HL Global Equity Income

[NapoleonD]

So, finally got round to opening my HL S&S ISA, and am buying units in VHVG every month by direct debit, so no dealing fees.

I got an email from HL, plugging the Equity Fund in the title. Now, I'm more drawn to trackers than managed funds, and the fee for the HL Global Eq Income isn't small:

3% entry fee
0.79% ongoing charges

Sounds expensive, BUT I was intrigued by the opening offer of buying units at £1.00 before midnight on the 6th Nov. I've exactly zero to base this on, but the unit price should surely increase on launch. Can't see anything that limits that initial buy - am I missing something?

[TedSwippet]

Sounds expensive, BUT I was intrigued by the opening offer of buying units at £1.00 before midnight...

Why? A fund's launch price is completely arbitrary. HL is literally offering you nothing more than £1 worth of stocks for £1.

... am I missing something?

You are perhaps missing the fact that trumpeting a £1 launch price is pure HL marketing spin, and it appears designed to fool the unsuspecting. It paints the £1 as if it is somehow a bargain. It is nothing of the sort. Personally, I detest the way HL repeatedly tries this on.

HL Global Equity Income - New fund launch:

£1 per unit fixed launch price – invest by 6 November
If you invest at the £1 per unit launch price by 11:59pm on 6 November, your money gets to work in the market right away once the fund begins trading on 7 November.

After the launch, the unit value will fluctuate with the market.

All of this is equally true for a launch price of £72, £13.75, £9.99, £0.13, or any other number you care to mention. There is absolutely nothing magic about launch at £1.

[DrFfybes]

Sounds expensive, BUT I was intrigued by the opening offer of buying units at £1.00 before midnight on the 6th Nov. I've exactly zero to base this on, but the unit price should surely increase on launch. Can't see anything that limits that initial buy - am I missing something?

Why must it go up?

Wht can't it drop to 97p, or lower?

Paul

[TedSwippet]

Sounds expensive, BUT I was intrigued by the opening offer of buying units at £1.00 before midnight on the 6th Nov. I've exactly zero to base this on, but the unit price should surely increase on launch. Can't see anything that limits that initial buy - am I missing something?

Why must it go up?

Why can't it drop to 97p, or lower?

Exactly. The fund's price (NAV) is simply going to follow the trajectory of the stocks it holds. Up, down, sideways, whatever. Perhaps the OP is thinking this is going to be more like an IPO, where the hype of "getting in on the ground floor" can at least sometimes be worthwhile. Of course, it is nothing of the sort.

Of special note, HL state:

If you invest at the £1 per unit launch price by 11:59pm on 6 November, your money gets to work in the market right away once the fund begins trading on 7 November.

What if you invest before 6 November? Your money does not "get to work in the market" until 6 November. By contrast, you could have invested earlier in a different (and of course, a lot cheaper; this fund is pricey for what it offers) equivalent global equity fund, in which case your money "gets to work in the market" well before 6 November.

Sleazy HL marketing. At least it's a mild toning down on their previous launches, which included a statement along the lines of "if you do not invest before <some date>, you miss the £1 launch price." Hurry; limited time offer! Yeah, right.


Can you tell from the above that I find this sort of shenanigan annoying? :-)

[NapoleonD]

Why must it go up?

Why can't it drop to 97p, or lower?

Exactly. The fund's price (NAV) is simply going to follow the trajectory of the stocks it holds. Up, down, sideways, whatever. Perhaps the OP is thinking this is going to be more like an IPO, where the hype of "getting in on the ground floor" can at least sometimes be worthwhile. Of course, it is nothing of the sort.

Of special note, HL state:

If you invest at the £1 per unit launch price by 11:59pm on 6 November, your money gets to work in the market right away once the fund begins trading on 7 November.

Can you tell from the above that I find this sort of shenanigan annoying?

Can't say I've noticed

I might be being swayed by the pricing of similar ETFs (eg Vanguard's All World, Developed World offering (though the HL product is an OEIC)), so it smells like something that could go up? Which is maybe what the offer is intended to do.

I'm a newbie at this still, hence asking before committing anything.

