VLS vs HSBC_GS Fees

slapPCM

New updates in reply 5
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Hey guys,

Newbie here.

I found it's hard to fully grasp the differences of fees. Different websites give contradict figures? For example, trustnet shows HSBC (OCF 0.17%, AMC 0.10%) and VLS (OCF 0.22%, AMC 0.22%).
https://www.trustnet.com/factsheets/o/g1hd/hsbc-global-strategy-balanced-portfolio
https://www.trustnet.com/factsheets/o/acdt/vanguard-lifestrategy-80-equity-a

Morningstar shows the same OCF figures using a £10,000 example.  

However, I found out on Vanguard website it says the VLS's AMC is 0.15%, AND if the total investment across all accounts exceed £250,000 AMC is capped at £375. https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained

On HSBC website, I found the AMC is 0.25%? Am I getting the wrong link? https://www.hsbc.co.uk/investments/products-and-services/global-investment-centre/#:~:text=What%20does%20it%20cost%3F,account%20in%20the%20previous%20quarter.

So what is the right figures? I am a bit confused....

Also, is transaction fee/cost included in OCF already? Thanks.

dunstonh

I found it's hard to fully grasp the differences of fees. Different websites give contradict figures? For example, trustnet shows HSBC (OCF 0.17%, AMC 0.10%) and VLS (OCF 0.22%, AMC 0.22%).

You should take no notice of AMCs.  They are obsolete and whilst still available to view, no-one should really be using them.  OCF or TER are the figures to rely on.    

lso, is transaction fee/cost included in OCF already?

No.  TC is an additional disclosure.    However, you generally disregard TC as it can create a misleading posiiton on charges if you do not understand the context and what is an isnt included.    For example, if a fund house sends a specialist into a business to help improve profits, that shows under TC.     So, funds that focus on growing companies will have higher TC. 

On HSBC website, I found the AMC is 0.25%? Am I getting the wrong link? https://www.hsbc.co.uk/investments/products-and-services/global-investment-centre/#:~:text=What%20does%20it%20cost%3F,account%20in%20the%20previous%20quarter.

The share class used in house with HSBC is different to whole of market platforms.

83705628

It depends on the platform.
I can only speak for Vanguard.
Vanguard charges 0.22% for those funds.
Those funds incur transaction costs of 0.03%-0.05% (Vanguard are very open about these, most providers aren't, they are not included in the OCF).
If you own these via an account on Vanguardinvestor.co.uk you pay a platform fee of 0.15% upto £250k 0% thereafter.
https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

Audaxer

slapPCM said:

However, I found out on Vanguard website it says the VLS's AMC is 0.15%, AND if the total investment across all accounts exceed £250,000 AMC is capped at £375. https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained

I think you are confusing the AMC with Vanguard's platform charge (Vanguard Account Fee as they call it) which is 0.15% capped at £375. The VLS ongoing fund charge is a separate and is 0.22%, and that charge is taken from the value of your fund.

bowlhead99

slapPCM said:

Hey guys,

Newbie here.

I found it's hard to fully grasp the differences of fees. Different websites give contradict figures? For example, trustnet shows HSBC (OCF 0.17%, AMC 0.10%) and VLS (OCF 0.22%, AMC 0.22%).
https://www.trustnet.com/factsheets/o/g1hd/hsbc-global-strategy-balanced-portfolio
https://www.trustnet.com/factsheets/o/acdt/vanguard-lifestrategy-80-equity-a

Morningstar shows the same OCF figures using a £10,000 example.  

However, I found out on Vanguard website it says the VLS's AMC is 0.15%, AND if the total investment across all accounts exceed £250,000 AMC is capped at £375. https://www.vanguardinvestor.co.uk/what-we-offer/fees-explained

On HSBC website, I found the AMC is 0.25%? Am I getting the wrong link? https://www.hsbc.co.uk/investments/products-and-services/global-investment-centre/#:~:text=What%20does%20it%20cost%3F,account%20in%20the%20previous%20quarter.

So what is the right figures? I am a bit confused....

Also, is transaction fee/cost included in OCF already? Thanks.

