HSBC Global Strategy Balanced Costs

bowlhead99

Alexland said:

ColdIron said:

If you look at the class C units on the All Units tab, you will see the Ongoing Cost (OCF) is 0.19% and that the Transaction Costs are 0.36% = 0.55%. Perhaps this is what the OP refers to

https://www.trustnet.com/factsheets/o/g1hd/hsbc-global-strategy-balanced-portfolio

Interesting 0.36% is much higher than the 0.04% transaction costs in the below advanced disclosure document from earlier this year.

http://www.assetmanagement.hsbc.com/uk/attachments/other-useful-documents/enhanced_disclosures.pdf

Picking another platform provider website to look up that same fund, Hargreaves Lansdown is also showing Transaction Costs running at ~ twice the ongoing charges level i.e. ~0.36% vs 0.18% so the combination of the two is about 0.55%.   

The transaction costs are inherently difficult to predict/project in advance  (and methods to calculate them with hindsight can have some subjectivity on whether the calculation method was really representative or meaningful).  For OEIC / Unit Trust funds-of-funds which are reporting ongoing charges, the industry guidelines mean they have to include ongoing exposure of the underlying OEICs in which they invest, but they may not necessarily need to include ongoing charges of ETFs or ITs in which they invest because the measure is not always reported in those vehicles using same underlying methodology.

Acknowledging dunstonh's comment about TCs being flawed anyway; by contrast to OCF mentioned above, the TCs are allowed to be disclosed without a lookthrough - i.e. HSBC Global Strategy Balanced might only have direct TCs of 0.04% for building and maintaining a portfolio of OEICs and ETFs as shown on  - but as Alexland's 'enhanced disclosures' document shows, each of the underlying investees to which they are exposed is going to be bearing its own TCs (for example a FTSE100 fund will have both broker costs and stamp duties) and those funds may or may not be able to explicitly pass certain of those costs on to its subscribing or redeeming investors (such as HSBC Global itself) through the use of swing pricing etc. 

So perhaps someone could consider that the 'true' transaction cost exposure is quite a lot higher than the 0.04% pure transaction cost that is disclosed by HSBC Global Strategy Balanced in that HSBC document.  Maybe that is what is being disclosed by CSD and HL. Or maybe it's simply a data feed error and CSD and HL's data provider were informed the TC for HSBC Global was 0.036% (rounded to 0.04% in HSBC's consumer-facing document) but have accidentally got the decimal in the wrong place to say 0.36%.

There are also implicit costs of hedging etc used by HSBC Global in relation to some of its non-GBP bond and equity exposure as they manage risk within the portfolio to stay within their volatility preferences - which would not need to be disclosed as either TC or OCF because it simply changes the level of realised and unrealised gains and losses on the portfolio from time to time, but is not without 'cost' of doing it vs not doing it.

Charges analysis can be a minefield, but for example, the OCF and TCs of the constituent investment funds that HSBC Global Balanced Class C would buy for its portfolio are not particularly high, and HSBC Global Balanced's cost of dealing in those investments (its own TC) will not be particularly high. I really wouldn't worry about it unless HSBC Global Balanced is disclosing a very high level of OCF relative to its investee funds and making a huge markup.  In this case, HSBC Global Balanced are not disclosing a particularly high OCF in their own documents, so to me it's going to be fine.

The bit that Charles Stanley are disclosing as 'total ongoing charges' is not conventional OCF but an attempt to capture OCF plus TC plus IC (as evidenced from the fact that they say "Please note that whilst we endeavour to show all charges associated with specific funds, sometimes this is not possible due to the information not being made available by the fund provider. In such cases transaction or incidental cost information may be missing"). Which means it will not be comparable between funds (as sometimes TC is excluded and sometimes included) - and for that reason I would just ignore it and do my own research by getting the factsheet or prospectus direct from HSBC.  

I don't rely on the platform websites to give me the info on the investments I buy - I might use them to help with some initial screening, but then generally would go to the provider themselves to give me the information from the horse's mouth at the same time as checking recent annual reports etc to understand what they are doing and how.

dunstonh

So perhaps someone could consider that the 'true' transaction cost exposure is quite a lot higher than the 0.04% pure transaction cost that is disclosed by HSBC Global Strategy Balanced in that HSBC document.  Maybe that is what is being disclosed by CSD and HL. Or maybe it's simply a data feed error and CSD and HL's data provider were informed the TC for HSBC Global was 0.036% (rounded to 0.04% in HSBC's consumer-facing document) but have accidentally got the decimal in the wrong place to say 0.36%.

It is coming through on the Financial Express feed.    The fund houses supply the data to FE.   FE supplies that to most of the platforms (Morningstar does a smaller number).   I have seen plenty of data errors over the years.  So, you cannot rule out error. The MIFID data provided to FE was updated 4th November:

The interim report to 15th October 2020 does not suggest that scale of increase:

The 6 month 2020 figures are exactly in line with expectation for the TC to stay in the same ballpark as usual.

dunstonh

Good news, I have had a response from HSBC confirming it is a data error and its a known issue.    The OCF should be 0.19% and the TC 0.13%.     

They also confirmed the known inconsistencies on how fund houses can calculate the TC where identical funds with identical transactions and identical costs could report significant differences in their TC charges.  I personally think that transparency is a good thing but if you have differing methodology in how you calculate figures then the data becomes pointless as you are not comparing like for like.   Which is one of the reasons most investors disregard TC.

I also have to say well done to HSBC.  I got a well-written response in under 30 minutes.   

cricidmuslibale

"HSBC have a very good reputation on the investments side and have continuously reduced charges that have forced others to follow.  A number of their funds are very attractive to others. Although they have some that are not (just like most fund houses)."

"HSBC have a history of reducing fund charges so not unattractive to investors."

Ok - I stand corrected re. HSBC's attitude to investments but the point (not directly related to this thread admittedly) about HSBC appearing to care less and less about savings still stands.

csgohan4

cricidmuslibale said:

"HSBC have a very good reputation on the investments side and have continuously reduced charges that have forced others to follow.  A number of their funds are very attractive to others. Although they have some that are not (just like most fund houses)."

"HSBC have a history of reducing fund charges so not unattractive to investors."

Ok - I stand corrected re. HSBC's attitude to investments but the point (not directly related to this thread admittedly) about HSBC appearing to care less and less about savings still stands.

You are aware HSBC are not the only ones reducing interest rates on accounts, NS&I are also doing it,  marcus, e.t.c

Investing wisely will usually beat the measly interest your getting at present

Albermarle

about HSBC appearing to care less and less about savings still stands.

I am not sure any bank , large or small, really 'cares' about anything except their own profitability .

If it suits their business model they will offer good savings rates, and if it doesn't then they will offer low savings rates . 'Caring ' does not come into it.

As the punter you just have to go somewhere else , if you do not get a competitive offering .

Kendall80

Thanks for the replies all. A productive conversation it would seem. While as Bowlhead says - it is best to check the KIID etc from the actual fund provider, I always have that 'Superman 3' suspicion. I have noticed small inaccuracies before with 2 different fund houses that I have had to clarify with them. The worst however was with my main bank. I was paid £50 in compensation and they've not made the same mistake since thankfully.