Feb 032014
 

A few more of the UK brokers who announced their clean fund pricing in the last couple of weeks also announced revised charges for shares at the same time. The main changes were:

  • Halifax Share Dealing will raise its online dealing rate for shares from £11.95 to £12.50. Telephone deals move to a flat rate of £25. Foreign currency charges for international shares rise from 1% to 1.25%. Charges for corporate actions have mostly been dropped. Transfer out fees from a dealing account or ISA remain £25 per investment, but the total has been capped at £125. Changes take effect 31st March 2014.
  • iWeb Share Dealing, which is the Halifax service under a different, mostly cheaper (but still-Halifax-owned) brand, has apparently also some similar changes, dropping corporate action fees and capping transfer out charges at £125. The ISA closure fee (previously £50) has also been removed. Less positively, the regular dealing option for stocks will also disappear (it seems to be retained under the Halifax service). (There’s no statement about this on the website – the update solely concerns fund charging – but iWeb clients say they’ve received an email about the changes.) Changes take effect 31st March 2014.
  • BestInvest has replaced its quarterly custody charge for shares (£12.5+VAT in a dealing account or ISA and £25+VAT in a SIPP), with a new fee covering all investments (eg both shares and funds) [PDF]. For  a dealing account, this is 0.4% up to £250,000, 0.2% between £250,000 and £1,000,000, and no further charge for holdings above £1,000,000; for a SIPP, the tiers are 0.3% and 0.2% (yes, the SIPP fee is less than an ISA or dealing account). Changes take effect from 1st March 2014.
  • Barclays Stockbrokers has reduced UK dealing commissions by £1 per trade and reduced the tier sizes for frequent trader rates. Clients who make 1-9 trades per month will pay £11.95 per deal, those make 10-19 will pay £8.95 and those who make 20 or more will pay £5.95 (previous commissions were £12.95 for 1-14 trades, £9.95 for 15-24 trades and £5.95 for 25+ trades). The ISA administration fee is now £30+VAT per year for all ISA sizes (previously it was £50+VAT for accounts over £7,500). Changes take effect from 1 March 2014.

The UK stockbroker comparison table, the UK international stockbroker table and the individual entries in the broker directory have been updated.

Feb 012014
 

The ban on UK execution-only brokers receiving trail commission takes effect in April 2014, so the few providers who have not yet announced their revised charges have been rushing to do so.

Fidelity FundsNetwork

Taking FundsNetwork first, Fidelity will be charging a relatively straightforward 0.35% on fund holdings up to £250,000 and 0.2% from £250,000 to £1,000,000 (stocks, investment trusts and ETFs are not affected – the Fidelity share dealing service is a white label service operated by Charles Stanley). There’s no minimum charge.

That’s towards the middle of the pack on costs – the lack of a minimum fee means it’s better than some for smaller portfolios, but will be beaten by – for example – Charles Stanley Direct (Charles Stanley’s own d2c fund and share platform, not to be confused with the aforementioned white label share dealing operated for Fidelity).

If you’d prefer to use the FundsNetwork platform anyway, Fidelity’s direct pricing can still be beaten by using Cavendish Online, which is an execution-only broker that uses Funds Network. The cost here is 0.25%, with FundsNetwork taking 0.2% and Cavendish getting 0.05%.  (This is Fidelity’s pricing for intermediaries of 0.25%, announced a couple of years ago, but with the fee split between Fidelity and Cavendish and a waiver of the £45 account fee.)

So at present, there is no reason that I’m aware of to go direct to Fidelity (and never has been – FundsNetwork has always been cheaper via Cavendish and other intermediaries.)

Changes take effect from 9th February 2014.
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Nov 302013
 

Sippdeal – up to now one of the cheaper UK brokers for international dealing – has rebranded itself in an effort to shed its SIPP-only association, changing to the rather clunky-sounding AJ Bell Youinvest. More importantly, it’s announced a new charging scheme to bring its business model into line with the Financial Conduct Authority’s platform review and the resulting ban on execution-only brokers receiving trail commission.

Unfortunately, Youinvest has combined this with another rather unwelcome fee change that will be much more of an issue for international investors, even though few people seem to be picking up on it so far. Full details of all the changes are listed on the Youinvest website [PDF], but the key points are: Continue reading »

Jan 132013
 

Last week’s Wall Street Journal had a short piece about the work of an exchange traded fund manager. While brief, it gives some obvious insight into why expense ratios for ETFs can be so much lower than those for traditional actively managed funds:

At 30 years of age, Hao-Hung (Peter) Liao leads a handful of portfolio managers at Van Eck Global who oversee some $24 billion in investor assets around the world. Mr. Liao’s rapid ascent—and the parallel success of his tiny team in handling its outsize mission—owe a great deal to the unique traits of the investments in which the team specializes: exchange-traded funds.

Such ETFs are easier to manage than index-tracking mutual funds. A single person or small team can oversee a long list of ETFs, as Mr. Liao and his team do. Indeed, 87% of Van Eck’s ETF assets are in the 38 funds run by Mr. Liao and his staff of three portfolio managers and analysts.

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Jan 062013
 

There are a couple of updates to fees at two Singapore brokers. OCBC Securities has slightly reduced its commissions on the higher tiers for Singapore stock trades – trades S$50-100k are now 0.22% from 0.275% and trades above S$100k are now 0.18% from 0.20%. This brings it in line with most of its local peers for online Singapore trades.

It’s a small change, but at least it’s in the client’s favour. DBS Vickers appears to have gone in the opposite direction. A reader has pointed out some significant alterations to the firm’s fee schedule for some international markets. (These apparently came in a little while ago, but neither I nor anyone I know uses DBS, so I wasn’t aware of it until now.)

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Aug 192011
 

Most investors understand that the fees they pay to fund managers have an impact on their investment returns. But it’s easy to overlook quite how large that impact can be. It’s also easy to focus on the wrong fees – putting a lot of effort into reducing one, when it’s the other that matters more.

So exactly how much do fees matter and what should you do to cut costs? Let’s take a look at a real example.

Before we begin, let’s recap what fees we’re looking at. There are two different sets of fees that fund management firms normally charge. One is the entry fee or initial charge, a one-off fee levied when your investment goes into the fund. The other is the annual management charge, which is levied on a recurring basis.

There are some other possible fees to keep in mind. For example, an exit fee might be charged when you withdraw your money or a performance fee levied when returns pass a certain hurdle. But these are less common and so we’ll leave them out for simplicity.

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What will my stock broker charge?

 FAQs
 

Comparing international stockbrokers can be difficult because their charges aren’t consistent. Some will charge flat fees, some a percentage of the trade value, some will impose administration fees, while others will charge an extra fee if you don’t trade frequently, and many other variations.

What’s more, the question of which broker is best depends on how these costs interact with how you trade. There’s no one answer to “which is the cheapest broker?”  – and in any case, cost is just one consideration along with quality of service and range of markets.

But it’s helpful to have a grasp of the different way that brokers charge and how a low headline rate can be offset through charges in the small print. So this article discusses some of the most common fees that are listed in the international stockbroker comparison table.

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