Costs of purchasing investments

schiff

I think I may have been lucky, it wasn't by design, as for the purchase of each of my last 6 investments I have paid either nothing or £1.50 (I'm with YouInvest). Then on my 7th purchase, an investment trust, I paid almost £20 in the charge plus stamp duty.

Smithson was free (IPO) and an in-house income fund of YouInvest was free too. HSBC FTSE All-Share Index, HSBC FTSE All-World Index, Fundsmith EI and Jupiter Monthly Alternative Income were those costing £1.50.

I was looking for a S&P 500 tracker and couldn't find anything that might cost £1.50, as suddenly I'm put off items that cost a lot more. Do people take this difference into account when choosing? I read that ETFs are low cost but apparently they are not that cheap to start with. I'm confused!

bowlhead99

schiff wrote: »

I was looking for a S&P 500 tracker and couldn't find anything that might cost £1.50, as suddenly I'm put off items that cost a lot more. Do people take this difference into account when choosing? I read that ETFs are low cost but apparently they are not that cheap to start with. I'm confused!

Youinvest's fee structure is £1.50 for open ended funds (like Fundsmith and the HSBC index funds you bought) but costs more (£9.95 a time, or 4.95 if you're a heavy trader) for things that are traded on a stock exchange (ETFs, investment trusts and individual shares).

You can however buy a large range of ETFs, shares and investment trusts for £1.50 per transaction on the 10th of every month via their regular investing program - click on My Account, Regular Investments. You don't actually have to do it for more than one month, as you can cancel or change any regular investments you set up. So if you wanted a US index fund that was structured as an ETF, you could buy something like the iShares Core S&P500 ETF (ticker on London Stock Exchange is 'CSP1' for the GBP-priced version) via that program. Its ongoing expense ratio is 0.07%.

Or if you use an open ended fund such as UBS S&P 500 Index C Acc, it would cost £1.50 to buy or sell whenever you like. That fund has an ongoing expense ratio of 0.09%.

If you don't specifically want only the biggest 500 US companies you could buy a broader index tracker such as Vanguard's U.S. Equity Index Fund. That fund uses 3400 stocks to track its benchmark, the S&P Total Market Index, and has an ongoing charges figure of 0.10%; it's also an open ended fund.

Note that the custody fees at Youinvest are 0.25% a year and don't cap out until your investments reach £250k on open ended funds, whereas on exchange-traded funds and shares they cap out at a much lower asset value of £12k (ISA or general investment accounts), or at £40k on SIPP accounts.

schiff

That is very useful bowlhead99 thank you