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Pension charges - !!!!!!!

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  • dunstonh said:
    Must confess the fact that the US and Canada have lower costs than the UK for investments is about as much use to me as knowing that housing and food is cheaper in Moldova.


    All of this though is just technical discussion and not of any interest to the vast majority posting here.
    Based on my own anecdotal experience of using products and brokers in both countries,the US is noticeably cheaper for comparable products. And has more choice.  And more information is available. 
  • dunstonh
    dunstonh Posts: 119,738 Forumite
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    dunstonh said:
    Must confess the fact that the US and Canada have lower costs than the UK for investments is about as much use to me as knowing that housing and food is cheaper in Moldova.


    All of this though is just technical discussion and not of any interest to the vast majority posting here.
    Based on my own anecdotal experience of using products and brokers in both countries,the US is noticeably cheaper for comparable products. And has more choice.  And more information is available. 
    But are the charges comparable in what they do and do not include?   Does the US charges disclosure match AMC or TER or OCF or OCF+TC+IC?

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • AlanP_2
    AlanP_2 Posts: 3,520 Forumite
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    edited 29 July 2022 at 10:04AM
    AlanP_2 said:
    Must confess the fact that the US and Canada have lower costs than the UK for investments is about as much use to me as knowing that housing and food is cheaper in Moldova.

    It has no relevance to what a UK investor can make use of.
    Your question was answered multiple times. Your costs are way, way too high given what’s available in the UK. 
    I never asked a question in this thread and you have absolutely no idea what my costs are.

    If you mean the OPs question has been answered and his costs are way too high given what is available in the UK then you are correct.

    That does not alter the point that what costs are in the US / Canada is irrelevant to a UK consumer and does not assist in helping the OP to decide whether his costs in the UK are too high.

    Unless you are suggesting he emigrate to save on investment charges?
  • AlanP_2 said:
    AlanP_2 said:
    Must confess the fact that the US and Canada have lower costs than the UK for investments is about as much use to me as knowing that housing and food is cheaper in Moldova.

    It has no relevance to what a UK investor can make use of.
    Your question was answered multiple times. Your costs are way, way too high given what’s available in the UK. 
    I never asked a question in this thread and you have absolutely no idea what my costs are.

    If you mean the OPs question has been answered and his costs are way too high given what is available in the UK then you are correct.

    That does not alter the point that what costs are in the US / Canada is irrelevant to a UK consumer and does not assist in helping the OP to decide whether his costs in the UK are too high.

    Unless you are suggesting he emigrate to save on investment charges?
    Yes, sorry. OP’s costs are way too high. OP has already been “assisted” and the discussion moved on because someone mentioned lower costs in the US and that caused a disagreement. Normally one does not need to emigrate to buy foreign financial products. I can do it from Canada. And that increases competition within Canada and makes Canadian products better. The reason British residents can’t buy US ETFs is EU rules, which are protectionist. Which might change in British context. 


  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    edited 29 July 2022 at 2:19PM
    dunstonh said:
    dunstonh said:
    Must confess the fact that the US and Canada have lower costs than the UK for investments is about as much use to me as knowing that housing and food is cheaper in Moldova.


    All of this though is just technical discussion and not of any interest to the vast majority posting here.
    Based on my own anecdotal experience of using products and brokers in both countries,the US is noticeably cheaper for comparable products. And has more choice.  And more information is available. 
    But are the charges comparable in what they do and do not include?   Does the US charges disclosure match AMC or TER or OCF or OCF+TC+IC?

    Expense ratio or “MER” is equivalent to TER and is readily available.  

    Separately, we are provided full information on other charges such as trading costs and platform charges (the latter is zero; the former zero for ETFs on many platforms). 

    The “trading costs/transaction fees” ( what you call TC) should be split out because they are different for different people. Of course they are provided.  Also,  my statement clearly summarizes total expenditure on “TC” over the statement period. No idea what  “IC” stands for so can’t comment but every cent I am charged vs pure idex performance is clearly explained. 

    I track performance vs a basket of indices which I hold. That tells me the real story on any imaginable charges and inaccuracies in tracking. I am “losing” circa 10 basis points vs the indices, including all costs such as platform charges and trading fees, currency exchange costs, etc).  That also includes foreign withholding taxes on products outside N America. The costs for “UK held” portion are higher. Still manageable; well under 50 basis points. 
  • dunstonh
    dunstonh Posts: 119,738 Forumite
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    Expense ratio or “MER” is equivalent to TER and is readily available.  
    TER is largely obsolete in the UK/EU.  It was replaced with OCF apart from certain instruments that are exempt.  Although in many cases, the TER and OCF are the same.

    The “trading costs/transaction fees” ( what you call TC) should be split out because they are different for different people. Of course they are provided.  Also,  my statement clearly summarizes total expenditure on “TC” over the statement period. No idea what  “IC” stands for so can’t comment but every cent I am charged vs pure idex performance is clearly explained. 
    I have looked and apparently, Transaction Charges are not required to be disclosed in the US yet they are included in the UK/EU.  

    TCs do not vary with different people in percentage terms.  They will obviously vary in monetary terms due to differing values.

    So, whilst I expect the US to be cheaper due to economies of sale, the margin is perhaps not as big as being made out.




