Aviva Pensions - Funds Hidden Charges?

McAhuna

Hi,
Is anyone able to advise on Aviva Pension Fund Charges?

I am aware that Aviva charge a platform fee of 0.4%.
I am also aware that individual funds then charge an additional fee, typically anything from 0.2% to 1.1%.

But is that it? Aviva say it is.
However, in the small print of some funds factsheet its seems to suggest there may be more, such as this wording from LF Lindsell Train UK Equity....

The ongoing charges are taken equally from the income and capital of the fund. It excludes portfolio transaction costs, except entry/exit charges paid by the fund when buying or selling units in other collective investment schemes. You may also be charged a dilution levy on entry to or exit

So are there more hidden costs, or is it simply Aviva platform charge + fund annual charge?
Any advice much appreciated.

dunstonh

I am aware that Aviva charge a platform fee of 0.4%.

it depends on who you use to set up the platform. It can be almost half that.

I am also aware that individual funds then charge an additional fee, typically anything from 0.2% to 1.1%.

It's actually a wider range. Around 0.05% to 1.5%

So are there more hidden costs, or is it simply Aviva platform charge + fund annual charge?

The OCF is the primary charge to be concerned about. The bulk of the charges are within that. (ignore AMC and TER). This doesnt include transaction charges (i.e. if the fund manager buys/sells holdings then they will have dealing costs). The EU came out with a new bloated and useless directive called MiFID II. It decided that there should be a measure to include the rest of the charges. That may sound like a reasonable idea. However, the mucked it up and transaction charges also include profit and loss from trades between booking and settlement. Most normal people would say that a measure of charges should be only charges and profit/loss shouldnt be shown as charges.

Transaction charges are an internal charge to the fund. You are not directly paying it. You cannot influence it in any way.

Most experienced investors are totally disregarding the Transaction Charges figure.

Pensions are exempt from MiFID II requirements. Although Unit Trust/OEICS are not. So, whilst Lindsell Train will declare a transaction charge in their documents, Aviva will not currently declare it on their documents.

McAhuna

dunstonh

Thank you very much for the detailed reply. It is enormously helpful to an inexperienced investor such as myself.

To check I have understood you correctly......So when Lindsell quote 0.7% as 'ongoing charge' for their fund, that is what I really should focus on. Based on what you are advising, I can effectively ignore the other small print 'charges' I mentioned in my opening post as not relevant to me? If I have understood you correctly, Lindsell are only mentioning them due to them not being exempt from MiFID II requirements. Would this last point explain why some funds (such as Aviva Investors Multi-asset Fund), do not mention the small print charges like 'portfolio transaction charges' and 'dillution levys'?

A follow-on question to the above. I was reading 'Investor's Chronicle' (08/02/19 edition) which advised to not hold too many funds as you will pay more "paying a fee for each fund and maybe trading charges when you add an investment"
But I don't understand how that can be true for Aviva if I am simply paying a platform fee % + a ongoing charge % for each fund? Surely it doesn't matter how many funds you have in this case?

I set up the Aviva pension myself and am paying a 0.4% platform fee. I am guessing that IFAs get a reduced rate? Oh well, too late now!

Thanks again for any advice you can give.

dunstonh

So when Lindsell quote 0.7% as 'ongoing charge' for their fund, that is what I really should focus on

Yes.

I can effectively ignore the other small print 'charges' I mentioned in my opening post as not relevant to me?

From a regulatory point of view, I shouldn't say you should ignore it as its an EU directive that requires it to be given. However, the figures are largely garbage and do not add value and are not a quality measure.

If I have understood you correctly, Lindsell are only mentioning them due to them not being exempt from MiFID II requirements. Would this last point explain why some funds (such as Aviva Investors Multi-asset Fund), do not mention the small print charges like 'portfolio transaction charges' and 'dillution levys'?

Dilution levies are normally disclosed but only when they exist. Most funds dont have them.

I was reading 'Investor's Chronicle' (08/02/19 edition) which advised to not hold too many funds as you will pay more "paying a fee for each fund and maybe trading charges when you add an investment"
But I don't understand how that can be true for Aviva if I am simply paying a platform fee % + a ongoing charge % for each fund? Surely it doesn't matter how many funds you have in this case?

You are correct. If the IC said that without context then they are wrong. Someone holding shares, ETFs or ITs would suffer dealing charges on purchases and sales. If you hold UT/OEICs then there is normally no dealing costs (certainly not on Aviva but a small handful of platforms will make charges).

I set up the Aviva pension myself and am paying a 0.4% platform fee. I am guessing that IFAs get a reduced rate? Oh well, too late now!

We do. I just set one up today at 0.21%. However, if you used an IFA you would have paid an adviser charge. So, swings and roundabouts.

McAhuna

Dear dunstonh,

That is fantastically helpful!

I can't thank you enough.