HSBC Stocks & Shares Tracker ISA - Are fees too high?

weaver33

Hi everyone,

Can one of you knowledgeable people help explain the fees I am currently being charged by HSBC for my Account Type:

Investment Funds ISA HSBC FTSE 250 Index Fund C (A) and also in the same package HSBC FTSE 250 Index Fund C (I).

I am paying in £350 pcm and the current value on paper is about £60,000.

I received a Costs and Charges Statement on 16th Sept and the charges looked really steep to me::shocked:

Service Costs – 0.25% of Investment Amount

Product Costs – 0.63% of Investment Amount

Total Costs = 0.88% of Investment Amount:(

Am I paying too much for a hands off monthly drip feed FTSE 250 Tracker ISA? Is there a better option??

Any thoughts would be greatly appreciated.

Linton

Is this your only investment? If so purely investing in the FTSE250 is a bad idea. The FTSE250 which represents Medium and Small UK companies, is a niche investment far more suitable for a relatively small part of a much broader portfolio. A global tracker would be far more appropriate.


Looking at the HSBC Costs & Charges document for the C(A) fund: here I see that 0.25% is already included in the (in this case) 0.66%. Also thanks to the latest regulations the reported 0.66% includes Transaction Costs which isnt a very helpful/meaningful category. As the document says these can be negative! The figure normally used for comparison purposes is the OCF, which in this case is 0.18%.



You may find it more convenient to invest through a platform rather than directly with the fund manager.

weaver33

Thanks Linton.

I have other investments as well so not all eggs in one basket.

I was just shocked by the fees.

Forgive my naivety , but can you explain what you mean by investing through a platform rather than directly with HSBC? Does that mean a cost saving??

chrisgg

As the esteemed poster above me says, investing in just a FTSE 250 tracker is a very unbalanced and concentrated strategy. I would not want a single fund of that sort accounting for more than 5% of my portfolio.

The fee you are paying isn't at all bad and the least of your concerns in my opinion. Although there will ultimately be cheaper options out there.

chrisgg

weaver33 wrote: »

Thanks Linton.

I have other investments as well so not all eggs in one basket.

I was just shocked by the fees.

Forgive my naivety , but can you explain what you mean by investing through a platform rather than directly with HSBC? Does that mean a cost saving??

Rather than approaching each individual fund manager directly, and opening an account with each of them, open a single account at a platform, which you can then use to access a range of funds from a broad range of providers. The most well known is Hargreaves Lansdown, but I'm sure the boffins on here will be able to point you in the direction of cheaper alternatives.

This will generally save you on both cost and administration efforts.

Alexland

I identify as Boffin.

For a monthly contribution into a £60k ISA then Halifax Share Dealing would be £12.50 pa and £2 per scheduled trade = £36.50 pa. Much cheaper than 0.25% of £60k = £150 pa with HSBC Investment Centre.

There are some good HSBC funds including their FTSE All World tracker and Global Strategy multi asset series and you can access them via the HSD account above.

Alex

weaver33

Thanks chrisgg.

I am actually thinking about drip feeding another ISA Tracker to run alongside the FTSE250, but didn't really know what good options to consider.

weaver33

Thanks Alex.

So if I wanted to start drip feeding a new HSBC FTSE All World tracker, how do I go about starting it?

Also, as I am already 7 years in to my current Stocks & Shares ISA set up directly with HSBC, how do I open a single account at a platform to include the same HSBC FTSE 250 ISA Tracker that I have already got now? Do I transfer it?...

Apologies if it seems a naive question, but I have never really looked into the whole platform method...

cattie

weaver33 wrote: »

Also, as I am already 7 years in to my current Stocks & Shares ISA set up directly with HSBC, how do I open a single account at a platform to include the same HSBC FTSE 250 ISA Tracker that I have already got now? Do I transfer it?...

Apologies if it seems a naive question, but I have never really looked into the whole platform method...

Yes, you sign up with the chosen platform then fill out the form they'll supply to transfer your ISA across to them so not to lose the tax free status.

I've recently transfered to one of the low cost platforms thanks to advice received here (iweb in my case as I only deal a few times a year). As you want to keep the same funds, the funds are transfered 'inspecie', meaning there's no need to liquidate your funds into cash to transfer & risk time out of the market. This can take many weeks though, mine took close to 3 months due to my original provider being very slow.

Alexland

If you have been contributing monthly then you will have already made S&S ISA contributions this tax year so you would have to ask your new provider to transfer the ISA to continue contributing this tax year.

To avoid extended time out of the market consider requesting an 'in specie' ISA transfer where your existing investment(s) are reregistered to the new platform. This only works if both platforms offer exactly the same investment and takes a bit longer.

If you are going to switch to a new fund it might be worth doing this first on HSBC Investment Centre as HSD charge £12.50 per adhoc trade.

Alex

weaver33

Thanks cattie.

Good to know someone else has gone through the Stock & Shares ISA transfer process successfully.

Thanks for clearly explaining the process as it was this that was giving me pause.

I am currently looking at Alex's suggestion of opening a Halifax Share Dealing account which from the looks of things will cut the fees in comparison to the 0.88% I currently pay directly to HSBC via their Investment Funds ISA account.

Again, please forgive my naivety, so if I transfer my existing Stocks and Shares ISA to Halifax Share Dealing account, does that mean the exact investment package is transferred? Or do I self-select a new mix of investment options?

Does that make sense?

Basically, to diversify the monthly £350 I drip feed in to my ISA, how do I change the existing set up which is the whole £350 into an HSBC FTSE 250 Tracker and break it up instead into a mix like say:-

£100 - HSBC FTSE 250
£125 - HSBC FTSE All World tracker
£125 - HSBC Global Strategy