What do the different fund class mean?

henryandmay

ColdIron wrote: »

Before the Retail Distribution Review in 2014 fund houses would pay the platform/advisor etc a commission which was reflected in the OCF (but not obviously). This is now outlawed and newer clean classes with a lower OCF were introduced and the platform/advisor must now make an explicit charge rather than the commission being hidden away in charges. The A class is the old one although the commission that would have been paid is returned to you as cash. The new I class is 'clean' as there is less jiggery pokery with commissions and rebates. The older dirty class is really only for people who had bought in before 2014 and for some reason haven't moved to the clean class. Sooner or later they may be removed from sale. You probably want as much of your money kept in the fund rather than receiving dribs and drabs as cash that you have to reinvest

Thanks, so if we take my initial example CLASS I and A; I assumed CLASS I is the clean version and one that if i was investing now, would invest in?

eskbanker

dunstonh wrote: »

Clean share classes are the default post 2013 version.

Superclean are not available on every platform. I beleive the two bigger platforms with the most superclean funds are Old Mutual Wealth (who were the first company to offer external funds in a single wrapper under the old Skandia brand) and Standard Life.

Some Super-Superclean have initial charges but even lower annual charge but that only makes them cheaper if you hold them for a certain period.

This is getting like tyres in Formula 1, how long until they introduce 'ultraclean' and 'hyperclean' to the naming convention....?

ColdIron

henryandmay wrote: »

Thanks, so if we take my initial example CLASS I and A; I assumed CLASS I is the clean version and one that if i was investing now, would invest in?

Yes

ColdIron wrote: »

The A class is the old pre-RDR version that HL call 'inclusive'. It has a higher OCF though this will be rebated to you. You want the newer 'clean' I class

With HL it's easy to tell the difference as they nearly always include the term 'inclusive' as part of the fund name of 'dirty' classes, usually best avoided

Edit: A word of warning. When selecting funds to buy, where HL display the funds in a drop down listbox they are ordered alphabetically under a heading of 'Unbundled Funds' (it's their word for clean) but where inclusive classes are available they list them in addition to, and below, the clean ones under a heading of 'Inclusive Funds', again alphabetically. It's very easy to scroll too fast, overshoot and end up selecting the wrong class, take care

DennisTenus

So confusing and unnecessarily complicated.

eskbanker

DennisTenus wrote: »

So confusing and unnecessarily complicated.

Indeed, quite hard to follow, arguably superhard, not just for beginners but even for those with intermediate experience

dunstonh

DennisTenus wrote: »

So confusing and unnecessarily complicated.

with over half of the top 10 platforms using the same software provider, if all of them had the funds at the same prices, what differentiator do you have? You just have an inefficient market that looks like a cartel.

It is messy but until someone thinks of a different solution, this is the best we have.

Oh, just to add to the confusion, if you didnt use a platform or an advice service, you are still allowed to buy retail share classes. Or if the distribution chain retails their own product, then they can still bundle.

t1redmonkey

I work for an investments company (albeit in more the admin side, rather than anything to do with the funds themselves), but even most of us don't understand the exact differences between the various share classes off the top of our heads, I think we have around 7 or 8 different ones at least.

But the main difference will be in the charges, they'll usually be different depending on the class (and the classes with the lowest charges will usually have a higher minimum investment than ones with higher charges).

If you can refer to the relevant fund fact sheets or Key Information Documents for the different classes, look at the charges and that should make things clearer.

jimjames

henryandmay wrote: »

So why would you choice one share class over another?

Go for the one with the lowest ongoing fees, probably shown as an OCF number like 0.5% or 0.2%