Wealth management performance and charges

OldMusicGuy

Albermarle said:

Hargreaves Lansdown being one example. They charge a % fee of the money you have invested on the platform. You have to choose which investments to buy and there is a charge for each investment. So just as an example you could be paying 0.35% for the platform and 0.45% on average for the investments = 0.8% in total.( will vary a lot between different investors )

I use low cost multi-asset funds on the HL platform that range from .09% to .22% which means that overall my total costs (including platform fee) are around .5%. I have a large SIPP so keeping costs low is important to me. And I can achieve my investment goals using this approach.

Albermarle

OldMusicGuy said:

Albermarle said:

Hargreaves Lansdown being one example. They charge a % fee of the money you have invested on the platform. You have to choose which investments to buy and there is a charge for each investment. So just as an example you could be paying 0.35% for the platform and 0.45% on average for the investments = 0.8% in total.( will vary a lot between different investors )

I use low cost multi-asset funds on the HL platform that range from .09% to .22% which means that overall my total costs (including platform fee) are around .5%. I have a large SIPP so keeping costs low is important to me. And I can achieve my investment goals using this approach.

I don't pay 0.8% for my Sipp either , also about 0.5% on average . It was just an example to help explain a point. 
Even at 0.8% it would be a lot cheaper than using SJP !

GeoffTF

OldMusicGuy said:

Albermarle said:

Hargreaves Lansdown being one example. They charge a % fee of the money you have invested on the platform. You have to choose which investments to buy and there is a charge for each investment. So just as an example you could be paying 0.35% for the platform and 0.45% on average for the investments = 0.8% in total.( will vary a lot between different investors )

I use low cost multi-asset funds on the HL platform that range from .09% to .22% which means that overall my total costs (including platform fee) are around .5%. I have a large SIPP so keeping costs low is important to me. And I can achieve my investment goals using this approach.

I am down to about 0.1% overall, but not many people are going to achieve that.

bostonerimus

GeoffTF said:

OldMusicGuy said:

Albermarle said:

Hargreaves Lansdown being one example. They charge a % fee of the money you have invested on the platform. You have to choose which investments to buy and there is a charge for each investment. So just as an example you could be paying 0.35% for the platform and 0.45% on average for the investments = 0.8% in total.( will vary a lot between different investors )

I use low cost multi-asset funds on the HL platform that range from .09% to .22% which means that overall my total costs (including platform fee) are around .5%. I have a large SIPP so keeping costs low is important to me. And I can achieve my investment goals using this approach.

I am down to about 0.1% overall, but not many people are going to achieve that.

The annual drip drip of total fees of 1% plus (ie fund, platform, advisor fees) is a drag on a portfolio. For a given portfolio the more you can lower that the better, but it is literally diminishing returns. My biggest holding is VTSAX with fees of 0.04%, then VTIAX with 0.11% fees and finally VWIAX with 0.16% fees. As I pay no platform charges my total investment fee comes to 0.08%. I look back now and I could have chosen a different portfolio with higher fees that would have got me better returns, but also one with far worse returns. The thing with lower fees is they are guaranteed returns...all things being equal portfoliowise...but they never are.

GeoffTF

I achieve my 0.1% with effectively a global equity tracker with about 20% UK as my 60% equities. The cost is diluted with 40% in savings accounts and other cash/bond investments with no ongoing costs. I do not pay any platform fees, and my dealing costs are virtually zero as a percentage.

Cus

Do your numbers include transaction costs and charges? So buying and selling of the underlying assets in the fund? On a normal breakdown of fees document they show ongoing fund costs separately from that? I guess I mean the cost the fund manager pays when trading the underlying assets to match an index. Or is that basically the lower performance of the fund versus the index it is trying to mimic?

dunstonh

Cus said:

Do your numbers include transaction costs and charges? So buying and selling of the underlying assets in the fund? On a normal breakdown of fees document they show ongoing fund costs separately from that? I guess I mean the cost the fund manager pays when trading the underlying assets to match an index. Or is that basically the lower performance of the fund versus the index it is trying to mimic?

You generally find that most posters on here disregard the TC and the IC/Other columns when it comes to charges.

I.e. they look only at the platform charge and OCF and ignore the rest.

GeoffTF

Cus said:

Do your numbers include transaction costs and charges? So buying and selling of the underlying assets in the fund? On a normal breakdown of fees document they show ongoing fund costs separately from that? I guess I mean the cost the fund manager pays when trading the underlying assets to match an index. Or is that basically the lower performance of the fund versus the index it is trying to mimic?

Yes, as I said. They are Vanguard trackers. I used the data here:

https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

I added "Ongoing Costs" to "Transaction Costs" for each fund and multiplied the result by the value of that holding. I added that up for all my fund holdings, and divided by the size of my portfolio (which contains 40% cash/bond investments with no ongoing costs). My brokerage costs are negligible as a percentage.

Cus

GeoffTF said:

Cus said:

Do your numbers include transaction costs and charges? So buying and selling of the underlying assets in the fund? On a normal breakdown of fees document they show ongoing fund costs separately from that? I guess I mean the cost the fund manager pays when trading the underlying assets to match an index. Or is that basically the lower performance of the fund versus the index it is trying to mimic?

Yes, as I said. They are Vanguard trackers. I used the data here:

https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges.pdf

I added "Ongoing Costs" to "Transaction Costs" for each fund and multiplied the result by the value of that holding. I added that up for all my fund holdings, and divided by the size of my portfolio (which contains 40% cash/bond investments with no ongoing costs). My brokerage costs are negligible as a percentage.

Thanks. Looks like the cheapest vanguard fund is 0.23% with lots above. I always though vanguard were cheaper. Must be the US ones that are cheaper.

bostonerimus

Cus said:

Do your numbers include transaction costs and charges? So buying and selling of the underlying assets in the fund? On a normal breakdown of fees document they show ongoing fund costs separately from that? I guess I mean the cost the fund manager pays when trading the underlying assets to match an index. Or is that basically the lower performance of the fund versus the index it is trying to mimic?

I'm using US based funds so the fees are a little different. For VTSAX (Total US Stock market) the expense ratio is 0.04% and it's annual average return since 2000 is 8.61% whereas the index it tracks has returned 8.62% so that's 0.01% in extra costs.