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Charges - Providers/Trusts/Funds
TJL
Posted: 13 March 2012 12:10:46(UTC)
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I’ve done this for myself (I’m sad), but I'm posting it in case anyone else is interested. You’ll probably fall asleep reading it, but if you spot any inaccuracies in the maths or the methodology please point them out. Sincere apologies if I accidently mislead anyone. If you were contemplating any decisions based upon this information I suggest you check the facts for yourself.

Charges for a notional £5000 investment in JPM Emerging Markets (I believe you can choose the fund or the investment trust – same manager).

HL - Investment Trust
]Buying and selling online dealing charges 2 x £11.95
£25 stamp duty
Annual Isa administration fee of 0.5 % (capped at £45) = £25 per annum (calculated daily?)
HL – Fund
Annual management charge (Isa & non-Isa) of 1.5% with 0.25% loyalty bonus, total for one year = £62.50 (and per annum thereafter).
Summary
Investment Trust total (non-Isa) = £48.90
Investment Trust Isa (one year) = £73.90 (and amc of £25 p.a. thereafter)
Fund (Isa or non-Isa) = £62.50 per annum.
Note - monthly payments and reinvestment of dividends free.

Sippdeal – Investment Trust
Buying and selling online dealing charges 2 x £9.95
£25 stamp duty
No Isa charge.
Sippdeal – Fund
Appear to have a similar annual management charge rebate system (Isa & non-Isa) to HL.
Summary
Investment Trust total (non-Isa) = £44.90
Investment Trust total (Isa) = £44.90
Fund (Isa or non-Isa) = £62.50 per annum (approx.).
Note - £1.50 to make regular payments into an Investment Trust (free for funds); I am waiting to find out if there is a charge for re-investing dividends.

iii – Investment Trust
Buying and selling online dealing charges 2 x £10
£25 stamp duty.
No Isa charge.
iii – Fund
Do not appear to rebate any of the annual management charge, total for one year @ 1.5% = £75.
Summary
Investment Trust total (non-Isa) = £45
Investment Trust total (Isa) = £45
Fund (Isa or non-Isa) = £75 per annum.
Note - £1.50 to make regular payments into Investment Trusts (not sure about funds) and 1% charge (capped at £10) to re-invest dividends.

X-O – Investment Trust
Buying and selling online dealing charges 2 x £5.95
Stamp duty = £25
X-O – Fund
Appears to be a share based service, not for fund investment.
Summary
Investment Trust total (non-Isa) = £36.90
Investment Trust total (Isa) = £36.90
Note – no regular payment system (so each on would cost £5.95) or dividend re-investment facility.

Alliance Trust
I’ve ruled them out based upon £12.50 dealing charges, £25 Isa administration charge (but you get 2 free trades which cancels this out), and £5 dividend reinvestment fee. They do appear to rebate up to 0.75% of annual management charges but I haven’t looked into it.

Halifax
I’ve ruled them out based upon £11.95 dealing charge, £2 per stock for regular investments and the fact they don’t appear to rebate any of the annual management charge.

Regards
2 users thanked TJL for this post.
Guest on 13/03/2012(UTC), banjofred on 14/03/2012(UTC)
SSJ
Posted: 13 March 2012 18:48:14(UTC)
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Joined: 13/09/2010(UTC)
Posts: 5

You seem to be counting the cost of the "annual management charge" for funds but ignoring it for investment trusts!!

Also, it would be a bit more accurate to use the "TER" rather then the annual management charge (it's closer to the true cost of holding either type of investment).
TJL
Posted: 13 March 2012 19:06:33(UTC)
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Hello SSJ,
Thank you for wading through my long post!
I'm not sure there is an AMC for Investment Trusts (which are basically a share purchase I believe)?
If there is, I've missed something and I'm glad you've mentioned it because I'm trying to get to the bottom of this (very confusing) situation.
I understand about TERs, but liked the idea of seeing the charges in 'black and white'.
Regards.
No name 2
Posted: 13 March 2012 19:26:01(UTC)
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I have been with Alliance Trust Savings for some years. All their charges are fixed with no percentages,execution only, and the dealing charge of £12.50 is reduced if you hold the right number of Alliance Investment Trust shares. I understand they rebate the full trail commission on Unit Trusts which is really good. ATS costs are creeping up as they seem to be increasing their marketing and product range but I was pleased to see that it came out as the cheapest in a piece on Charges in the Money Section of last Sunday's SUNDAY TIMES. I always focus on the TER which, unlike the annual management charge, sometimes takes some finding!
john brace
Posted: 13 March 2012 20:07:25(UTC)
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Yes there are AMC,s for investment trusts, also of course the best ones trade at a premium.
Otherwise very helpful to see the charges set out

