Fundsmith - Direct or Via Broker

[NorthDave]

Hi All

I am looking to invest a small amount of cash in Fundsmith - I already have some of the fund via HL.

HL appear to charge me 0.95% yearly to hold the fund and when I look at the Fundsmith site I can invest directly with them and there seems to be no mention of charges.

Am I missing something or is it as simple as going direct and saving the 1%?

Thanks in advance and apologies for what might be a noddy question!

[NorthDave]

Dont worry I;ve found the answer! Different class of funds available apparently so it looks like HL have slightly lower charges.

Ignore me!

[nyt]

Fundsmith have three classes of share

If you buy directly then you'll get 'T' class - OCF charges 1.06%

The cheapest share class is for large institutional investors - OCF charges 0.96%

I'm not an expert but I don't see how HL 's charges can be lower. Even if they get the I(nstitutional) Class rate, their charges would dwarf the small I Class discount.



Share Class OCF* Minimum Price p
T Class Acc 1.06% £1,000 584.67
T Class Inc 1.06% £1,000 534.46
R Class Acc 1.56% £1,000 554.89
R Class Inc 1.56% £1,000 529.41
I Class Acc 0.96% £5m 590.79
I Class Inc 0.96% £5m 534.71

• The OCF (Ongoing Charges Figure) is the total expenses paid by the fund (excluding bank overdraft interest), annualised, against its average net asset value. The OCF will fluctuate as the average net assets and costs change. The OCF is updated following the publication of accounts for the periods ending 30th June and 31st December.

ETA: Info taken from Fundsmith's front page: https://www.fundsmith.co.uk/fund-factsheet

Edited by nyt on Thursday 15th April 08:48

[xeny]

NorthDave said:

Dont worry I;ve found the answer! Different class of funds available apparently so it looks like HL have slightly lower charges.

Unless you've negotiated a very discounted fee with HL (normally 0.45% for funds I think), HL will be more expensive - they'll offer FS for .95%+.45% so 1.4% total while direct is 1.05% all in.

Advantage of going via a broker is it is easier to move funds between different Funds/ITs, while FS only offer FS, so you'd be looking at a transfer of some sort if you need to preserve an ISA wrapper.

If you're fussed about a .1% difference in fee, why are you investing via HL ?

[NorthDave]

Thanks all - I understand now. I think I have a different class of share via HL than going direct which seems to go someway to mitigating the HL fees.

[Mr Pointy]

NorthDave said:

Thanks all - I understand now. I think I have a different class of share via HL than going direct which seems to go someway to mitigating the HL fees.

But you're still paying the HL fee on top as has already been explained.

[NorthDave]

Mr Pointy said:

But you're still paying the HL fee on top as has already been explained.

I am but I am buying a different class of share which has lower fees than the offering direct from Fundsmith which has lower costs associated. HL then add their cost on top but for this cost I get flexibility.

[bitchstewie]

NorthDave said:

I am but I am buying a different class of share which has lower fees than the offering direct from Fundsmith which has lower costs associated. HL then add their cost on top but for this cost I get flexibility.

That's the way to see it I think.

If you know you only ever intend holding Fundsmith then going directly to Fundsmith makes sense.

HL offer a lot of other options which may or may not be worth the premium if you need them.

[nyt]

If it's a large holding then you can buy the 'i' shares on other platforms.

https://www.ii.co.uk/ charge a flat fee - £9ish a month rather than a percentage. So if you have more than £40k invested you'll save money.
As far as I know they offer the same ability to move your holding as HL but I'm sure that someone will correct me if necessary.

[xeny]

Is that maths correct? The fee difference between T class and I class is 1.05%-0.95% =.1%.

.1% fee difference on £100,000 is £100, so a monthly fee of 100/12 -> ~£8 or less would be the break even point.

£40K is going to be more expensive at £9 a month, and I don't know what ii charge for dealing, which is free direct with FS.

[nyt]

xeny said:

Is that maths correct? The fee difference between T class and I class is 1.05%-0.95% =.1%.

.1% fee difference on £100,000 is £100, so a monthly fee of 100/12 -> ~£8 or less would be the break even point.

£40K is going to be more expensive at £9 a month, and I don't know what ii charge for dealing, which is free direct with FS.

My maths may be screwy, here's my working:

Xeny said: Unless you've negotiated a very discounted fee with HL (normally 0.45% for funds I think), HL will be more expensive - they'll offer FS for .95%+.45% so 1.4% total while direct is 1.05% all in.
So the net cost of using HL is 0.35%

iii.co.uk charge £9.50 a month / £114 a year.

0.35% of £32,600 = £114

ETA: I was comparing HL prices against another platform which gave the OP similar abilities to change funds that HL does. Not against investing direct with Fundsmith.

Edited by nyt on Tuesday 20th April 14:51

[xeny]

Ah gotcha. Essentially any platform is cheaper to hold funds than HL.