As dunstonh mentions the OCF is the expected annual operating costs figure of a fund (e.g. the 0.22% for Lifestrategy or 0.17% for Global Strategy Balanced), and that cost will include the annual management fee that the fund pays to its manager for investment management services. Although it won't include the transaction costs incurred when the investment fund is buying the underlying investments in its portfolio, because transaction costs incurred by the fund are simply considered part of the cost of buying investments and feed into gains or losses of the fund, rather than being an explicit part of ongoing running costs (like admin, accounting, marketing, custody, legal, etc).

Separately, when you buy one of these funds you will buy it through an investment platform. Many platforms will allow you to hold funds from lots of different managers but some only offer their own products. The platforms will charge *you* a fee or ongoing charges for maintaining and managing your financial account through which you buy and hold the fund.

You shouldn't confuse that investment platform fee (charged to you, the customer of the investment platform) which they might call some sort of annual 'management fee' or management charge, with the annual 'management fee' or management charge that is charged by a fund manager to an investment fund as a component of OCF (e.g. the 0.10% within the 0.17% ongoing charges for HSBC Global Strategy Balanced that Trustnet or Morningstar told you about.  Trustnet and Morningstar don't know what platform you'll choose to use to hold the fund, so they are just telling you about the costs of the fund itself.

In the link you provided from HSBC's site, they were telling you that their global investment centre would charge you an account management fee of 0.25% a year. That's the fee for their platform service which could be compared to the 0.15% that Vanguardinvestor would charge you for their platform service.

Whereas the running costs for the Global Strategy Fund is a separate figure and could be compared to the 0.22% running costs for Lifestrategy Fund.

slapPCM

Hey guys, really really appreciate your speedy replies! Generally you guys have been very helpful. You guys are in almost every post I read here dating back to 17/18!

If you don't mind I have a few further questions, as I am in the process of buying one (or more) of these multi-asset funds.

1) This is actually a question I have from a 2018 reply made by @dunstonh. In that reply, you said within the VLS and HSBC_GS range, only VLS60 and HSBC_GS_Balanced are of the similar type and can be compared against each other (along these lines...). My question is that from various analysis it seems HSBC_GS_Balanced is slight riskier than VLS60? Do you (or any one really) have any comment on that?

2) If I prepare to have both VLS and HSBC_GS, is there a good platform I should be using? (Ideally the platform should be accommodating all major multi-asset funds?) I was thinking of getting VLS from their own site vanguardinvestor or/and HSBC_GS from HSBC site. Guess I will have to pay separate platform fee of 0.15% and 0.25% if I do this?

3) @dunstonh In a 2018 reply you mentioned that VLS had not been the cheapest in terms of cost, and it was not recommended to clients (anymore?). Is this based on OCF only then? As I assume the clients will let you manage the funds (you as platform).....?

4) Let's say if I have all my cash ISA around £110,000 into S&S ISA to buy one of the above mentioned funds. Should I go all in or drip feed each month (given the current big environment)? Well, I am not trying to "time" the market but at the same time don't wanna it starting with a negative straight away... (although it seems things already started to pick up...)

Any help is appreciated!

Audaxer

slapPCM said:

Hey guys, really really appreciate your speedy replies! Generally you guys have been very helpful. You guys are in almost every post I read here dating back to 17/18!

If you don't mind I have a few further questions, as I am in the process of buying one (or more) of these multi-asset funds.

1) This is actually a question I have from a 2018 reply made by @dunstonh. In that reply, you said within the VLS and HSBC_GS range, only VLS60 and HSBC_GS_Balanced are of the similar type and can be compared against each other (along these lines...). My question is that from various analysis it seems HSBC_GS_Balanced is slight riskier than VLS60? Do you (or any one really) have any comment on that?

2) If I prepare to have both VLS and HSBC_GS, is there a good platform I should be using? (Ideally the platform should be accommodating all major multi-asset funds?) I was thinking of getting VLS from their own site vanguardinvestor or/and HSBC_GS from HSBC site. Guess I will have to pay separate platform fee of 0.15% and 0.25% if I do this?

3) @dunstonh In a 2018 reply you mentioned that VLS had not been the cheapest in terms of cost, and it was not recommended to clients (anymore?). Is this based on OCF only then? As I assume the clients will let you manage the funds (you as platform).....?

