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Vanguard Global Equity
Tyrion Lannister
Posted: 16 April 2018 19:45:15(UTC)
#16

Joined: 03/03/2017(UTC)
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Apostate;60708 wrote:
Tom Bards;60703 wrote:
Sara G;60701 wrote:
Tim D;60694 wrote:
Tom Bards;60682 wrote:
Alan Selwood;60679 wrote:
0.6% is dearer than Scottish Mortgage Trust (run by Baillie Gifford), and several of the other mainstream active trusts (Temple Bar, to name but one of several).


Scottish Mortgage Trust costs 0.95%

Temple Bar costs 1.37%


To compare like with like, the Vanguard PRIIP info for this Global Equity fund (here) claims there's another 0.1% in transaction fees to add on top of that 0.6% OCF, for a "total cost of investing" of 0.7%.


Not sure where those cost figures are coming from? On HL the OCF for TMPL is 0.49% and for SMT it is 0.44%. I hold MNKS which is 0.59%.




Check the KID Documents for full charges including transaction costs and gearing costs.

SMT overall charge is 0.95%, Temple Bar is 1.37%

MNKS with transaction costs and gearing costs included is about 0.95%

If you are using HL go to the cost tab for more accurate charges.


Edit: Looks like SMT is closer to 0.85% instead, still much more than 0.44%


Interesting. According to HL the average annual charge on their platform for SMT is 1.48%. For Baillie Gifford Long Term Global Growth fund (almost the same holdings as SMT) it is 1.14%. For FGT it is 1.58% whereas Lindsell Train UK Equity is 1.15%.

Possible reasons for using ITs rather than OEIC funds:

1) The IT's performance outweighs the higher costs.
2) One can trade ITs "live"
3) They might be cheaper if you hold them without using a platform or use a platform which reduces costs for ITs/shares.

Otherwise it seems OEIC funds have the advantage. Or am I missing something?


I don't know the answer to this which is why I invest in both, roughly 50/50. My suspicion though is, that over the long term, there really won't be much difference.

P.S. currently it's not possible to do a direct comparison between OEICs and ITs on the HL website. As far as expenses are concerned, ITs are required to include all dealing costs in the overall charge, OEICs aren't. They will be in a year or two. The reason is that new MIFID II legislation only covers ITs at present. Totally ridiculous and unfair of course, but that's politicians for you!
2 users thanked Tyrion Lannister for this post.
Guest on 17/04/2018(UTC), antigricer on 18/04/2018(UTC)
Tom Bards
Posted: 16 April 2018 20:28:02(UTC)
#17

Joined: 28/06/2017(UTC)
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Tyrion Lannister;60734 wrote:
Apostate;60708 wrote:
Tom Bards;60703 wrote:
Sara G;60701 wrote:
Tim D;60694 wrote:
Tom Bards;60682 wrote:
Alan Selwood;60679 wrote:
0.6% is dearer than Scottish Mortgage Trust (run by Baillie Gifford), and several of the other mainstream active trusts (Temple Bar, to name but one of several).


Scottish Mortgage Trust costs 0.95%

Temple Bar costs 1.37%


To compare like with like, the Vanguard PRIIP info for this Global Equity fund (here) claims there's another 0.1% in transaction fees to add on top of that 0.6% OCF, for a "total cost of investing" of 0.7%.


Not sure where those cost figures are coming from? On HL the OCF for TMPL is 0.49% and for SMT it is 0.44%. I hold MNKS which is 0.59%.




Check the KID Documents for full charges including transaction costs and gearing costs.

SMT overall charge is 0.95%, Temple Bar is 1.37%

MNKS with transaction costs and gearing costs included is about 0.95%

If you are using HL go to the cost tab for more accurate charges.


Edit: Looks like SMT is closer to 0.85% instead, still much more than 0.44%


Interesting. According to HL the average annual charge on their platform for SMT is 1.48%. For Baillie Gifford Long Term Global Growth fund (almost the same holdings as SMT) it is 1.14%. For FGT it is 1.58% whereas Lindsell Train UK Equity is 1.15%.

Possible reasons for using ITs rather than OEIC funds:

1) The IT's performance outweighs the higher costs.
2) One can trade ITs "live"
3) They might be cheaper if you hold them without using a platform or use a platform which reduces costs for ITs/shares.

