HSBC FTSE All World Index fund OCF reduction

Alexland

Just noticed that one of my favourite passive equity funds the HSBC FTSE All World Index accumulation fund is now reporting an OCF of just 0.13% at 1st April 20. It was previously reporting either 0.16% or 0.18% depending on where you looked. At just 0.01% more than a developed world only tracker such as Fidelity World fund this is now looking incredible value when compared to Vanguard's VWRL or VWRP etfs at 0.22%. Our inactive iWeb ISAs just got even cheaper.

Albermarle

I think the HSBC World Etf is also only 0.15% .

[Deleted User]

What are the total fees? As I understand it the total fees for VWRL (IE00B3RBWM25) are 0.43%:
Source: https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

MaxiRobriguez

I need to add more passiveness to my iWeb ISA which is currently 100% individual stocks. (My pension pot which is significantly larger is all tracker).

dunstonh

HSBC wrote out last week (or the week before) saying they had reduced the OCF on a number of their funds.

bowlhead99

Deleted_User said:

What are the total fees? As I understand it the total fees for VWRL (IE00B3RBWM25) are 0.43%:
Source: https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

The total fees for VWRL on that link include 0.15% platform fee, which is on the basis of you using their own platform to buy the investment. But you could instead buy it from a different broker, making your overall cost higher or lower than that.

Whether it's more efficient to pay an ongoing 0.15% annual charge to Vanguardinvestor.co.uk with no dealing fees, or instead pay a few pounds for every investment purchase and sale to a different broker that may charge you less than 0.15% per year to hold the investment, depends on the amount involved and your patterns of trade.

With the HSBC fund you could buy it through their own platform for 0.25% a year, or you could do as Alexland does and hold it through IWeb for £0 per year after an initial account setup cost and dealing fee.

HSBC have updated their April charges disclosure and March factsheet for their fund to show 0.13% OCF (with a few points of transaction costs on top), though as of the last financial accounts six months ago they were showing 0.18% OCF. As the fund gets bigger over time it will generally be cheaper to run - the prospectus shows the ACD management fee is 0.10%, but some of the fund's other operating costs will have more of a fixed fee basis rather than purely being percentage-based.

Alexland

Albermarle said:

I think the HSBC World Etf is also only 0.15% .

Yes HMWO as a developed world only ETF is looking poor value by comparison with this All World fund and competitors such as Lyxor LCWL and Vanguard VEVE both at 0.12%. Maybe that's next to come down?

Albermarle

Am I right in thinking that the HSBC fund at 0.13% on I web and the etf at 0.15% with say Fidelity , have historically given almost identical performance ( 60% over 5 years) at virtually the same cost . If so why would anyone pick one over the other - for 0.02% a year or more a personal preference for funds or etf's ?

Alexland

HSBC's All World fund gives the circa 10% emerging market exposure which you don't get with HMWO ETF (which you would expect to be cheaper) but ultimately the difference in performance of those EM stocks isn't going to make a huge difference as global equity markets are increasingly synchronised. Still I would pay a little bit extra to get the extra coverage and diversification within that asset class.

If you are on Fidelity then an ETF might be preferable on a larger account to benefit from their £45 capped fees. We hold World ETFs in our Fidelity SIPPs and make up for the lack of EM via our workplace pensions.

Alistair31

I’ve always been tempted to switch my ISA holding to this instead, 0.22 vs 0.13 makes it more appealing now and I was always going to switch platform anyway due to cost (VG to IWEB). Now could be the time.

Off topic, Alexland, what, if any, bond funds do you hold?

Sailtheworld

Alistair31 said:

I’ve always been tempted to switch my ISA holding to this instead, 0.22 vs 0.13 makes it more appealing now and I was always going to switch platform anyway due to cost (VG to IWEB). Now could be the time.

The whole of the saving for the first year will be lost in the sell / buy spread so only worth doing if Vanguard don't reduce as a result or, as per your case, there's an additional reason to do so.