4) Let's say if I have all my cash ISA around £110,000 into S&S ISA to buy one of the above mentioned funds. Should I go all in or drip feed each month (given the current big environment)? Well, I am not trying to "time" the market but at the same time don't wanna it starting with a negative straight away... (although it seems things already started to pick up...)

Any help is appreciated!

I'll have a go at answering some of your questions as best I can, as I have some VLS and HSBC GS funds:
1) VLS60 and HSBC GS Balanced have similar percentages of equities. VLS funds have a fixed allocation so VLS60 is always rebalanced to 60% equities. The percentage of equities in HSBC GS Balanced is usually around 65% but the fund can be risk adjusted to vary the percentage a bit. It may be deemed slightly riskier than VLS60 because of the higher percentage of equities, but there is not much in it. They both have a fairly similar record of returns. The VLS60 has a higher percentage of UK equities than HSBC GS Balanced (as do all the VLS funds), and for that reason some investors would consider the VLS fund more risky.
2) If you are investing fairly large lump sums and not doing much subsequent trading, a low-cost fixed fee platform is better value than the Vanguard platform. For example Halifax Share Dealing platform only costs £12.50 a year platform charge and £12.50 per trade. IWeb is even cheaper than that.
4) Although the overall evidence is that in most cases you benefit from investing it all straight away in a lump sum, you need to consider how you would feel if there was a 20% or more fall in the value just after you invested. That's why in some cases I think for a very large lump sum it is better to invest in large chunks maybe over a year or so, but only you can make the decision as to what you feel comfortable with.

I hope that helps.

83705628

1. Slightly more equity, no fixed equity allocation and unhedged global bonds in HSBC GS so you can expect a bit more volatility. There's sites comparing them (https://monevator.com/passive-fund-of-funds-the-rivals/). There's no harm holding both.

2. I THINK since you've already paid in and the cash is already in an ISA you can transfer some of it to VG some to HSBC's platform. Because you can only pay into 1 per year, or is the rule that you can only have one S&S ISA?

4. Pensioncraft has done some extremely detailed videos about this https://youtu.be/DMznHFuGJr4, https://youtu.be/csvto8iKOw

Jack Bogle has spoken about it too

https://youtu.be/Oa8MqIcMAfM

basically 2/3 of the time you're better off lump sum, if yoyre to drip feed theres rarely an advantage to taking more than a year

dunstonh

1) This is actually a question I have from a 2018 reply made by @dunstonh. In that reply, you said within the VLS and HSBC_GS range, only VLS60 and HSBC_GS_Balanced are of the similar type and can be compared against each other (along these lines...). My question is that from various analysis it seems HSBC_GS_Balanced is slight riskier than VLS60? Do you (or any one really) have any comment on that?

Things on the internet are written as a snapshot in time.  Things change.  Back in 2018, Vanguard didn't have a platform.  They do now.  However, HSBC GS Balanced is very slightly lower risk than VLS60.  Although only by such a tiny minuscule amount that makes no difference.    VLS60 is not risk targetted.  HSBC is.

2) If I prepare to have both VLS and HSBC_GS, is there a good platform I should be using? (Ideally the platform should be accommodating all major multi-asset funds?) I was thinking of getting VLS from their own site vanguardinvestor or/and HSBC_GS from HSBC site. Guess I will have to pay separate platform fee of 0.15% and 0.25% if I do this?

The best fund and fund house today will not be the best in the future.  So, whole of market is my preference as you do not tie yourself to one fund house that way.

3) @dunstonh In a 2018 reply you mentioned that VLS had not been the cheapest in terms of cost, and it was not recommended to clients (anymore?). Is this based on OCF only then? As I assume the clients will let you manage the funds (you as platform).....?

IFAs are not a platform.  However, for advised clients on an servicing basis and with larger amounts, the IFA will often control the investment strategy in terms of asset allocation but it will still be the investment funds that handle the investments.   IFAs will use different platforms to DIY investors.

slapPCM

All points taken, cheers guys

A very productive day!

Albermarle

Guess I will have to pay separate platform fee of 0.15% and 0.25% if I do this?

Just to be clear as the platform charges are a % of money invested , you do not get double charged for being with two platforms .

For example if you had £10K with both you would pay an average of 0.2% overall , not 0.25% + 0.15%.

Sorry if you already understood this but it can be a point of confusion sometimes.