Change of M&S Unit Trust Management 26th Sept

Briskly

Does anyone know much about this? I've never heard of the company taking over. I'm wondering if I can get someone else to manage my modest investment and if so if I will have to sell and re-buy with all the possible added fees.

dunstonh

 I've never heard of the company taking over.

To be fair, the fact that you chose M&S Unit Trusts does suggest your knowledge on investments is poor. Don't mean that derogatively, but more an observation that if you knew about investment companies and investments, then you wouldn't have chosen M&S.

Waystone is now the largest independent ManCo/ACD in the UK

I'm wondering if I can get someone else to manage my modest investment 

yes you can.

 if so if I will have to sell and re-buy with all the possible added fees.

Yes, you'll have to sell and re-buy. Not sure what possible added fees you're referring to though.

poseidon1

Reading the details of the change below, you will find yourself with a noticeably different investment product than you have at present -

https://bank.marksandspencer.com/content/dam/wpb/msrf/pws/documents/MSUTMImportantInformation.pdf

Your current product is to all intents and purposes a 'white labled' HSBC unit trust with M&S branding. HSBC are the investment managers and advise on the sale and purchase of stockmarket listed shares to meet the investment brief of the unit trust you are invested in.

By contrast Waystone the new managers will not be doing this. They will be investing in a selection of third party unit trusts companies, who in turn go on to directly invest in stocks and shares and therefore will be offering a form of managed 'fund of funds' service for each of the unit trusts currently in the M& S stable.

If you liked what HSBC were effectively doing for you and consider Waystone an unknown quantity, you will be selling your exsisting units and sourcing the appropriate HSBC fund to reinvest in, either direct with HSBC via their Global Investment Centre or via an appropriate independent third party investment platform.

However, if you are significantly in profit, you may trigger a gain well in excess of your £3,000 annual exemption and end up paying CGT at 18 or 24% on sale, so your decision to move should be considered with this potential tax penalty in mind.

What is the current profit on your unit trust and what is your annual taxable income?

Briskly

https://forums.moneysavingexpert.com/discussion/comment/82094234#Comment_82094234

Thanks - I inherited these from my Dad a long time ago! He bought them when they came out, and seemed OK at the time. I was wondering about management fees as well.

Briskly

https://forums.moneysavingexpert.com/discussion/comment/82094244#Comment_82094244

Thanks for this. When my Dad gave them to me about 20 years ago they were worth about £4,500. Now they are £17,000. I'm at the lower income tax rate and have got the full £3000 capital gains allowance but would still have to pay a lot of CGT by the look of it. Feel a bit miffed by this as I don't like the sound of the transition. I was hoping I could somehow just transfer them all to some more local manager without selling and incurring taxes.

dunstonh

Feel a bit miffed by this as I don't like the sound of the transition.

There was a period when retailers decided to look at financial services and started offering financial products under their brand names. In reality, many of the products offered were cut-down or more expensive versions of the originals they were based on. When that fad fell out of fashion, what was often left behind was a declining customer base. So paying a multinational global company to control the book in decline doesn't look that attractive when you can use a dedicated ACD who is used to dealing with small and, niche investments.

And let's be honest, I've just looked at the performance of the M&S funds, and all of them have underperformed the sector average. They're expensive, as to be expected but the performance is a disappointment. I suppose, then again, that shouldn't be unexpected either. White-labelled financial services products are not normally that good.

I was hoping I could somehow just transfer them all to some more local manager without selling and incurring taxes.

Obviously, there are no charges for changing the investments, but taxation is going to be your key issue. It's a shame that they were not bed and ISA'd over the years. However, that is still possible. Just do enough each year to utilise the CGT allowance and re-buy a better alternative in a stocks and shares ISA.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82094822#Comment_82094822

So you have about £12500 of gain. If you sold the lot you could set £3k against that and pay 18% on £9500 which is £1710.

If you spread the sales out to use up only £3k of gain each year that would take you 4 or 5 years to get rid of the lot.

If you are married you could give half to your spouse and they could use their £3k allowance selling their half - could get you down to 2 or 3 years Or if you both sold all in one year it would get the CGT bill down to £1170 saving £540 of CGT.

Briskly

https://forums.moneysavingexpert.com/discussion/comment/82095134#Comment_82095134

Thanks again. I may well draw out £3k a year. Does it complicate the tax position that the fund is "inc", so the dividends added to the capital? Also, does the FSCS cover if the new company goes bust?

EthicsGradient

When you say "the dividends added to the capital", do you mean that, although it was "inc", you asked for the dividends to be automatically reinivested anyway? (Normally "inc" means you actually get the income paid out to your bank account, or at least to a "cash" account).

The underlying shares and funds in your fund are held by a major bank (the "depositary" - at the moment, for instance, for the M&S High Income Fund it is State Street, a huge American bank) in your name; if the manager goes bust, this would slow down your ability to cash them in, but they never belong to the manager, so they wouldn't disappear withit.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82095930#Comment_82095930

Do you mean income units or accumulation units? Accumulation units are the ones where dividends get rolled up into the price of the unit while income units pay out the dividends (but as @EthicsGradient says maybe you reinvested those dividends in new units - which could lead to a rather boring CGT calculation if you have done it a lot)

The attached note explains CGT on both types of unit

Taxation of OEICs and unit trusts

If you are uncertain about the gain calculation then the safest way to avoid CGT would be to keep the sales to £3k worth of units per tax year (assuming the annual allowance doesn't get changed). But you should be able to sell more than that without having any CGT to pay.

Briskly

https://forums.moneysavingexpert.com/discussion/comment/82095989#Comment_82095989

Thanks - sorry about my mistake, they are accumulation units! I'll stick to selling £3000 every year - but maybe wait until the budget in case they retrospectively change the allowance……