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AIC hits out at Hargreaves investment trust fees

by Gavin Lumsden, Danielle Levy on Jan 17, 2014 at 14:51

AIC hits out at Hargreaves investment trust fees

The Association of Investment Companies (AIC) has criticised Hargreaves Lansdown's decision to open up investment trust investors to extra annual charges as part of its RDR pricing structure.

Hargreaves this week announced that investment trusts would now fall into a separate charging category to shares, bonds and exchange-traded funds (ETFs) on its Vantage platform. It means an extra annual charge from 1 March for its clients who invest in closed-ended funds.

Previously investment trusts were in the same category as shares, ETFs and bonds. Investors paid an annual holding fee of 0.5%, capped at £45 in an ISA and £200 in a self-invested personal pension. Hargreaves is reducing the fee to 0.45%, in line with the new holding charge it is introducing for investors in unit trusts and Oeics.

However, because investment trusts are now to be treated separately, individuals holding both trusts and shares, will be hit with two holding fees of 0.45%.

It is a move that has attracted criticism from the AIC, who question why investment trusts are being treated differently, although they welcome the caps.

Ian Sayers (pictured), AIC Director General, commented: 'It’s difficult to see any justification for treating investment trusts separately to other listed shares or securities, as the mechanisms for dealing and holding them are the same.

'However, it may well be cheaper to hold investment trusts on this platform compared to open-ended funds, as the charges are capped for investment trusts but not, say, for unit trusts. For example, an investor with £100,000 in unit trusts might pay an annual fee of £450 a year, but only £45 for a portfolio of investment trusts.'

Hargreaves' new unbundled tiered pricing structure for its Vantage platform starts at 0.45% for clients with less than £250,000, dropping to 0.25% under £1 million; 0.1% up to £2 million; with no charge for clients with over £2 million on the platform.

From March the average annual management charge (AMC) for a Wealth 150 fund will fall to approximately 0.65%. Hargreaves said the average AMC charges will compare favourably to the standard AMC of 0.76% for the same funds and give an average discount of 0.11% for Hargreaves clients.

Hargreaves has also selected 27 funds from its Wealth 150 list which will make up a new list called the Wealth 150+ where the average AMC will be 0.54%.


1 comment so far. Why not have your say?

Philip Milton

Jan 17, 2014 at 15:54

And shouldn't all these charges be subject to VAT like those 'everyone else' suffers?

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