Fund of Funds = double the charges?

[Deleted User]

Does anyone know if you pay charges on the funds held within the fund?
For example LifeStrategy 100, the fund charge is 0.22%

The fund holds many Vanguard funds, eg US equity index which has a charge of 0.10%

Therefore, would you pay 0.22% + 0.10%? Or just the 0.22 for the "parent" fund?

coyrls

Just the 0.22.

Albermarle

Although terminology in this area can be fluid, normally a ' fund of funds' refers to a managed/active fund containing other managed/active funds .
These are expensive as there are two layers of active fund management charges.

MaxiRobriguez

The 0.22 accounts for any charges of the underlying funds, hence why it's double.

[Deleted User]

Albermarle wrote: »

Although terminology in this area can be fluid, normally a ' fund of funds' refers to a managed/active fund containing other managed/active funds .
These are expensive as there are two layers of active fund management charges.

Isn't the LS100 a fund of funds?

SonOf

As mentioned above, you are not paying the full charge of the underlying funds in addition to the OCF of the fund of funds. However, there are increased costs but these are reflected in both the transaction charge column and the OCF column.

So, in the case of VLS100, the charges are 0.22% OCF and 0.03% Transaction charges (total 0.25%). Fund of funds tend to have higher transaction charges but as VLS100 is fettered rather than unfettered, its only about 0.01% more for administration whilst the OCF is increased to allow vanguard to build in their margin and cover the cost of the underlying funds.

bostonerimus

newbinvestor wrote: »

Isn't the LS100 a fund of funds?

In general terms yes it is; it's a single fund that is made up of other funds and so when you buy it you have a ready made portfolio. You will see the fees on any fact sheet and they will be higher than many of the underlying funds as you are paying for the administration of the portfolio of funds and those fund charges are baked into the fee you see. Such funds run the spectrum from being unfettered ie they can buy funds from any company and manager and also change be actively managed to something like VLS100 that is fettered as it only contains Vanguard funds.

ColdIron

newbinvestor wrote: »

Does anyone know if you pay charges on the funds held within the fund?
For example LifeStrategy 100, the fund charge is 0.22%

The fund holds many Vanguard funds, eg US equity index which has a charge of 0.10%

Therefore, would you pay 0.22% + 0.10%? Or just the 0.22 for the "parent" fund?

Haven't we been round this loop before? See your post #17 in your thread below and my (and others) replies to your question e.g. my Waitrose analogy

https://forums.moneysavingexpert.com/discussion/6052297/how-many-funds-in-a-portfolio

bowlhead99

ColdIron wrote: »

Haven't we been round this loop before? See your post #17 in your thread below and my (and others) replies to your question e.g. my Waitrose analogy

https://forums.moneysavingexpert.com/discussion/6052297/how-many-funds-in-a-portfolio

Yes, I thought I had answered the question recently, my post #24 in that thread after OP had said "it's not clear, but you are probably right".

It is clear, because there are industry-standard disclosure requirements which OEIC funds adopt and will tell you in their prospectus or other marketing material how they are doing it (especially if they are doing it a different special way).

[Deleted User]

I still think this is confusing sorry.

For example HSBC Global Strategy (adventurous) holds Ishares SP500.

From what I can see, the factsheet nor Key Information Document state anything about the charges on this fund within the fund. It is confusing and lacks clarity.

Lokolo

newbinvestor wrote: »

I still think this is confusing sorry.

For example HSBC Global Strategy (adventurous) holds Ishares SP500.

From what I can see, the factsheet nor Key Information Document state anything about the charges on this fund within the fund. It is confusing and lacks clarity.

But you don't need to know what the underlying funds cost, it's all calculated and shown in the overall fund cost.