I have a pending Loyalty Balance of £1.14.

Not sure why there was no June payment.

It's going to take a little time to build up to the £10 minimum investment threshold.

Alexland

Ours are even smaller having recently switched LISA from Nutmeg. When it gets to £10 then I might open a can of Diet Coke to celebrate!

TheShape

I'm assuming the automatic re-investment would incur the automatic re-investment fee of 1% min £1 which is a bit steep on a £10 re-investment.

Better perhaps to top up the capital account periodically, add the loyalty bonus and invest that.

Alexland

I don't get the impression that they would charge as a dividend investment but maybe someone who has already seen it happen could comment. Alternatively you could drop them a message to ask? A.

londoninvestor

I've never used the automatic reinvestment but I reckon there will be no dealing charge for it - HL doesn't charge for any other fund buys and sells, whether they're ad hoc or regular investments.

ColdIron

TheShape wrote: »

Better perhaps to top up the capital account periodically, add the loyalty bonus and invest that.

They won't let you move the loyalty bonus to the capital account as you could withdraw it or use it for fees

Wildsound

I would just wait until the next time (assuming April next year) you top up the account, then just lump whatever cash you have earned on the loyalty bonus on to your fund purchase (e.g. £4k contribution, £9.50 loyalty bonus on cap account - buy £4,009.50 of the fund)

I doubt you will be crying if the market goes up and your sub £10 "dividend" wasn't reinvested and made you a few pence. On the flip side, if the market goes down, I doubt you will be partying that your "dividend" didn't lose you a few pence, although you may do what Alex does and buy yourself a diet coke (other terrible soft drinks are available)

TheShape

ColdIron wrote: »

They won't let you move the loyalty bonus to the capital account as you could withdraw it or use it for fees

You're right. I confused it with the options for pre 2014 loyalty bonus payments.

londoninvestor

Wildsound wrote: »

I would just wait until the next time (assuming April next year) you top up the account, then just lump whatever cash you have earned on the loyalty bonus on to your fund purchase (e.g. £4k contribution, £9.50 loyalty bonus on cap account - buy £4,009.50 of the fund)

They won't let you do that either - reinvesting the loyalty bonus needs to be done as a standalone transaction of at least £10. Of course, you could do that transaction on the same date as you make another investment, but that doesn't get you around the £10 minimum specifically for the loyalty bonus.