Fidelity Index World P vs Fidelity Index World RS

moneymagic

Hello,
I currently have a chunk of money invested in Fid Index World P Acc (ISIN:GB00BJS8SJ34) within my workplace pension. Looking through the funds available I have noticed Fidelity Index World RS Acc (ISIN:GB00BQB5Z552) which was launched in Mar 2024. They appear to be the same when looking through the factsheet (aside from the charges of 0.12 vs 0.09%). I'm curious to know if there is something I'm missing (different share class maybe?) Given the limited funds available through my workplace pension, I'd be tempted to switch and save those pennies where I can ;-)

gravel_2

Same fund, different unit. https://www.trustnet.com/factsheets/O/AL65N/fidelity-index-world-rs-acc-gbp then click "all units".

Possibly the cheaper one is an institutional version (it has a far higher minimum initial investment) or it's a version specifically created and available to specific pension providers?

InvesterJones

Different class, yes. Looks like it's for institutional investors with a minimum £200m, which perhaps your pension provider qualifies for.

dunstonh

With DFM MPS on the rise, fund houses have been more proactive in issuing institutional share classes. On the tracker side, Blackrock, HSBC, L&G, and Vanguard have all issued supercleans for institutional investors. Fidelity was less active on that side, but it's no surprise to see them do it now.

aroominyork

dunstonh said:

With DFM MPS on the rise, fund houses have been more proactive in issuing institutional share classes. On the tracker side, Blackrock, HSBC, L&G, and Vanguard have all issued supercleans for institutional investors. Fidelity was less active on that side, but it's no surprise to see them do it now.

What is DFM MPS please, and can you please explain a little about cleanliness? Is it just cheaper classes of fund? 

ii is this week switching our iShares Continental European Equity Index Fund (UK) H Acc to the "equivalent cleaner" D Acc class. The return after charges looks better:

dunstonh

What is DFM MPS please, and can you please explain a little about cleanliness? Is it just cheaper classes of fund? 

Starting backwards,

With the retail distribution review (RDR) of 2013, all commissions (adviser and platform) had to be removed.   This unbundling of the charges meant fund houses issued share classes known as clean share classes.

However, some distribution channels wanted better terms.   So, some fund houses would issue superclean share classes.    i.e. clean of commission but lower cost than the default share class.

Larger investors also wanted better pricing, and historically, they had their own share classes, which were known as institutional share classes.     Post RDR, some were moved to superclean and some got a superclean institutional share class (sometimes you had the whole bundled available.   Retail (pre-RDR bundled), institutional, clean, superclean and institutional superclean.

DFM MPS is where a discretionary fund manager runs a portfolio of funds using platform software.  Some offer it in an OEIC form (fund of funds) and some offer it in both forms.  Vanguard Lifestrategy or HSBC GS for example, is available in OEIC form or MPS form.   OEIC would see you hold the single fund.   MPS sees you hold each of the underlying funds.

DFM MPS often have billions of pounds under management, and the fund houses view the amount at the top level (the DFM total) rather than the individual investor level. So, they will often offer the DFM MPS the institutional superclean share class rather than the clean share class that individual investors get.   For example, my preferred MPS gets Vanguard institutional superclean, which is 0.05% cheaper than the clean.   Bizarrely, Vanguard do not use the institutional superclean share classes in their own life strategy funds (in either OEIC or MPS form).

Because DFMs often have billions of pounds under management, they have to spread it around more to reduce concentration risk and liquidity risk.  Some fund houses force a maximum amount.

ColdIron

aroominyork said:

dunstonh said:

With DFM MPS on the rise, fund houses have been more proactive in issuing institutional share classes. On the tracker side, Blackrock, HSBC, L&G, and Vanguard have all issued supercleans for institutional investors. Fidelity was less active on that side, but it's no surprise to see them do it now.

What is DFM MPS please

MPS is a 'Managed Portfolio Service' or 'Model Portfolio Service'

EthicsGradient

aroominyork said:

dunstonh said:

With DFM MPS on the rise, fund houses have been more proactive in issuing institutional share classes. On the tracker side, Blackrock, HSBC, L&G, and Vanguard have all issued supercleans for institutional investors. Fidelity was less active on that side, but it's no surprise to see them do it now.

What is DFM MPS please, and can you please explain a little about cleanliness? Is it just cheaper classes of fund? 

ii is this week switching our iShares Continental European Equity Index Fund (UK) H Acc to the "equivalent cleaner" D Acc class. The return after charges looks better:

The slightly odd thing about those figures (open in new tab if needed to enlarge) is that the operating charges and direct transaction costs are the same in each year for each type, but the return after charges is about 0.035% better for the D class, in each year - because the return before operating charges is better, by about the same. The prospectus notes that
"Class H units are only available at the Manager’s discretion and to unitholders who have entered into a separate agreement with the Manager, the Principal Distributor or one of their affiliates in relation to the holding of Class H units."
but doesn't seem to explain what other difference there would be - or why its pre-charge returns should be slightly smaller.