Vanguard Lifestrategy 60% equities: bunch of questions!

caper7

jimjames said:

caper7 said:

* Transaction cost of 0.5% on the investment, wasn't expecting that on top of the OCF of 0.22%.
Real ongoing charge is 0.72% in fact then, is this considered reasonable?

* How does one actually pay the charges? Preferably from outside the ISA.

Apologies for the length of the post 😳

In addition to the replies already Transaction cost is a one off fee when you buy the fund. It's not an ongoing charge. The OCF is paid by the fund so you don't need to do anything and because it's paid by fund it's inside the ISA.

You may have other charges for holding the fund depending where you buy it

Thank you. 
It pays to ask questions! I had assumed it was an ongoing charge. 

Thrugelmir

caper7 said:

NottinghamKnight said:

You are asking some fairly detailed questions about what is supposed to be a fairly simple multi asset fund that is a 'sort of' tracker'.  If you want to invest in that level of detail then sector funds that you have selected would make more sense. 

This forum rightly puts great emphasis on not investing in things one doesn't understand. It is also pretty critical of those who leave their money in savings. 

Very easy to invest and be disappointed. Hence why a product range such as Vanguard is often suggested. As it enables someone new to the world investing to put their toe in the water. When faced with a plethora of options. Rather than what the product contains, approach the task from the direction of your personal risk appetite and objectives. 

caper7

barnstar2077 said:

Have you compared the cost of buying LS60 with Vanguard instead of IWeb?  I'm not saying it would be better, I'm just interested myself, as Vanguard don't have an initial charge when you buy the fund.  Well, not in their SIPP or S&S ISA anyway, 

I haven't. I chose I Web because it seemed the cheapest (as long as you don't trade too much) but sufficiently established and trusted (I think and hope).
I have one very old isa with Hargreaves Landsdown, I do like the fact you need two passwords and a pin/number with them, hope I Web security is good... 

jeelz

* Transaction cost of 0.5% on the investment, wasn't expecting that on top of the OCF of 0.22%.

Real ongoing charge is 0.72% in fact then, is this considered reasonable?

I believe for amounts under £80,000 it is cheaper to hold these funds through Vanguard directly, Above this amount a fixed fee provider like Interactive Investor is cheaper.

Swipe

barnstar2077 said:

Have you compared the cost of buying LS60 with Vanguard instead of IWeb?  I'm not saying it would be better, I'm just interested myself, as Vanguard don't have an initial charge when you buy the fund.  Well, not in their SIPP or S&S ISA anyway, 

There is a one off transaction cost with LS60 even with vanguard. Off the top of my head it is something like 0.05%

Audaxer

jimjames said:

caper7 said:

* Transaction cost of 0.5% on the investment, wasn't expecting that on top of the OCF of 0.22%.
Real ongoing charge is 0.72% in fact then, is this considered reasonable?

* How does one actually pay the charges? Preferably from outside the ISA.

Apologies for the length of the post 😳

In addition to the replies already Transaction cost is a one off fee when you buy the fund. It's not an ongoing charge. 

As I understand it, the Transaction costs in a fund, are the costs incurred by the fund in buying and selling assets within the fund. The Transaction fees on VLS60 is only 0.04% so is a minimal amount on top of the OCF of 0.22%.

caper7

I think the transaction fee is 0.5%, but I'd be happy to be wrong and for you to be right. 

Alexland

Ignore the iWeb 0.5% transaction cost its just a standard example number they confusingly show before you buy any fund. The platform cost of the transaction is £5 and the fund will have small transaction costs within it under 0.1% as disclosed on the Vanguard website.

caper7

Alexland said:

Ignore the iWeb 0.5% transaction cost its just a standard example number they confusingly show before you buy any fund. The platform cost of the transaction is £5 and the fund will have small transaction costs within it under 0.1% as disclosed on the Vanguard website.

You're right, Vanguard says 0.05.
How odd I Web make it sound worse than it is. 
You ask questions and you keep learning. 
Many thanks. 

tacpot12

caper7 said:

jimjames said:

caper7 said:

* Transaction cost of 0.5% on the investment, wasn't expecting that on top of the OCF of 0.22%.
Real ongoing charge is 0.72% in fact then, is this considered reasonable?

* How does one actually pay the charges? Preferably from outside the ISA.

Apologies for the length of the post 😳

In addition to the replies already Transaction cost is a one off fee when you buy the fund. It's not an ongoing charge. The OCF is paid by the fund so you don't need to do anything and because it's paid by fund it's inside the ISA.

You may have other charges for holding the fund depending where you buy it

Thank you. 
It pays to ask questions! I had assumed it was an ongoing charge. 

I'm not sure this is correct: this article suggests not: Why many funds are more expensive than you thought | Shares Magazine

As with so much regulation, MiFID has just confused the consumer by requiring disclosure of "transactions costs", when the customer is already aware that they pay "transaction charges" when they buy or sell shares or fund units with a broker.

Transaction costs are the sum of the transaction charges that the fund has paid to buy and sell the underlying shares. For a fund like LifeStrategy 60, you should be asking why there are any transaction costs associated with this fund, as it doesn't directly hold anything that costs Vanguard any money to trade -  it only holds other Vanguard funds, however, this is unreasonable as when LifeStrategy buys more of any of the underlying funds, these funds need to pay the transaction costs to buy more underlying assets.
The transaction costs for LifeStrategy 60 should consist of the transaction costs of the underlying funds in the proportion that VLS60 holds of the underlying fund. 

Reading this document Vanguard Personal Investor costs and charges information (vanguardinvestor.co.uk)
confirms that both the OCF and the Transaction Costs are deducted from the fund, thus reducing its performance and meaning that the customer is paying this as an ongoing charge. Add in the Bid/Offer spread, and Vanguard funds are not quite the "cheap" option they appear to be at first glance.