HL are now charging platform fees for some funds and they give no rebate to SIPPS
I guess everything will cost more in December when Trail commisions are ended
TJL
Posted: 14 March 2012 10:04:31(UTC)
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Very confusing.
Still can't find details of annual management charges applying to ITs, other than in an HL Stocks and Shares Isa, and I would be grateful to anyone who can point me in the right direction.
I find the information on the Alliance Trust website a bit confusing, I think it might mean you get 100% of the rebate, not a 100% rebate?
In support of this, I have looked at their charges for the JPM Emerging Markets fund in their fund list; they discount 4% of the initial charge of 4.5% (which costs you £12.5 - other platforms discount all the initial charge) and then they discount 0.5% of the 1.5% annual management charge, so you would pay a £49.87 annual management charge on what was left of your £5000 after deduction of the 0.5% initial charge.
I also realise that you get one free trade, not two, as part of your annual administration charge of £25 plus VAT.
Happy to proved wrong - just trying to get to the bottom of it.
Regards.
Martin Chambers
Posted: 14 March 2012 11:44:46(UTC)
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For IT mgt charges see Trustnet:

http://tinyurl.com/6ntmt6v

Management fee paid monthly in arrears at the annual rate of 1.0% of total assets less current liabilities. Performance-related fee will also be paid, depending on the extent to which the Fund outperforms its benchmark. Performance fee is equivalent to 10% of any out performance of the Company's NAV per share (total return basis) over MSCI Emerging Markets Free Index in sterling terms over the Company's financial year. No fee will be charged for investments that are managed or advised by the Manager or any of its associated companies. The notice period is 12 months except in the case where a decision is taken as a result of poor investment performance when it will be 6 months.
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TJL on 14/03/2012(UTC)
fundwatch
Posted: 14 March 2012 11:59:46(UTC)
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Re annual charges for investment trusts: as I understand it, ITs do have AMCs/TERs, but it comes out of the fund's NAV. So from an investor's point of view, while it's relevant, you are buying a share, and it's the price of that share and how it changes over time that directly impacts your portfolio.

Here's a link to the TER details for an IT picked at random from the AIC website:
http://www.theaic.co.uk/...es/Profile/?fundkey=225
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TJL on 14/03/2012(UTC)
TJL
Posted: 14 March 2012 13:21:48(UTC)
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Thank you.
By annual management charge I was referring more to the charge made to the investor by the platform they use, as opposed to the charge made by the investment trust, although I guess they may be one and the same thing ultimately and just carrying different labels.
Some platforms make no reference to a management charge for investment trusts and don't appear to charge one, whilst others do, but I appreciate you can't invest for free and the money will be taken somewhere in the process.
For me personally, it is the difference between trail commission on funds and no trail commision on investments trusts and the generally lower TERs that are of interest, together with the apparent difference in price to invest in any given investment trust depending on which platform you opt for.
Until a few days ago I had no idea how much I have ACTUALLY been paying in fees to invest, and I suspect I am in the majority; as a result of this exercise (and with the help of everyone here) I now feel a lot better informed and better equipped to diversify into investment trusts next financial year, and, the pros, cons and charging structure of the popular platforms.
Thanks again.
Martin Chambers
Posted: 14 March 2012 14:08:09(UTC)
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My understanding is that a typical unit trust's amc of say 1.5% is made up of 0.5% trail commission, 0.25% to the platform provider, and 0.75% is retained by the fund manager for operating the fund.

In this respect the retained 0.75% would be comparable to the 1% annual management fee charged by the investment trust - it's just charged in a different way.

I know that Alliance Trust refunds all the commission element while H-L refunds some of it. IIRC Alliance also refunds the 0.25% platform fee as well making an annual ISA fee instead. This means, as far as Alliance is concerned you effectively reduce the amc by the amount of the rebate.

Hope this helps.
1 user thanked Martin Chambers for this post.
TJL on 14/03/2012(UTC)
Matthew Charles Flinders
Posted: 16 March 2012 14:44:13(UTC)
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Just thought i'd say i use X-O for my share dealing. Website is fine, never had any problems. Perfect for what i was after. (Cheap execution share dealing!).
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TJL on 16/03/2012(UTC)
TJL
Posted: 16 March 2012 18:14:12(UTC)
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Thanks Matthew, X-O does seem to be pretty competitive for straightforward dealing.
I see there is an interesting article on Citywire today regarding this subject for anyone who is following it.
The article is about funds as opposed to investment trusts, but I still don't think I, and possibly the author of the article on Citywire, or the author of the article in last Sunday's Times has got to the bottom of it and managed to paint an accurate and definitive picture.
Let the mystery continue!
Regards.
TJL
Posted: 16 March 2012 18:50:40(UTC)
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Article on MoneyWeek dated 6th March - now HL appear to be the most competitive.
So much contradictory information - where does it leave me (and you).
I would have so much respect for the website/financial journalist who painted the definitive picture and justified it with logic, taking into account all the charges - obvious and not so obvious.
Otherwise - classic case of 'let the buyer beware'.
If I've become obsessed, someone please tell me and I'll shut up!

ljmuk
Posted: 16 March 2012 20:44:38(UTC)
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Does this help, or perhaps add to the confusion?

http://www.citywire.co.u...gn=BulkEmail_Money_Daily
2 users thanked ljmuk for this post.
TJL on 17/03/2012(UTC), antigricer on 19/03/2012(UTC)
TJL
Posted: 17 March 2012 08:04:21(UTC)
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Thank you Linda.
That's makes two articles in which Alliance Trust has come out well (the other being last Sunday's Times) but Sippdeal isn't even included and I thought they came out pretty well when I compared.
The only thing I think I have managed to establish (for my own benefit) is that HL are not the best place to be if you want to invest in investment trusts within an Isa - otherwise it seems to be swings and roundabouts, especially for funds.
Regards.
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