Fees for income funds

Malthusian

dont_use_vistaprint said:

Thinking of investing in Franklin Income USD fund via HSBC. They have been very helpful matching my objectives and setting up the platform and USD account. But the one off fee of 3% seems high & I know they are not competive on Forex too.

For a 3% initial fee for a non-advised purchase I wouldn't expect "helpful", I would expect "contract note hand-delivered to my house on a gold platter with a complimentary cake". And they can clean my house while they're at it.

dont_use_vistaprint

Eyeful said:

Where did the 8.12% you have just mentioned arise?

I was just pointing out that I followed that link you posted as being the income fund you intended to invest in. Once there I clicked on the documents section which led to the Regulatory Documents section. From this I extracted the KIID document, which the company themselves say you should read before making a final decision. 

The KIID clearly states that for the year ending 31 December 2022.
You will pay a one off charge of 5.75%.
That the this fund has an annual on going charge of 1.67% (at present).

To me these are both high charges to pay someone for being very helpful.

I have no idea if you had read the KIID, or if these charges had been pointed out to you. That is why I included all these in that first post.   

It’s the current amount of income paid based on the dividend and current unit price / entry point.

Those fees are maximum that can be charged and may be fully discounted and not applicable via HSBC Jersey platform it’s a one off 3% of amount invested 

dont_use_vistaprint

masonic said:

This thread is seriously confusing, but it bears mentioning that any "initial charge" in the fund's literature is likely to be heavily discounted, usually to 0% at most popular fund supermarkets, while the OCF/TER figure is the one to look out for and is an annual charge. The platform fee (0.25% taken quarterly at HSBC - does this mean 1% per year?) should be added on.

This looks like an eye-wateringly expensive choice of fund and platform to me. It's also unclear why you would want to invest in an offshore fund when there are better and cheaper UK-domiciled alternatives without the forex headache.

It also doesn't look from here as if the fund being discussed is carried: https://www.hsbc.co.uk/investments/products/global-investment-centre/funds/

Perhaps you are using a different HSBC advisory or offshore service?

Can you post a link to better performing / cheaper uk based income fund please 

latest nav 9.9
Dividend 0.067
Monthly dividend on $100K

$676.77

dont_use_vistaprint

Malthusian said:

dont_use_vistaprint said:

Thinking of investing in Franklin Income USD fund via HSBC. They have been very helpful matching my objectives and setting up the platform and USD account. But the one off fee of 3% seems high & I know they are not competive on Forex too.

For a 3% initial fee for a non-advised purchase I wouldn't expect "helpful", I would expect "contract note hand-delivered to my house on a gold platter with a complimentary cake". And they can clean my house while they're at it.

In your expert opinion, What is a competitive one-off fee for a lump sum investment in a high yield income fund ? 

For example 100k invested, 8120 per annum returned via monthly payments , initial 3K is extortionate in your opinion , so what is reasonable ?

dont_use_vistaprint

masonic said:

This thread is seriously confusing, but it bears mentioning that any "initial charge" in the fund's literature is likely to be heavily discounted, usually to 0% at most popular fund supermarkets, while the OCF/TER figure is the one to look out for and is an annual charge. The platform fee (0.25% taken quarterly at HSBC - does this mean 1% per year?) should be added on.

This looks like an eye-wateringly expensive choice of fund and platform to me. It's also unclear why you would want to invest in an offshore fund when there are better and cheaper UK-domiciled alternatives without the forex headache.

It also doesn't look from here as if the fund being discussed is carried: https://www.hsbc.co.uk/investments/products/global-investment-centre/funds/

Perhaps you are using a different HSBC advisory or offshore service?

Hi , im finding it hard to compare , what are some of  the popular fund supermarkets I should compare it with  ? I only currently have these , I can’t locate this fund (LU0098860793) on any of them 

Vanguard
revolut
interactive investor
HSBC Wealth
Barclays plan & invest 

dont_use_vistaprint

JohnWinder said:

the only fees payable for life is one off is 3% of the sum invested …..

‘it’s the fee that HSBC charge me , and it’s the only fee there is for the life of the investment 

The only fee payable to whom? If the answer is HSBC, are there any other fees payable to anyone                                                                                                                                                                                        else for the life of the fund?      
If there are none, buy some for me too, although I have strong doubts about the managers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Fee is payable to HSBC. For example to invest lump sum of  1000, you pay them 1030. High amounts may reduce to 2.25 with a bit of arm twisting but you still hand over 3% they just buy more units.

they said no other fees are payable to anyone , no management fees, no fees for selling and no fees on the monthly income transfers. The only additional fee would be 3% of any additional future  investments.