Otherwise it seems OEIC funds have the advantage. Or am I missing something?


I don't know the answer to this which is why I invest in both, roughly 50/50. My suspicion though is, that over the long term, there really won't be much difference.

P.S. currently it's not possible to do a direct comparison between OEICs and ITs on the HL website. As far as expenses are concerned, ITs are required to include all dealing costs in the overall charge, OEICs aren't. They will be in a year or two. The reason is that new MIFID II legislation only covers ITs at present. Totally ridiculous and unfair of course, but that's politicians for you!



While this is true, Hargreaves Lansdown does seem to provide transaction costs for OEICs as well and not just the OCF.

A example here would be Baillie Gifford Japanese Smaller Companies.

OCF is 0.63% + 0.45% Platform Charge = 1.08%, however HL lists the total costs as 1.33% and if you go into the details on the cost page you can see they are including fund transaction costs in this figure. As far as I know OEICs don't use gearing so you can still get a pretty accurate comparison.
3 users thanked Tom Bards for this post.
Tyrion Lannister on 16/04/2018(UTC), antigricer on 18/04/2018(UTC), Guest on 31/05/2018(UTC)
Tyrion Lannister
Posted: 16 April 2018 21:41:51(UTC)
#23

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Thanks Tom, but I'm not so sure. I asked HL this question directly and the answer I got was somewhat evasive.

My question was:

Quote:
As I understand, this legislation only applies to ITs and ETFs at present but it will soon apply to UT's and OEIC funds.

It's good to see that your website treats all funds equally wrt cost disclosure, at least on the surface.

However, I'm aware that it's only ITs and ETFs that are legally obliged to disclose this information in full. Could you please confirm:

1) That you disclose all the costs you are aware of relating to OEICs and UTs,

2) If yes, how confident are you that the funds disclose all costs to you.


And the answer:

Quote:
Thank you for your email.

MiFID II applies to all equities which are trading on a live market.

The fund managers we have on our platform provide cost disclosure on our factsheets and also on the 'Key Investor Information Documents' which are located on 'Key Features & Documents' tab.

I hope this has been of assistance to you. If you have any further queries, please view our Help and Support centre or contact us on 0117 900 9000.
1 user thanked Tyrion Lannister for this post.
antigricer on 18/04/2018(UTC)
Apostate
Posted: 17 April 2018 09:08:15(UTC)
#24

Joined: 02/04/2018(UTC)
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One wonders where HL get their "transaction costs" information for OEICs. To my knowledge these costs don't generally appear on factsheets or KIIDS. Vanguard have a document that identifies these costs for all their funds but I'm not sure who else does this.
4 users thanked Apostate for this post.
c brown on 17/04/2018(UTC), Guest on 17/04/2018(UTC), North Star on 17/04/2018(UTC), antigricer on 18/04/2018(UTC)
Tom Bards
Posted: 17 April 2018 12:11:42(UTC)
#25

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Apostate;60750 wrote:
One wonders where HL get their "transaction costs" information for OEICs. To my knowledge these costs don't generally appear on factsheets or KIIDS. Vanguard have a document that identifies these costs for all their funds but I'm not sure who else does this.



I wonder the same thing but one has to assume HL must be basing it on something.
1 user thanked Tom Bards for this post.
antigricer on 18/04/2018(UTC)
c brown
Posted: 17 April 2018 15:56:36(UTC)
#26

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Just spoken to HL re costs.

In order to get a correct cost you MUST go to the cost tab and use the Average Annual charge minus the O.45% platform fee.

Told them off for not being that transparent on the at a glance page. Many thanks to Tom.
1 user thanked c brown for this post.
antigricer on 18/04/2018(UTC)
Tyrion Lannister
Posted: 17 April 2018 18:51:23(UTC)
#27

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c brown;60777 wrote:
Just spoken to HL re costs.

In order to get a correct cost you MUST go to the cost tab and use the Average Annual charge minus the O.45% platform fee.

Told them off for not being that transparent on the at a glance page. Many thanks to Tom.


I don’t believe that that’s the actual charges which ITs are obliged to include.

