Investment Platform Charges

mgarl10024

Hi all,

Just after a sanity check.

The other half has a small SIPP (~34k). The size means that percentage based rather than flat fee works out best. They're also just holding a simple common global tracker and unlikely to add more or trade - so the trading fees are irrelevant.

They're currently with HL and I'd always considered them expensive.
I spotted they were charging 0.45% compared with 0.25% for some other brokers, so savings of 0.20% to be made.

However, I then noticed that their SIPP contains Class I shares of the tracker - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-consensus-100-i-accumulation which seem rare as all the discount brokers have Class D.
I think this means that HL have negotiated a discount of 0.13% from the fund provider (which comes back as a "loyalty bonus" and is auto-reinvested once big enough).

So, I'm assuming that the comparison is:
0.25% (discount broker fee) + 0.24% (standard fund manager fee) = 0.49%
against HL of
0.45% (HL fee) + 0.10 (0.23-0.13) (discounted fund manager fee) = 0.55%.

Am I correct? If so, given the size of the SIPP, it'd take a while to save the exit fees alone if switching away...

Alexland

Yes if they hold a discounted fund such as Consensus 100 (as we do in our HL LISAs) then it helps make up for the more expensive platform fee.

dunstonh

However, I then noticed that their SIPP contains Class I shares of the tracker - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-consensus-100-i-accumulation which seem rare as all the discount brokers have Class D.

I cant speak for the DIY platforms but you tend to find Blackrock have issued superclean to most of the big ones on the advice side. The problem is that HL dominates the DIY market. There needs to be more consolidation on the DIY side to put pressure on their pricing.

mgarl10024

Thanks Alexland for confirming my thoughts.

Thanks also Dunstonh. The classes confuse me. From reading http://mutualfunds.com/education/what-are-share-classes/ which could be US centric, I understood that D were 'no load' and I were for big investors. Should I read I as "super-clean"? I've no idea how I've ended up with I - I guess it depends on the size of the broker rather than the individual investor, and HL are so big they can access I, but the other discount brokers are too small and so can only offer D? Should I care which I get?
Thanks.

dunstonh

Alphabet share classes are not consistent across fund houses. So, a class D maybe clean with one provider but superclean or retail with another. You need to look at each fund house individually.

but the other discount brokers are too small and so can only offer D?

There is no such thing as a discount broker following the unbundling of fund charges.

Alexland

mgarl10024 wrote: »

Should I care which I get?

Get the one that gives you the lowest cost of ownership across your combined fund manager and platform fees which might be different depending on the wrapper type and your contribution pattern.

Alex

A_T

To be pedantic Consensus 100 is not a tracker. It is a collection of trackers.

The factsheet and KID from Blackrock say the fee is 0.63%. I know HL say they discount it to 0.10% but I would prefer to see some documentation from the fund provider to that effect. For instance their discounted Legal & General International Index Trust have a factsheet and KID from L&G that show the discount.

Alexland

The KID is showing the expensive A class OCF whereas the D and I class OCFs are 0.24% on the Blackrock website (or the I class is 0.23% on the HL website).

https://www.blackrock.com/uk/intermediaries/products/260985/blackrock-consensus-100-fund-i-accum-class-fund

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-consensus-100-i-accumulation

The evidence that the further discount is being applied on the I class is the regular cash bonus I see from Blackrock in my HL loyalty account. Once it gets to £10 then HL will then reinvest the cash into more fund units.

Alex

A_T

If I was going to use just one equity fund in HL with the object to keep charges as low as possible I would use L&G International Index at 0.08%.

Alexland

A_T wrote: »

If I was going to use just one equity fund in HL with the object to keep charges as low as possible I would use L&G International Index at 0.08%.

I figured for an extra 0.02% that I would prefer the 46% US exposure in the Blackrock fund over the 60% US exposure in the L&G fund.

Alex

ColdIron

A_T wrote: »

If I was going to use just one equity fund in HL with the object to keep charges as low as possible I would use L&G International Index at 0.08%.

You would need to reconcile yourself to having no UK exposure at all as it tracks the FTSE World (ex UK) Index