Questions about investing jargon

Afternoon

Hi there, I'm new to investing so please bear with me, I just have a few questions; 

- I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

- Is an index tracker fund different from a passive fund?

Thanks

eskbanker

Afternoon said:

I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

Yes, every time you buy or sell fund units you'd pay this charge, assuming your selected platform chooses that particular charging model - some don't charge for such transactions but make their money on higher ongoing fees instead.

Afternoon said:

Is an index tracker fund different from a passive fund?

An index tracker is a popular type of passive fund.

Afternoon

eskbanker said:

Afternoon said:

I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

Yes, every time you buy or sell fund units you'd pay this charge, assuming your selected platform chooses that particular charging model - some don't charge for such transactions but make their money on higher ongoing fees instead.

Afternoon said:

Is an index tracker fund different from a passive fund?

An index tracker is a popular type of passive fund.

So would I pay dealing fees if I had a index tracker?

eskbanker

Afternoon said:

eskbanker said:

Afternoon said:

I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

Yes, every time you buy or sell fund units you'd pay this charge, assuming your selected platform chooses that particular charging model - some don't charge for such transactions but make their money on higher ongoing fees instead.

Afternoon said:

Is an index tracker fund different from a passive fund?

An index tracker is a popular type of passive fund.

So would I pay dealing fees if I had a index tracker?

I'm trying to think of other ways of paraphrasing the answer I've already given to that question - dealing fees are what you pay when you buy or sell, but not all platforms charge that way so it isn't a simple yes/no answer.  For example, assuming you're using a S&S ISA, if you go with Hargreaves Lansdown, you wouldn't pay a dealing charge when buying or selling funds but there is an annual charge of 0.45%, whereas IWeb's charging model involves a dealing charge of £5 but no annual charge.

dunstonh

So would I pay dealing fees if I had a index tracker?

Depends.

If you buy an ETF, then there is often dealing charges.  If you buy a UT/OEIC then there is usually not.   However, some providers will charge differently depending on what fund universes you decide to buy from.

Albermarle

Might be easier if you name the fund and the investment platform you are using ?

MaxiRobriguez

Afternoon said:

eskbanker said:

Afternoon said:

I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

Yes, every time you buy or sell fund units you'd pay this charge, assuming your selected platform chooses that particular charging model - some don't charge for such transactions but make their money on higher ongoing fees instead.

Afternoon said:

Is an index tracker fund different from a passive fund?

An index tracker is a popular type of passive fund.

So would I pay dealing fees if I had a index tracker?

Think of it when you get a new mortgage. There is a one off arrangement fee for getting the mortgage "product" and then the ongoing interest you pay. Most people pay a combination of both, but it is possible to pay £0 for the arrangement fee (but the provider will instead charge you for this in additional interest most likely).

Dealing fee = Arrangement fee.
Ongoing charges = Mortgage interest.

In terms of what is best, it depends on how often you trade and how much money you have.
Lots of trades = Look for lower dealing fees.
Lots of money being invested = Look for lower ongoing charges.

If you're somewhere in the middle (lots of trades AND lots of money or not many trades NOR a lot of money in the portfolio) then you'll just need to crank the numbers to see what's best.

AnotherJoe

Afternoon said:

eskbanker said:

Afternoon said:

I see "dealing commission per trade" or fees relating to that and I don't understand if I would pay that if I have an index tracker fund?

Yes, every time you buy or sell fund units you'd pay this charge, assuming your selected platform chooses that particular charging model - some don't charge for such transactions but make their money on higher ongoing fees instead.

Afternoon said:

Is an index tracker fund different from a passive fund?

An index tracker is a popular type of passive fund.

So would I pay dealing fees if I had a index tracker?

Your question shows such a disconnect that you need to do more research before buying any investments. Whether you pay a fee depends on the platform and the type of investment, but NOT whether its an index or active.

Also in any case you are worrying about the wrong thing, eg a dealing fee is likely to be far lower than ongoing fees, so unless you intend  to be dealing frequently (probably not a good idea unless its a regular investment rather than buying and selling) its the ongoing fees that might be a concern.

If you are concerned about dealing fees because you are buying regularly, say monthly,  then say what the investment is, often there are reduced dealing fees for regular investments (and that would  be platform dependent not type of investment dependent)