Charges for share ISA

Gemius

As a keen follower of Money Saving Expert I went to Hargreaves and Lansdown to open a stocks and share ISA after reading Martins advice on the cheapest deals. I chose the HSBC FTSE 100 Index Tracker for which they quoted no initial fee and an Annual Management fee of 1%.
While I was at it I checked around and found that my own bank, The Co-op had a fund supermarket of their own and were quoting exactly the same. So where is the saving going to H&L or am I missing something?

Aegis

Tracker funds tend not to pay as much commission, hence you get less commission rebated to you from H-L for having a tracker fund. If you put some managed funds in your portfolio, you'll find that they get a lot more of a discount.

cheerfulcat

HL also rebate some of the annual charges.

dunstonh

Do they rebate on a tracker fund? Most trackers tend to pay trail of around 0.35%.

While I was at it I checked around and found that my own bank, The Co-op had a fund supermarket of their own and were quoting exactly the same. So where is the saving going to H&L or am I missing something?

They use Fidelity as a backbone and white label it as their own. They also add in charges which are higher than your average IFA. So, if you use Co-op/Smile you are paying more for less consumer protection and no advice .

cheerfulcat

dunstonh wrote: »

Do they rebate on a tracker fund? Most trackers tend to pay trail of around 0.35%.

Yes, to the tune of 0.25%.

turbobob

1% AMC on a tracker fund is extremely high though, in my opinion.

dunstonh

Ahh, thats the rebate on that fund but that is an expensive tracker. I was thinking more along the lines of a charges on a better tracker.

cheerfulcat

That's the fund the OP posted about! Yes, of course there are cheaper trackers. I don't know HL's position on all of them but the very cheapest ones, ETFs, don't AFAIK provide trail commission, so nothing to refund.

dunstonh

The Op's choice of fund is naff and highlights the risks of an inexperienced investor trying to go DIY to save a few pence.

its 100% stockmarket and probably above their risk profile (most inexperencied investors are cautious risk yet this fund is medium/high). Its also 100% into the FTSE 100 which has been the worst index to track for over 14 years. Of course, past performance is no guide to the future....

If you are going to investment on medium/high risk then there are better options available looking at future potential.

turbobob

cheerfulcat wrote: »

That's the fund the OP posted about! Yes, of course there are cheaper trackers. I don't know HL's position on all of them but the very cheapest ones, ETFs, don't AFAIK provide trail commission, so nothing to refund.

HL will add their own 0.5% annual charge on funds that don't pay any/enough trail commission.

So if for example, the OP chose an L&G UK 100 Index fund, which has a 0.75% annual charge, they would neither have any discount nor any additional charge through HL.

But if they chose a Fidelity Moneybuilder UK Tracker fund, which only has a 0.1% annual charge, then HL would charge an extra 0.5% a year for this fund.

I can see the logic in choosing an FTSE100 tracker fund. "Its the 100 biggest companies, so its going to be safe innit" or something like that But I think with a bit of research you could definately do better.

purch

after reading Martins advice on the cheapest deals

The advice is not always sound when it related to Investment Funds

The cheapest deal is unlikely to be the best deal