Cheapest fee's on self managed FTSE All Share Index
Discussion
fellatthefirst said:
I want to invest into a FTSE All Share Index and am wondering where to go for the cheapest fees? Any advice greatly received.
Here's a reasonably comprehensive list of brokers with comments about what portfolio/investing habits the broker/fee structure is a good fit for:https://monevator.com/compare-uk-cheapest-online-b...
Ridealong said:
An alternative to Vanguard is Legal & General UK Index, on the HL platform it is 0.04% annual fee.
But you also have HL's 0.45% platform fee, bringing the total cost up to 0.49%.Vanguard's is 0.08% but the Vanguard platform fee is only 0.15% giving a total cost of 0.23%.
This is why I said about being careful to factor in platform costs above. L&G initially looks half the price of Vanguard, but factor in the platform costs and it becomes more than twice as expensive.
JulianPH said:
Ridealong said:
An alternative to Vanguard is Legal & General UK Index, on the HL platform it is 0.04% annual fee.
But you also have HL's 0.45% platform fee, bringing the total cost up to 0.49%.Vanguard's is 0.08% but the Vanguard platform fee is only 0.15% giving a total cost of 0.23%.
This is why I said about being careful to factor in platform costs above. L&G initially looks half the price of Vanguard, but factor in the platform costs and it becomes more than twice as expensive.
I've just looked at L&G website and the UK Index Fund Class C Total On-Going Charge Fee is 0.06%, other classes are (I) 0.10%, (F) 0.30% and (R) 0.48%.
I can't see a platform fee.
Many thanks for the replies on this....
To give a bit more information on my situation, i have for the last 4 years been paying into my pension and ISA and it's been managed by a local financial advisor. The money is all invested into a range of managed funds on the Fidelity platform.
I have been reading up over the xmas break and a few places are saying that management funds over the long term do not perform as well as index trackers mainly because of the higher fee's on managed funds.
Does anyone have any experience on this?
I'm in this for the long term. I'm 34 now so i really don't want to get to 65 and look back thinking how much i've lost in fee's over the years when i could have just put everything in index funds and government bonds.
To give a bit more information on my situation, i have for the last 4 years been paying into my pension and ISA and it's been managed by a local financial advisor. The money is all invested into a range of managed funds on the Fidelity platform.
I have been reading up over the xmas break and a few places are saying that management funds over the long term do not perform as well as index trackers mainly because of the higher fee's on managed funds.
Does anyone have any experience on this?
I'm in this for the long term. I'm 34 now so i really don't want to get to 65 and look back thinking how much i've lost in fee's over the years when i could have just put everything in index funds and government bonds.
fellatthefirst said:
I have been reading up over the xmas break and a few places are saying that managed funds over the long term do not perform as well as index trackers mainly because of the higher fees on managed funds.
Remember that if you track the market upwards you will inevitably track it downwards as well - with no manager to bail you out from collapsing sectors until a company's fall drops it right out of the index. We've just had the longest bull market in history which has made tracking look clever, but how trackers may fare in 2019 and beyond can only be known after the event.fellatthefirst said:
Many thanks for the replies on this....
To give a bit more information on my situation, i have for the last 4 years been paying into my pension and ISA and it's been managed by a local financial advisor. The money is all invested into a range of managed funds on the Fidelity platform.
I have been reading up over the xmas break and a few places are saying that management funds over the long term do not perform as well as index trackers mainly because of the higher fee's on managed funds.
Does anyone have any experience on this?
I'm in this for the long term. I'm 34 now so i really don't want to get to 65 and look back thinking how much i've lost in fee's over the years when i could have just put everything in index funds and government bonds.
There would be no particular reason not to stay with Fidelity, it does everything you seem to be looking for (and more) at a lower platform price than HL.To give a bit more information on my situation, i have for the last 4 years been paying into my pension and ISA and it's been managed by a local financial advisor. The money is all invested into a range of managed funds on the Fidelity platform.
I have been reading up over the xmas break and a few places are saying that management funds over the long term do not perform as well as index trackers mainly because of the higher fee's on managed funds.
Does anyone have any experience on this?
I'm in this for the long term. I'm 34 now so i really don't want to get to 65 and look back thinking how much i've lost in fee's over the years when i could have just put everything in index funds and government bonds.
Charges are important as they reduce your money each and every year, but it goes without saying that the cheapest is not necessarily the best.
You will likely be paying three different types of annual charge:
- Platform Fee - This should be 0.35% a year with Fidelity
- Fund Fees - This depends upon the funds used. It could be below 0.1% (trackers) or up to 1% (managed funds)
- Adviser Fees - Typically 0.5% to 1% (and these days they generally are 1%)
So if you are currently in managed funds on the Fidelity platform with an adviser in place you could be paying 1.85% to 2.35% a year in total fees.
If you switched to tracker funds and removed your financial adviser you would be able to reduce charges to 0.4% to 0.65% very easily.
Assuming 7% average annual returns on a £50k portfolio and £500 a month of regular contributions this could save you over £250k in fees over 30 years.
On a £100k portfolio with £1k a month of contributions this would save you over £500k in fees (on the same basis as above) and so on.
