FTSE100 tracker
Discussion
Ari said:
What do actively managed funds cost, anyone know?
Active managed fund can vary drastically in costs but there are lots of good ones all under 0.80%A few of the ones I like are;
http://www.hl.co.uk/funds/fund-discounts,-prices--...
http://www.hl.co.uk/funds/fund-discounts,-prices--...
http://www.hl.co.uk/funds/fund-discounts,-prices--...
http://www.hl.co.uk/funds/fund-discounts,-prices--...
Ari said:
Totally agree. Classic example was having a few hundred quid in and seeing it go up and imagining what I would have 'earned' had it been a few thousand.
When I'm on a good run I start looking at my daily expenditure on breakfast cereal and thinking how much that could return if I invested it instead. Investing when I started probably made me more money from not spending to invest than the actual investment return.Ari said:
No problem, will do. And that is exactly what I am, so am trying to understand the simplest way of investing, which I think this probably is.
To answer your question - there is no entry charge or exit charge, so no fees for converting it into cash. The only charge is a 0.06% 'ongoing charge', which (I believe) is annual (so having £10,000 invested for one year will cost £6). This is the real beauty of investing this way, it takes the gamble out of trying to find a super successful fund manager that can outperform the market, and reduces to a bare minimum the costs involved in investing (I've no idea how much managed funds cost, perhaps someone can tell us?)
More info here: https://www.vanguardinvestor.co.uk/investments/van...
A funds on going charge is reflected in the price of the fund, i.e the fund price is 0.06% below the funds NAV. Some funds also have a buy/sell spread but I'm not sure many trackers do.To answer your question - there is no entry charge or exit charge, so no fees for converting it into cash. The only charge is a 0.06% 'ongoing charge', which (I believe) is annual (so having £10,000 invested for one year will cost £6). This is the real beauty of investing this way, it takes the gamble out of trying to find a super successful fund manager that can outperform the market, and reduces to a bare minimum the costs involved in investing (I've no idea how much managed funds cost, perhaps someone can tell us?)
More info here: https://www.vanguardinvestor.co.uk/investments/van...
A good global equity managed fund, some like lindsell train or fundsmith, who consistently get above or close to index performance will cost ~0.7% to 1%.
Don't forget you'll have platform fees on top of that, i.e HL ~.45%, best invest ~.35%
To do really low cost investing you need a very cheap platform as well as very cheapnfunds. If you're paying for HL or Bestinvest (the biggest fund shops) and just holding vanguard funds you're in the worst of both worlds.
sidicks said:
Do you mean an actively managed equity fund (i.e. one that aims to outperform a specific market index) or a managed fund (which typically allocates across a variety of different asset classes (aiming to diversify exposure and outperform a composite benchmark)?
Honestly, I don't really know. I guess where you pay someone to invest your money for you in their fund in the hope of out performing the market, but not familiar enough to be more specific.But some interesting answers further down.
xeny said:
When I'm on a good run I start looking at my daily expenditure on breakfast cereal and thinking how much that could return if I invested it instead. Investing when I started probably made me more money from not spending to invest than the actual investment return.
Interesting, and I know what you mean. 
Ari said:
Honestly, I don't really know. I guess where you pay someone to invest your money for you in their fund in the hope of out performing the market, but not familiar enough to be more specific.
But some interesting answers further down.
It sounds like you mean outperform the equity market.But some interesting answers further down.
So bear in mind that if the market falls 15% and your fund only falls 13%, your manager has done an excellent job!
Ari said:
Fair point, unless he's charged you the 2% for the privilege.
Would you say that most fund managers do out perform the market?
Not after fees. Would you say that most fund managers do out perform the market?
Different managers tend to perform better in different investment environments, but you don;t normally know what the environment is going to be like until after the event!
In addition, actually trading incurs costs.
Ari said:
I'm bandying around these £5K figures like it's nothing, but to be clear, it's big chunks of my meagre savings.
Same issue, but annual ISA limits.You watched the Kroijer videos I linked to which I think are about as sensible as I've seen in terms of reinforcing that very few people are the next Warren Buffet (I'm not )
Not sure who you invested with but direct looks best if possible just because you should pay less as there's no additional fees from a third party.
Vanguard look good for this.
The active funds seem a bit of a dark art. Part of me is toying with sticking some in Fundsmith but I'm not sure choosing an active fund should be done the same way you'd buy a laptop i.e. just go for one that has five star reviews and hope it's as good as the reviews say.
Plus when you go direct to reduce the management costs and combine that with an ISA you're down to it being harder to mix and match if that makes sense.
Edited by b
hstewie on Saturday 13th January 18:55
hstewie on Saturday 13th January 18:55Ari said:
Fair point, unless he's charged you the 2% for the privilege.
Would you say that most fund managers do out perform the market?
In sum, the fund managers can only own the market, so on average they must deliver "market" performance. On top of that, there's the cost of the the fund fees, so on average an actively managed fund is likely to underperform the market.Would you say that most fund managers do out perform the market?
bhstewie said:
hstewie said: Plus when you go direct to reduce the management costs and combine that with an ISA you're down to it being harder to mix and match if that makes sense.
If you've picked a suitably cheap ISA provider, it's actually cheaper to hold Fundsmith indirectly rather than directly (.95% OCF rather than 1.05) as you can buy I class rather than T class shares. The downside is you have to download & print your own copy of his letter to shareholders rather than having it drop through the letterbox.Edited by bhstewie on Saturday 13th January 18:55
hstewie on Saturday 13th January 18:55xeny said:
In sum, the fund managers can only own the market, so on average they must deliver "market" performance. On top of that, there's the cost of the the fund fees, so on average an actively managed fund is likely to underperform the market.
What about shares not held by fund managers?xeny said:
Sloppy language on my part. How about "investors who choose to depart from a market cap weighted allocation"?
Many of whom will be amateurs with small undiversified portfolios! But I've not seen figures to compare the relative sizes of the market managed by fund managers compared to the whole market!
Ari said:
Would you say that most fund managers do out perform the market?
Interestingly, where a fund management business is quoted, there have been examples of the shareholders doing better than the fund customers.
St James's Place is probably one example.
It is worth going to one of their sales sessions, often held at hotels. You can see how they do it then. They usually provide a free lunch, but I am sure you know the saying.
Edited by Jon39 on Saturday 13th January 21:19
zubzob said:
That's an extremely interesting read! Jon39 said:
Interestingly, where a fund management business is quoted, there have been examples of the shareholders doing better than the fund customers.
St James's Place is probably one example.
Edited by BanzaiMan on Monday 15th January 20:34
Gassing Station | Finance | Top of Page | What's New | My Stuff