[TedSwippet]

Can't say I've noticed :D

Was I that subtle? :-)

I might be being swayed by the pricing of similar ETFs (eg Vanguard's All World, Developed World offering (though the HL product is an OEIC)), so it smells like something that could go up? Which is maybe what the offer is intended to do.

I think it is, and it seems underhand.

A fund's or ETF's nominal quoted price is irrelevant. It's just a measure of the net value of the stuff the fund holds divided by the number of shares issued by the fund. What matters is the change in the price over time. Buy one share of a £100/share fund or 100 shares of an equivalent £1/share fund and if the fund's assets rise 10% you now have either one share at £110 or 100 shares at £1.10; you are £10 better of both ways.

I'm a newbie at this still, hence asking before committing anything.

And this is precisely why I feel HL's marketing slime here is particularly insidious. They have been careful not to say anything that isn't factually true, while at the same time giving every impression that this is some sort of special limited time benefit to consumers, which it is not.

[Komo]

As of today its £101 you could have made 1p per unit.

[DrFfybes]

As of today its £101 you could have made 1p per unit.

Compared to Vanguards FTSE All-World High Dividend Yield Index VHYL which is up over 3% in the same time period

The HL fund is mainly a Fund of Funds, so several layers of fund manager fees will be taken out as well as their 0.79%.

And as for their initial 3% saving, I can't see it listed on ii or IWeb, so I'm not sure where I could buy it with the initial fee.

Paul

[mtk62]

I always avoided funds as they charge a % of the value to hold in the ISA/SIPP wrapper.
You can normally find an ETF that does the same as the fund you are interested in.

One of the things that will affect the long term performance of your portfolio is charges.
These will be both platform and fund manager related.

I hold an ISA with AJBell.
I recently transferred my SIPP from HL to AJBell.
I like AJBell's platform and the charges are low - lower than HL.

I have successfully mismanaged my SIPP for the last 12 years.
It turns out that if I had simply followed Warren Buffett's advice to his wife and bought the S&P 500 (VUSA) my SIPP would now be at least twice as large!
This has grown significantly in the last few years - though it is now dominated by the tech companies.
There's no guarantee this performance will be repeated.

[kernelthread]

I always avoided funds as they charge a % of the value to hold in the ISA/SIPP wrapper.
You can normally find an ETF that does the same as the fund you are interested in.

II charge a two-layer flat fee for an ISA (£5/month for <50K, £12/month over) with no percentage cost, so they work out cheaper if you want to hold large quantities of OEICs.

[kernelthread]

As far as the fund in the title goes, I wouldn't touch it with a barge pole. You'd be absolutely murdered on charges. On HL there's a platform fee of 0.45%. The HL Global Equity Income fund charges 0.79%. If you look at the list of holdings, the top one is JP Morgan Global Equity Income, with 37% allocation. That fund has its own charge of 0.9%. So that makes a total charge of 2.14% on that 37% of your fund. If we assume the other constituents have similar charges (I haven't checked them all), you would be handing over more than 2% of your money every year. That makes a massive difference over time.

[mtk62]

According to the HL website funds in an ISA (as opposed to ITs) are charged a % of their value:

0.45% on first £250K

https://www.hl.co.uk/investment-services/isa/savings-interest-rates-and-charges

[DrFfybes]

The HL Global Equity Income fund charges 0.79%. If you look at the list of holdings, the top one is JP Morgan Global Equity Income, with 37% allocation. That fund has its own charge of 0.9%. So that makes a total charge of 2.14% on that 37% of your fund. If we assume the other constituents have similar charges (I haven't checked them all), you would be handing over more than 2% of your money every year. That makes a massive difference over time.

In fact if one felt so inclined (and personally I would not be) one could pretty much just buy the underlying funds in the same proprtions as HL and save their 0.79% fee.

Paul

[mtk62]

I always found that the Vanguard ETFs do what most people require.
Normally for a low TER and platform holding cost.

I never paid more than £200 per year for Hargreaves to hold my SIPP (much less than 0.1% for the SIPP).
I now pay AJBell £120 per year for holding a larger SIPP and get much better interest on the cash.

[CliffEdge]

Does the HL fund offer a £10 M&S voucher?