Only you can decide if your adviser and their recommendations are worth the money they will cost you.
rockin said:
fellatthefirst said:
I have been reading up over the xmas break and a few places are saying that managed funds over the long term do not perform as well as index trackers mainly because of the higher fees on managed funds.
Remember that if you track the market upwards you will inevitably track it downwards as well - with no manager to bail you out from collapsing sectors until a company's fall drops it right out of the index. We've just had the longest bull market in history which has made tracking look clever, but how trackers may fare in 2019 and beyond can only be known after the event.This is why I prefer active asset allocation of low cost trackers for portfolio management rather than active stock picking, as the manager can do just this.
The OP may want to consider this approach as well. As I said, the cheapest is not necessarily the best (though this approach could still be less than half the lowest price he is currently paying).
JulianPH said:
I prefer active asset allocation of low cost trackers for portfolio management.
This may be a good approach for many investors.Regarding your point about fees (above) it's both desirable and doable to get the overall annual cost of running a portfolio under 1%.
These two things can IMO be combined by relatively unskilled investors who take some interest in the subject,
- Ditch the IFA - or at least only pay a one-off fee for advice when you really need it.
- Make some basic decisions, with advice if appropriate, about what sort of things to invest in. (Global equities? USA eq? European eq? Large cap? Small cap? Bonds?)
- Buy the relevant low cost index funds.
- Use the tax wrappers (ISA, SIPP)
- Recognise it's a long game. Most particularly, don't panic in a downturn! Review once or twice a year.
- Keep topping up.
rockin said:
fellatthefirst said:
I have been reading up over the xmas break and a few places are saying that managed funds over the long term do not perform as well as index trackers mainly because of the higher fees on managed funds.
Remember that if you track the market upwards you will inevitably track it downwards as well - with no manager to bail you out from collapsing sectors until a company's fall drops it right out of the index. We've just had the longest bull market in history which has made tracking look clever, but how trackers may fare in 2019 and beyond can only be known after the event.rockin said:
JulianPH said:
I prefer active asset allocation of low cost trackers for portfolio management.
This may be a good approach for many investors.Regarding your point about fees (above) it's both desirable and doable to get the overall annual cost of running a portfolio under 1%.
These two things can IMO be combined by relatively unskilled investors who take some interest in the subject,
- Ditch the IFA - or at least only pay a one-off fee for advice when you really need it.
- Make some basic decisions, with advice if appropriate, about what sort of things to invest in. (Global equities? USA eq? European eq? Large cap? Small cap? Bonds?)
- Buy the relevant low cost index funds.
- Use the tax wrappers (ISA, SIPP)
- Recognise it's a long game. Most particularly, don't panic in a downturn! Review once or twice a year.
- Keep topping up.
And if you are not sure how to build an asset allocation model and manage it for you, then use an investment manager that will do this for you at a low cost (under 1%, as you say). Then the only time you may ever need to pay for financial advice would be for a specific reason and at a one off fee.
Happy New Year!
rockin said:
Regarding your point about fees (above) it's both desirable and doable to get the overall annual cost of running a portfolio under 1%.
Depending on size of pot it shouldn't be too much more than 1% even with advice fees, surely?- Ditch the IFA - or at least only pay a one-off fee for advice when you really need it.
Funds: 20bps
Platform: 10-30bps
Advice: 50-75bps
Happy New Year!
Derek Chevalier said:
rockin said:
Regarding your point about fees (above) it's both desirable and doable to get the overall annual cost of running a portfolio under 1%.
Depending on size of pot it shouldn't be too much more than 1% even with advice fees, surely?- Ditch the IFA - or at least only pay a one-off fee for advice when you really need it.
Funds: 20bps
Platform: 10-30bps
Advice: 50-75bps
Happy New Year!
We see, on a daily basis:
Funds: 80bps +
Platform: 35bps to 45bps
Advice: 100bps
So 2.25% a year is completely normal, with some advisers having the gall to take this to 3% a year using a discretionary manager whilst still charging 1% a year for themselves.
The reason most financial advisers have such a bad reputation is because of the charges they generate. It also does not help that they charge more each year than even active fund managers!
Happy New Year!
Derek Chevalier said:
fellatthefirst said:
I want to invest into a FTSE All Share Index
Why? Why not pork bellies?Would I pay c.1% a year for advice, over and above the other costs? No. Why not? Because on a £100k portfolio running for 20 years which for the sake of a simple example achieves no growth at all, your adviser will still have pocketed 20% of your money. Advice can be invaluable but the cost needs to be carefully scrutinised.
rockin said:
Derek Chevalier said:
fellatthefirst said:
I want to invest into a FTSE All Share Index
Why? Why not pork bellies?Would I pay c.1% a year for advice, over and above the other costs? No. Why not? Because on a £100k portfolio running for 20 years which for the sake of a simple example achieves no growth at all, your adviser will still have pocketed 20% of your money. Advice can be invaluable but the cost needs to be carefully scrutinised.
This article sums it up nicely, IMO.
http://www.fpadvance.com/value-proposition/
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