Money Market funds

Stargunner

I have money in the acc version of the Royal London Short Term Money Market Fund Y. Lots of others seem to as well, as It has a market cap of over £5b   It is money that I intend to start drawing down from my SIPP within the next year, so don’t want to risk it in equities.

GeoffTF

Mr_blibby said:

If its I have a reasonable slug in the Lyxor Smart overnight CSH2 in my AJ Bell Sipp - £9.95 transaction charge and as its an ETF then max £120 charges a year, which for me makes it pretty close to getting base rate. Doesn't have the £85K bank protection, but I already dont have that just leaving it as cash, so worth the small risk I think

I believe AJ Bell splits client cash over several banks. The FSCS "looks through" AJ Bell to the individual banks. You have £85K protection with each of those banks, if you do not have deposits with them already.

I expect that CSH2 holds a portfolio of gilts and swaps the interest payments from those with those from Societe Generale's overnight deposits with other banks. If something blows up, it may well only be overnight interest payments that are lost. Hopefully, the Luxembourg regulator has done a good job here.

cwep2

If you use an accumulation fund, is this taxed as capital gains, even though the source of these capital gains is interest income?

Might be useful as CGT allowance is several k and interest income gets taxed after 1k or £500 if you’re a basic/higher rate tax payer. 

GeoffTF

cwep2 said:

If you use an accumulation fund, is this taxed as capital gains, even though the source of these capital gains is interest income?

Might be useful as CGT allowance is several k and interest income gets taxed after 1k or £500 if you’re a basic/higher rate tax payer. 

No:

https://techzone.abrdn.com/anon/public/investment/Guide-Taxation-of-Collectives

For accumulating ETFs like CSH2, the Excess Reportable Income is taxed as income. That can be added to the base cost, but there may still be a capital gain or loss.

brucefan_2

ChilliBob said:

That's interesting, I think that might be just how that platform charges tbh, I'm pretty sure I'd pay charges on both II and iweb 

This from the Hargreaves Lansdown SIPP fees and charges page:

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

GeoffTF

brucefan_2 said:

ChilliBob said:

That's interesting, I think that might be just how that platform charges tbh, I'm pretty sure I'd pay charges on both II and iweb 

This from the Hargreaves Lansdown SIPP fees and charges page:

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

You pay 0.45% of the value of OEICs every year with HL, but nothing with either iWeb or II (except for the dealing charges).

brucefan_2

GeoffTF said:

brucefan_2 said:

ChilliBob said:

That's interesting, I think that might be just how that platform charges tbh, I'm pretty sure I'd pay charges on both II and iweb 

This from the Hargreaves Lansdown SIPP fees and charges page:

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

You pay 0.45% of the value of OEICs every year with HL, but nothing with either iWeb or II (except for the dealing charges).

Thanks for the further clarification.

So, basically from £1100 upwards, you're better off with iweb (although there is a one-off £100 initial registration charge with iweb?)

David

coyrls

With ii, if you buy through their regular investing facility, there is no dealing charge.  Although it's called regular investing, you can use it for one off purchases, just cancel it after the buy has gone through.

ChilliBob

coyrls said:

With ii, if you buy through their regular investing facility, there is no dealing charge.  Although it's called regular investing, you can use it for one off purchases, just cancel it after the buy has gone through.

Interesting, I'd never thought of that. So you just setup regular investing, wait x days for the first one to go through, then cancel it?

I suppose its not much good if you want to place something there and then. However, for something like this it may work well. 

GeoffTF

brucefan_2 said:

GeoffTF said:

brucefan_2 said:

ChilliBob said:

That's interesting, I think that might be just how that platform charges tbh, I'm pretty sure I'd pay charges on both II and iweb 

This from the Hargreaves Lansdown SIPP fees and charges page:

Dealing charges

Fund dealing

Includes unit trusts and open-ended investment companies (OEICs). There’s no dealing charge for buying or selling funds.

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

You pay 0.45% of the value of OEICs every year with HL, but nothing with either iWeb or II (except for the dealing charges).

Thanks for the further clarification.

So, basically from £1100 upwards, you're better off with iweb (although there is a one-off £100 initial registration charge with iweb?)

David

iWeb will usually be cheaper. Money Market funds do not make much sense for a meagre amount of life savings. They are most appropriate for people who already have large investment portfolios. You can avoid percentage platform charges with most brokers by using ETFs, but they come with their own issues.