I can’t buy them for you sorry but do you think it’s a low cost fee? Others here think it’s very high. This is confusing 

what is your concern about the 3 managers, I researched them and nothing negative came up at all  

Eyeful

    So ,are you saying that instead of paying an up front charge of 5.75% that is  mentioned in the KIID, the company has agreed to give you a discount & only have you pay them a one off charge of 3% instead?

 What explanation did they give for their high annual on going charge of 1.67%?  

Have you thought of using an ETF with a much lower on going charge?
 
Examples:-
S&P US Dividend  Aristocrats with an on going charge of just 0.35%  
 https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000UHBW    
                              or  
Vanguard All World High Dividend Yield on going charge of 0.25%
 https://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-plc-ftse-world-high-div-yld

Would either of these two articles be of interest to you?
  https://www.morningstar.co.uk/uk/news/228237/top-rated-income-funds.aspx
https://www.trustnet.com/news/13300702/the-uk-income-funds-that-have-paid-the-most-in-dividends-and-made-top-returns

dont_use_vistaprint

Eyeful said:

    So ,are you saying that instead of paying an up front charge of 5.75% that is  mentioned in the KIID, the company has agreed to give you a discount & only have you pay them a one off charge of 3% instead?

 What explanation did they give for their high annual on going charge of 1.67%?  

Have you thought of using an ETF with a much lower on going charge?
 
Example:- S&P US Dividend  Aristocrats with an on going charge of just 0.35%  
 https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000UHBW       

Would either of these two articles be of interest to you?
  https://www.morningstar.co.uk/uk/news/228237/top-rated-income-funds.aspx
https://www.trustnet.com/news/13300702/the-uk-income-funds-that-have-paid-the-most-in-dividends-and-made-top-returns

Thanks for these I’ll take a read 

they made no up front disclosure or explanation about the Franklin fees on the funds own documents, but of course they provided  them &  I read them and asked. 

The one off sales fee is reduced to 3%, the annual fee is disclosed for info on expense ratios but it’s taken off before  the yield and calculated returns, so it’s not concerning to me at all it’s the output that matters to me

Zero platform fees 

They said all funds charge different fees, based on the costs of running the fund, but said what’s important is the income I get back from this fund each month is after the annual fees & the closest  to my requirements ( I asked for 10%)  at the risk level I asked for and the entry point unit price is extremely good plus other requirements I wanted like offshore and all monies in USD etc. 

GeoffTF

dont_use_vistaprint said:

They said all funds charge different fees, based on the costs of running the fund, but said what’s important is the income I get back from this fund each month is after the annual fees & the closest  to my requirements ( I asked for 10%)  at the risk level I asked for and the entry point unit price is extremely good plus other requirements I wanted like offshore and all monies in USD etc. 

No. There is no point in drawing a high income if it does not last. Past performance is irrelevant, because it is in the past. A global tracker fund gives the widest spread of risk at the a very low cost. You then decide how much income you draw from it. Income funds are less diversified than a market weighted global tracker because they only invest in companies that pay high dividends. Those companies are usually higher risk or have lower growth prospects. You can reduce your risk by holding a bond fund in to a global equity tracker, and drawing each month's income from whichever fund is above your target percentage allocation. There is no substitute for educating yourself. Here is a good place to start:

https://kroijer.com/

Malthusian

dont_use_vistaprint said:

They said all funds charge different fees, based on the costs of running the fund, but said what’s important is the income I get back from this fund each month is after the annual fees & the closest  to my requirements ( I asked for 10%)  at the risk level I asked for and the entry point unit price is extremely good plus other requirements I wanted like offshore and all monies in USD etc. 

This is starting to sound like an advised sale. But not good advice.
We had assumed you chose the Franklin Income fund yourself, but from the above paragraph it sounds like HSBC did.

High amounts may reduce to 2.25 with a bit of arm twisting but you still hand over 3% they just buy more units.

That makes no sense - the fee is either 2.25% or it isn't. You are handing over £100k and whatever isn't used to buy units is an initial charge.
Are you living in the US? It isn't clear why you wanted a fund with a price quoted in USD. (The fund is invested in UK equities so ultimately what matters is the value of UK companies with high dividends relative to the currency you pay your bills in, not the flucutations of USD vs GBP.)