Edit: For example - I’ve just had a look at JMG vs JP Morgan emerging markets OEIC. The charges are 1.83% v 1.33% yet the charges should be more or less the same.
1 user thanked Tyrion Lannister for this post.
antigricer on 18/04/2018(UTC)
Sara G
Posted: 17 April 2018 19:06:55(UTC)
#28

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Comparing the costs tab for a fund and an IT (Artemis Income and Bankers IT - randomly chosen) it would appear that the ITs also list 'incidental charges' and stamp duty on top of transaction costs, although the incidental charges for BNKR are nil. This suggests that the OEIC figures do not include stamp duty.
2 users thanked Sara G for this post.
Tyrion Lannister on 17/04/2018(UTC), antigricer on 18/04/2018(UTC)
Tim D
Posted: 17 April 2018 20:02:12(UTC)
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Sara G;60790 wrote:
Comparing the costs tab for a fund and an IT (Artemis Income and Bankers IT - randomly chosen) it would appear that the ITs also list 'incidental charges' and stamp duty on top of transaction costs, although the incidental charges for BNKR are nil. This suggests that the OEIC figures do not include stamp duty.


Back in January there were stories about how it was all a bit of an inconsistent mess:

Quote:
According to Charles Cade, head of investment companies research at Numis Securities, the majority of investment companies have released KIDs but he expects to see revisions of the documents as the sector faces teething problems in areas like cost calculations.

He commented: "An initial analysis of the KIDs raises concerns over the lack of consistency in the way that the fund's costs are calculated across the sector.

"For instance, some funds include stamp duty as a cost but most do not (in-line with the latest AIC guidance), some seem to have excluded finance costs and performance fees, and a few show absolute figures rather than annualised, and others seem to include errors.

"There are also huge differences in the estimates of transaction costs. At least one investment company has already published a revised KID and we would not be surprised to see more revisions over the coming days."


No idea if/when things will improve.
3 users thanked Tim D for this post.
Sara G on 17/04/2018(UTC), c brown on 17/04/2018(UTC), antigricer on 18/04/2018(UTC)
lynne shaffer
Posted: 18 April 2018 07:53:53(UTC)
#30

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are you saying you need £10,000 per IT or over the whole portfolio?
2 users thanked lynne shaffer for this post.
c brown on 18/04/2018(UTC), antigricer on 18/04/2018(UTC)
c brown
Posted: 18 April 2018 09:37:40(UTC)
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I asked HL yesterday and they said the whole portfolio.
1 user thanked c brown for this post.
antigricer on 18/04/2018(UTC)
mark spurrier
Posted: 28 May 2018 08:49:39(UTC)
#32

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Seems that the requirement for KIIDs or at least the performance part has been dropped.

Charges are opaque - some give some clarity, some don't and some are misleading. i think it is a pointless debate. What matters to me is the return not the costs

I would much rather pay 15% for something returning 50% than .00001% for something returning 2%

very well managed active collective investments will always outperform trackers both to the downside and the up.
ITs have structural advantages over funds and ITs. If you look at the pairings that do exist where there is both a UT/IT with the same manager and the same portfolio, the IT has better performance.

The issue for me is the huge swathe of "active" funds that can't justify their fees - they hug an index and can't outperform either the index or ETFs for their index

My second bugbrear is funds that choose a wholly inappropriate index for the market they are in........ look at Utilico Emerging Markets who set their benchmark as a calculation against the return on UK gilts to decide if they qualify for performance fees

i also don't like JEO that can get charges of >3.5% if their performance fee cuts in. Given the fund manager carries no risk that does look like a piss take and the Jupiter European fund version is a better story.
2 users thanked mark spurrier for this post.
Tim D on 29/05/2018(UTC), Guest on 31/05/2018(UTC)
philip gosling
Posted: 28 May 2018 10:09:34(UTC)
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Mark spurrier

"very well managed active collective investments will always outperform trackers both to the downside and the up. ""


Well they ought to outperform but most funds do not. The difficulty is knowing in advance which funds are going to be duds. Who would have thought Woodford's funds would be bottom quartile for years- he was amongst the highest rated fund managers running " as you say "well managed" funds. Plus if you choose wrong sector/country etc all funds may suffer whereas if you chose a global tracker for the whole market you, over long term, will do OK. Horses for courses.
1 user thanked philip gosling for this post.
Tim D on 29/05/2018(UTC)
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