Understanding HL fees

solidpro

I've got a SIPP with HL.

I read this page: https://www.hl.co.uk/help/income-and-fees/fees-explained/annual-charges

Now, in the SIPP section, it says I pay 0.45% on my first £250k. Let's say I have £250k in a SIPP, that would be £1125 p/a in fees.

However, someone told me that if that SIPP is invested only in either shares or ETFs then the annual fee is capped at £200. Is this true?

On the HL web page above, it does have a section under each type of account called 'other investments' and it does say that 'any' is charged at .45% capped at £200 - which seems similar to what my 'friend' is telling me, but is that what it means!? And if it is, then does the cap apply for the fee charges other than .45%, like that above £250k?

The whole 'other investments' thing under each type of account and it's fees seems a bit weird and requires better labelling/explanation...

eskbanker

solidpro said:

I've got a SIPP with HL.

I read this page: https://www.hl.co.uk/help/income-and-fees/fees-explained/annual-charges

Now, in the SIPP section, it says I pay 0.45% on my first £250k. Let's say I have £250k in a SIPP, that would be £1125 p/a in fees.

However, someone told me that if that SIPP is invested only in either shares or ETFs then the annual fee is capped at £200. Is this true?

It's clearer at the SIPP fees page:

Shares

Including UK and overseas shares, investment trusts, exchange-traded funds, VCTs, gilts and bonds.

0.45%

capped at £200 per year

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

solidpro

BANG! Like a bullet train, eskbanker is out of the gates with the answers we all need. Like a highly trained whippet, desperate to fulfil his god-given skills. 

So, to clarify, if someone had £1m in a HL SIPP which was 100% in SPDR S&P 500 ETF, the only fees would be £200 and the 0.57% fund fee = £200 + £5900)?

Presuming that when these companies talk about caps, it only refers to the platform fee and not the fund fee too? Or does the £375 cap with Vanguard include both when it's a Vanguard fund, like VLS?

solidpro

I did the maths and at a sample balance of £100k in a SIPP account, it costs £690 P/A to service the VLS100 via HL and £615 via Vanguard's own platform. A difference of £75 due to Vanguard's platform fee cap of £375 P/A, which, of course does accumulate over 20 years with the compounding loss of £75+ profit each year and slightly lower balance gathering interest each year.

But it's not as bad as I thought.

And if you look at switching from the VLS100 fund via HL to an ETF in order to benefit from the HL £200 cap (has to be ETF or Share) you get an ETF fund fee which is more than double what the VLS's is, which costs £962 p/a and is probably slightly riskier than a VLS100. So unless anyone knows a decent ETF that is quite similar to the VLS100, for the time being, I'll leave as is, simply to keep SIPPs with two organisations rather than one.

MX5huggy

VLS100 is basically a global tracker with an over weight in the UK. Either decide you don’t want the overweight so any global tracker ETF will do (I use VHVG, but thats because I want it on the Vanguard platform) or put 85% in a global tracker and 15% in a FTSE all share tracker ETF.

masonic

solidpro said:

And if you look at switching from the VLS100 fund via HL to an ETF in order to benefit from the HL £200 cap (has to be ETF or Share) you get an ETF fund fee which is more than double what the VLS's is, which costs £962 p/a and is probably slightly riskier than a VLS100. So unless anyone knows a decent ETF that is quite similar to the VLS100, for the time being, I'll leave as is, simply to keep SIPPs with two organisations rather than one.

Which ETF are you looking at with a fee double Vanguard's 0.22% fund fee? A nice cheap ETF option would be FWRG at 0.15%. It doesn't have the UK bias, but that is no negative in my view. If you want the home bias, buy some LCUK or CUKX on the side.

Rich1976

solidpro said:

I did the maths and at a sample balance of £100k in a SIPP account, it costs £690 P/A to service the VLS100 via HL and £615 via Vanguard's own platform. A difference of £75 due to Vanguard's platform fee cap of £375 P/A, which, of course does accumulate over 20 years with the compounding loss of £75+ profit each year and slightly lower balance gathering interest each year.

But it's not as bad as I thought.

And if you look at switching from the VLS100 fund via HL to an ETF in order to benefit from the HL £200 cap (has to be ETF or Share) you get an ETF fund fee which is more than double what the VLS's is, which costs £962 p/a and is probably slightly riskier than a VLS100. So unless anyone knows a decent ETF that is quite similar to the VLS100, for the time being, I'll leave as is, simply to keep SIPPs with two organisations rather than one.

Where do you get £615 from? 

Vanguards platform fee is 0.15% + 0.22% fund fee = 0.37%

0.37% of 100000 is £370 so a difference of £320

solidpro

MX5huggy said:

VLS100 is basically a global tracker with an over weight in the UK. Either decide you don’t want the overweight so any global tracker ETF will do (I use VHVG, but thats because I want it on the Vanguard platform) or put 85% in a global tracker and 15% in a FTSE all share tracker ETF.

Good call.

masonic said:

solidpro said:

And if you look at switching from the VLS100 fund via HL to an ETF in order to benefit from the HL £200 cap (has to be ETF or Share) you get an ETF fund fee which is more than double what the VLS's is, which costs £962 p/a and is probably slightly riskier than a VLS100. So unless anyone knows a decent ETF that is quite similar to the VLS100, for the time being, I'll leave as is, simply to keep SIPPs with two organisations rather than one.

Which ETF are you looking at with a fee double Vanguard's 0.22% fund fee? A nice cheap ETF option would be FWRG at 0.15%. It doesn't have the UK bias, but that is no negative in my view. If you want the home bias, buy some LCUK or CUKX on the side.

SPDR S&P 500 UCITS ETF (SPY5.L) is 0.57%?

masonic

solidpro said:

SPDR S&P 500 UCITS ETF (SPY5.L) is 0.57%?

No it isn't:

It isn't a global tracker / equivalent to VLS100 either, but we've had that discussion before.

dunstonh

VLS100 is the odd one out in the range.    The rest of the VLS range are multi-asset funds.  VLS100 is a global managed fund.  

So, when comparing VLS100 to other "similar" funds, you would not select an S&P500 tracker.  You would pick another global managed fund or if you want to reduce the active decisions you would select an appropriate global tracker that suits your preferred investment style.

solidpro

The problem is that we are specifically talking about HL, and to align with their £200 P/A platform fee cap, the SIPP has to be invested in shares or an ETF. This is why I am comparing VLS100 (which isn't capped) which is there our SIPP sits with an ETF (which is capped). I'm trying to find something close in cost to a VLS100 and as least 'differrent' as possible - because I like it. I know VLS100 is more 'UK' weighted than S&P500, and I realise you could weigh up having more than one ETF to try and replicate that.

Having said all that, the extra cost with using HL and owning VLS100 isn't really anywhere near as much as I expected, even considering larger sums and longer timeframes.