Retail investors and institutional classes

aroominyork

I am considering buying Royal London Sterling Credit on Interactive Investor, Z class at 0.35% OCF. I track my investments on HL's watchlist but HL only offer M class at 0.53% OCF. I messaged HL about this and they replied they do not offer Z class because it is an institutional class. Can someone please explain this retail/institutional difference? The fund's factsheet shows minimum investment in M class as £100,000 and Z class as £3,000,000. How does this affect retail investors and the classes which platforms do or do not offer? (Naturally this wouldn't stop me buying it on ii - it is just out of interest.)

Prism

It just means that HL haven't decided to commit to the Z class. Others like AJBell and ii do have it. Other way around for funds like Lindsell Train global where HL have the cheapest class.

I always use institutional classes where available - I don't think the word means much nowadays.

aroominyork

Prism said:

It just means that HL haven't decided to commit to the Z class. Others like AJBell and ii do have it. Other way around for funds like Lindsell Train global where HL have the cheapest class.

I always use institutional classes where available - I don't think the word means much nowadays.

What does 'committing' mean for the platform? Is there a downside to them of offering the cheapest class?

Prism

aroominyork said:

Prism said:

It just means that HL haven't decided to commit to the Z class. Others like AJBell and ii do have it. Other way around for funds like Lindsell Train global where HL have the cheapest class.

I always use institutional classes where available - I don't think the word means much nowadays.

What does 'committing' mean for the platform? Is there a downside to them of offering the cheapest class?

I guess they have to be sure that in this case they have £3m worth of investments. It doesn't sound much but unless anyone asks for the cheaper class they don't bother providing it.

dunstonh

aroominyork said:

Prism said:

It just means that HL haven't decided to commit to the Z class. Others like AJBell and ii do have it. Other way around for funds like Lindsell Train global where HL have the cheapest class.

I always use institutional classes where available - I don't think the word means much nowadays.

What does 'committing' mean for the platform? Is there a downside to them of offering the cheapest class?

Platforms are the investor in the fund.  not the individual.   So, if the platform believes it can make the target minimum investment amount, they will discuss it with the fund house and the fund house will offer it if they can be persuaded to believe the minimum can be hit within a defined period.  There may be a cost or consequence to the platform is the amount isn't hit.  So, they wont go offering institutional funds willy nilly.

george4064

dunstonh said:

aroominyork said:

Prism said:

It just means that HL haven't decided to commit to the Z class. Others like AJBell and ii do have it. Other way around for funds like Lindsell Train global where HL have the cheapest class.

I always use institutional classes where available - I don't think the word means much nowadays.

What does 'committing' mean for the platform? Is there a downside to them of offering the cheapest class?

Platforms are the investor in the fund.  not the individual.   So, if the platform believes it can make the target minimum investment amount, they will discuss it with the fund house and the fund house will offer it if they can be persuaded to believe the minimum can be hit within a defined period.  There may be a cost or consequence to the platform is the amount isn't hit.  So, they wont go offering institutional funds willy nilly.

Also worth noting that these ‘minimums’ are just guidelines and many fund managers negotiate on them with the investors (i.e. the platforms).