Invested in wrong fund

Dh6

Hi, I’ve mistakenly invested my LISA into the HSBC FTSE index world INC tracker rather than the Accumulation version of the fund. 

Ive spoken to AJ Bell who advised me to send a secure message last Friday but I’ve yet to hear anything back ( I understand there may be a delay with COVID )
Does anyone have any idea of what will happen, will they be able to transfer me over to the ACC version? Or will I have to sell my INC and then repurchase ACC costing me time out of the market and transfer fees etc?
kind regards

masonic

Why not just stick with the inc unit class?

Dh6

It’s a lifetime ISA, I don’t want/can’t touch it for another 26years. 

Will the INC fund place any gains I may get into the cash side of my account for me to invest separately?
If so I’d rather this happen automatically. 

Thanks 

masonic

Until you are 50 you'll presumably be adding to the LISA each year, so you can just add the accrued income to the new money you are investing. By the time you are 50 you might already have decided to switch funds.

How are you intending to fund the monthly platform fee? I hold an accumulating ETF as it is the cheapest option, but if I had the choice I'd have the income paid out to cover the fees and sweep any excess up into the fund through the regular investing service every now and then.

Alexland

The downside of the INC units are that they will put cash distributions into your LISA account that would cost £1.50 to reinvest (unless you waited until you were also making an investment of new money in the same trade in which case there would be some time out of the market).

Some people prefer to have cash added into the account to help pay the (soon to be) monthly AJ Bell platform fees however the distributions are never likely to be the right amount or frequency to match the platform charges. In your position I would probably do nothing and just wait a few years as with AJ Bell once the LISA gets big enough (after 3-4 years of £4k pa) it makes sense to sell the fund down and reinvest in ETFs/ITs for the capped platform charges. Still if you are obsessive enough that it bothers you it's only two lots of £1.50 and a bit of time out the market (when it could go up or down) to sell it down and rebuy the ACC units.

dunstonh

The downside of the INC units are that they will put cash distributions into your LISA account that would cost £1.50 to reinvest (unless you waited until you were also making an investment of new money in the same trade in which case there would be some time out of the market).

That is a bit naff. Most platforms charge nothing for reinvesting income distributions.    
That said, the yield on that fund is not high and the cash generated could be used to pay the platform fee (as you say).

Alexland

dunstonh said:

That is a bit naff. Most platforms charge nothing for reinvesting income distributions.   

OP said they were with AJ Bell and they charge £1.50 for fund trades. They have a dividend reinvestment option at 1% which sounds better until you see the minimum is £1.50 the same as their scheduled trade rate.

"Hello and welcome to AJ Bell - did you remember to bring your £1.50?"

EQi would have been cheaper for investing in fund(s) via a LISA.

masonic

It's not too late for the OP to transfer, unlike some of us, so probably worth putting that on the table while we are considering changes.

Alexland

masonic said:

It's not too late for the OP to transfer, unlike some of us, so probably worth putting that on the table while we are considering changes.

But as you identified it would involve time out of the market if they only accept cash balance transfers.

masonic

Alexland said:

masonic said:

It's not too late for the OP to transfer, unlike some of us, so probably worth putting that on the table while we are considering changes.

But as you identified it would involve time out of the market if they only accept cash balance transfers.

Yes, no rush to make a change, but perhaps something to consider for the future when there is less to perturb the markets and while the amount being transferred is still relatively low.

Thrugelmir

Why not add the income paid to future contributions and diversify your portfolio.