Scottish Mortgage Investment Trust

RolandFlagg

I'm a big fan of this trust run by James Anderson. I put a monthly amount into it via HL together with a couple of ETFs I have there.
Now, I know that SMT is a fund and not an ETF, but the fund charge on HL is 0.36% then obviously HL charge their platform fee.
If I wanted I could invest in SMT monthly using a free trading platform such as Trading212 I take it SMT still charge the 0.36%?

cloud_dog

If they offer it.

T212 have a relatively reduced list of investments, compared to other investment platforms.  Their T&C also acknowledges that the can load the bid/offer spread.

wmb194

Freetrade also offers SMT but unlike T212 it will just place your order straight into the market at best.

RolandFlagg

So if you buy via freetrade or t212 do you see pay the fund fee?

Prism

Yes you always pay the fund fee - its automatically taken from the value within the fund.

ColdIron

The Ongoing Charge of 0.36% is an internal fee taken from within the assets of the trust by the fund managers. It will be taken regardless of who you hold your shares with. If you move away from HL you will save HL charges

bowlhead99

RolandFlagg said:

So if you buy via freetrade or t212 do you see pay the fund fee?

The 'fund fee' of 0.36% is the ongoing running costs experienced by the fund. 

The fund is an investment company that buys a bunch of assets and is managed by James Anderson and other people at Baillie Gifford.

The management company bills the fund for the investment management services that James and the team provide, and the fund also has to cover all sorts of other costs (legal, accounting, audit, administration, annual investor meetings, regulatory compliance, tax services, custody of the assets it holds, etc etc).

Together those costs come to millions in a typical year, which represents 0.36% of the overall value of the fund. The fund pays those bills. After the fund pays the bills, it has fewer assets, because it has spent cash on paying the bills.   

If you are an owner of the fund by having a share in it, your share of the underlying assets will be reducing as the fund incurs all those costs, throughout the year.

Whether you choose to buy the share in SMT through Freetrade, T21, HL or whomever else, you are not going to be able to avoid being exposed to those 0.36% a year of expenses. The expenses are not billed to you as an individual. They are invoiced to the fund by service providers (Baillie Gifford as fund managment company / investment adviser, or PricewaterhouseCoopers as auditor, or Computershare as registrar, BNY Mellon as depositary etc, and the fund pays their bills as they come in, and that's how they get around to spending 0.36% of their assets every year on running the fund.  The costs would be reduced to zero if BG and PwC and BNYM etc didn't charge them any fees for any work they did, but that's never going to happen.

RolandFlagg

That's what I suspected. Thanks all.

Prism

Its a very low fee for an active fund or trust. In comparision the popular L&G Global Technology Index Trust is 0.32%.
I typically pay up to 1% for a fund fee but Scottish Mortgage stands out.

csgohan4

Prism said:

Its a very low fee for an active fund or trust. In comparision the popular L&G Global Technology Index Trust is 0.32%.
I typically pay up to 1% for a fund fee but Scottish Mortgage stands out.

to be fair the trust you quoted is not too bad, heavy in apple and microsoft, which is pretty much how the tech funds are geared towards. 
Would have liked something with more samsung, but EM will do that

bowlhead99

csgohan4 said:

Prism said:

Its a very low fee for an active fund or trust. In comparision the popular L&G Global Technology Index Trust is 0.32%.
I typically pay up to 1% for a fund fee but Scottish Mortgage stands out.

to be fair the trust you quoted is not too bad, heavy in apple and microsoft, which is pretty much how the tech funds are geared towards. 
Would have liked something with more samsung, but EM will do that

If you use a market-cap weighted index such as the L&G technnology index trust (which follows FTSE's index) then inevitably you'll get a great deal of Apple (because at $1.5 trillion at the end of June, it was about 15% of the $10 trillion FTSE All-World Technology and 17% of the $9 trillion FTSE World Technology index) while Samsung with only $200bn in free float is less than a seventh of the size.  85% of FTSE's World tech index is USA.  So using an 'index' approach is going to be a poor way to spread your money around the various technology companies that exist, if you are looking to be an 'equal opportunity investor'. 

Obviously if the current biggest companies are the ones with the highest growth rates going forward you would be happy with it, but that's not always the case with tech firms.

Would have liked something with more samsung, but EM will do that

You would get 0% Samsung in any FTSE or S&P Emerging Markets index tracker because both those organisations consider South Korea to be a developed market rather than an emerging one, and would include it in a standard developed world or developed asia pacific tracker, just like (e.g.) Softbank in Japan. 

However, MSCI count it as an emerging market so it would appear in funds based on their index, and I have exposure to it via (e.g.) Templeton Emerging Markets who benchmark to MSCI's index - though as with some other EM-focused funds, they have latitude to invest outside 'EM' countries anyway if they have EM exposure (e.g. Unilever is a top 10 holding).