    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    dunstonh said:
    Expense ratio or “MER” is equivalent to TER and is readily available.  
    TER is largely obsolete in the UK/EU.  It was replaced with OCF apart from certain instruments that are exempt.  Although in many cases, the TER and OCF are the same.

    The “trading costs/transaction fees” ( what you call TC) should be split out because they are different for different people. Of course they are provided.  Also,  my statement clearly summarizes total expenditure on “TC” over the statement period. No idea what  “IC” stands for so can’t comment but every cent I am charged vs pure idex performance is clearly explained. 
    I have looked and apparently, Transaction Charges are not required to be disclosed in the US yet they are included in the UK/EU.  

    TCs do not vary with different people in percentage terms.  They will obviously vary in monetary terms due to differing values.

    So, whilst I expect the US to be cheaper due to economies of sale, the margin is perhaps not as big as being made out.






    The OP's charges are high and will be a drag on performance and will hurt particularly early in the drawdown phase where they will constitute a large fraction of their income. So minimize pension charges (wherever you are) is a good thing to do. Vanguard in the US is used by many people because they have low expense ratios and don't charge transaction fees on their own funds, but there are plenty of other firms and platforms who will happily charge their customers more. So the UK investor should understand fees and shop around. If they are buying index funds they should look at the total expenses , ie platform and fund fees and then also look at any tracking error from the benchmark to gauge any internal transaction costs. That is why I earlier gave the example of Vanguard Total Stock Market Admiral funs having an ER=0.04% and a tracking error of 0.02%. If this is owned with US Vanguard there are no transaction or platform fees, but it would be possible to own Vanguard funds on other platforms and pay more. So the OP should shop around with fees and expenses in mind.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • dunstonh
    dunstonh Posts: 119,738 Forumite
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    Vanguard in the US is used by many people because they have low expense ratios and don't charge transaction fees on their own funds
    They do suffer transaction costs internally.  Their own documentation confirms that.  They just don't declare it (along with other mutual funds) as the SEC doesn't require it in their disclosures. In comparison, the EU/UK do require it to be included in the disclosure.

    So, if you compare charges in a country that doesn't require full disclosure vs one that does then you have to take that into account. 

    It may not be a lot in some cases (Vanguard US equity index suffers 0.01% TC but VLS60 ETF suffers 0.07% TC).   According to one research group US Investors in small-cap growth funds pay an average of 3.17% per year in transaction costs. Investors in large-cap value funds pay an average of 0.84% per year in transaction costs (2018).   That is far higher than that most expensive in the UK.  However, if they are not being included and disclosed in the US, you don't know how much they really are and that makes it difficult to compare to the UK/EU.
    ie platform and fund fees and then also look at any tracking error from the benchmark to gauge any internal transaction costs. 
    It's not just costs that cause tracking error.   Vanguard use sampled replication.  Whereas many others use full replication.    It doesn't make a lot of difference but it can create slightly more volatility.


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    edited 29 July 2022 at 6:45PM
    dunstonh said:
    Expense ratio or “MER” is equivalent to TER and is readily available.  
    TER is largely obsolete in the UK/EU.  It was replaced with OCF apart from certain instruments that are exempt.  Although in many cases, the TER and OCF are the same.

    The “trading costs/transaction fees” ( what you call TC) should be split out because they are different for different people. Of course they are provided.  Also,  my statement clearly summarizes total expenditure on “TC” over the statement period. No idea what  “IC” stands for so can’t comment but every cent I am charged vs pure idex performance is clearly explained. 
    I have looked and apparently, Transaction Charges are not required to be disclosed in the US 

    TCs do not vary with different people in percentage terms.  They will obviously vary in monetary terms due to differing values.

    So, whilst I expect the US to be cheaper due to economies of sale, the margin is perhaps not as big as being made out.




    I don’t know what’s required but transaction charges are disclosed in the US. For someone like me there are two types:  

    1. Broker commission.
    2. Spread costs.

    This week I bought some NYSE-traded VWO ETF shares via my Canadian broker (Questrade). Broker commission was zero. The spread was 1 US cent or about 0.02%.

    Today I bought some UK traded EMIM ETF shares via Jarvis X-O SIPP.  Broker commission was 5.95 GBP. The spread was 5 pence or 0.2%.

    In both cases everything was transparent. UK transaction costs are markedly higher. Not a deal breaker but irritating. Also, means that I won’t always reinvest dividends right away until its worth it, which creates additional traction and costs. 

    Of course annual transaction costs are very different depending on individual, trading frequency and instruments used.  Both in absoluteand percentage terms. For someone like me, N America is way cheaper. 

    Expense ratio for holding EMIM is noticeably higher than for VWO, whatever you call it. 

    N American ETFs have  more info available too. For the life of me I couldn’t find withholding taxes for EMIM. Info for VWO is readily available. Its a meaningful cost, higher than the expense ratio, and different instruments holding the same type of equity could vary in efficiency wrt foreign withholding taxes.  
  • dunstonh
    dunstonh Posts: 119,738 Forumite
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    edited 29 July 2022 at 7:16PM
    I don’t know what’s required but transaction charges are disclosed in the US. 
    No they are not.   Apart from other independent sources, here is what Vanguard say:



    in the UK/EU, those costs are included and disclosed on investments captured by MiFIDII and the insurance directive ( which includes pension funds)

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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