iweb fund fees

[yetanothermike]

Hello All

I'm trying to understand how much my existing broker iweb would charge if I dropped a lump sum in a particular fund.

iwebs documentation for that fund says there is a 1.03% ongoing (presumably annual) charge and a £5 online dealing commission. Ok so far. Then it says "0.5% of your investment (you'll be provided with the exact cost before investing in a fund) "

So I started a test trade of just £100. The information I received was this:
Dealing commission : £5.00
Initial Charge: 0%
Ongoing Charges Figure: 1.05%
Transaction Cost : 0.00296%


My questions are what is this transaction cost? Is it 5% or 2.96% ? How much of the original £100 goes into initial fees and how much of it goes into the fund? Why does Monevator comparison table not show this transaction cost?

[tjh290633]

Hello All

I'm trying to understand how much my existing broker iweb would charge if I dropped a lump sum in a particular fund.

iwebs documentation for that fund says there is a 1.03% ongoing (presumably annual) charge and a £5 online dealing commission. Ok so far. Then it says "0.5% of your investment (you'll be provided with the exact cost before investing in a fund) "

So I started a test trade of just £100. The information I received was this:
Dealing commission : £5.00
Initial Charge: 0%
Ongoing Charges Figure: 1.05%
Transaction Cost : 0.00296%


My questions are what is this transaction cost? Is it 5% or 2.96% ? How much of the original £100 goes into initial fees and how much of it goes into the fund? Why does Monevator comparison table not show this transaction cost?

You paid £100, of which £5 went to iweb, and the rest was built into the price of the units.

Your own transaction cost was 5%, the fund's transaction cost is what it cost the fund managers to make changes to the portfolio. The ongoing charges are what it costs to run the fund, essentially. You may find more information in the Key Information Document.

TJH

[GeoffF100]

iWeb's numbers are nonsense. They refer to a generic fund that is not all like a Vanguard tracker and possibly not at all like whatever you are buying. You just pay iWeb a fiver. There are transaction costs within the fund. Mifid II requires fund managers to publish them, but does not require them to be easy to find. The numbers provided are useless anyway, according to Vanguard. The transaction costs should be very low for a market weighted tracker. For any tracker, you can get an indication of whether the fund manager is being honest by looking at the tracking error. For anything else it is caveat emptor. Fund managers have always been very resourceful when it comes to hiding costs and charges.

[yetanothermike]

Thanks all. So I've learned that £5 is the iweb fee and its not clear about the fund fees.

Looks to me like 1.05% per annum plus a transaction cost of 0.00296%.

So if I invested say £10,000. I'd pay £5 to iweb and if my investment remained at 10K I'd pay:

£105 per annum to the fund (1.05%)
plus 29.6 pence per annum to the fund (0.00296%)

Have I got that right?

[mc2fool]

Thanks all. So I've learned that £5 is the iweb fee and its not clear about the fund fees.

Looks to me like 1.05% per annum plus a transaction cost of 0.00296%.

So if I invested say £10,000. I'd pay £5 to iweb and if my investment remained at 10K I'd pay:

£105 per annum to the fund (1.05%)
plus 29.6 pence per annum to the fund (0.00296%)

Have I got that right?

Yes and maybe. It depends on what you think "pay" means.

The £5 IWeb dealing fee is straightforward. You pay it directly out of your pocket (well, your account). If you want to buy £10,000 worth of the fund you must put £10,005 into your account. Or if you have £10,000 in the account and tell the trading screen that you want to invest £10,000 it'll buy you £9,995 worth of the fund and keep the remaining fiver for the dealing fee.

The fund fees, on the other hand, you don't have to stump up any money for; they are taken by the fund managers out of the value of the fund. So you "pay" them indirectly by getting a slightly lower return. E.g. if the value of your holding remained at £10K then what that'd mean is that the underlying investments had actually grown by 1.5+0.00296% (grossed up) but that would have been eaten by the costs to keep your end value at £10K.

Geoff is a little harsh in calling iWeb's numbers "nonsense"; they show the numbers provided by the fund or when they give a "typical" figure of 0.5% they do say it is so and not the actual figure for the fund, although I'd agree that their presentation isn't as clear as it could be. However, what he says about transaction costs is right...

[GeoffF100]

Geoff is a little harsh in calling iWeb's numbers "nonsense"; they show the numbers provided by the fund or when they give a "typical" figure of 0.5% they do say it is so and not the actual figure for the fund, although I'd agree that their presentation isn't as clear as it could be.

When I last looked, iWeb gave a huge transaction cost for a Vanguard tracker that clearly did not have that cost. iWeb did not say that the cost was typical rather than actual. It was a source of great confusion to posters on these boards. Hopefully, iWeb has changed the wording.

[yetanothermike]

Thanks all. So I've learned that £5 is the iweb fee and its not clear about the fund fees.

Looks to me like 1.05% per annum plus a transaction cost of 0.00296%.

So if I invested say £10,000. I'd pay £5 to iweb and if my investment remained at 10K I'd pay:

£105 per annum to the fund (1.05%)
plus 29.6 pence per annum to the fund (0.00296%)

Have I got that right?

Yes and maybe. It depends on what you think "pay" means.

The £5 IWeb dealing fee is straightforward. You pay it directly out of your pocket (well, your account). If you want to buy £10,000 worth of the fund you must put £10,005 into your account. Or if you have £10,000 in the account and tell the trading screen that you want to invest £10,000 it'll buy you £9,995 worth of the fund and keep the remaining fiver for the dealing fee.

The fund fees, on the other hand, you don't have to stump up any money for; they are taken by the fund managers out of the value of the fund. So you "pay" them indirectly by getting a slightly lower return. E.g. if the value of your holding remained at £10K then what that'd mean is that the underlying investments had actually grown by 1.5+0.00296% (grossed up) but that would have been eaten by the costs to keep your end value at £10K.

Geoff is a little harsh in calling iWeb's numbers "nonsense"; they show the numbers provided by the fund or when they give a "typical" figure of 0.5% they do say it is so and not the actual figure for the fund, although I'd agree that their presentation isn't as clear as it could be. However, what he says about transaction costs is right...

That is extremely clear. Thank you so much for taking the time.

Does beg the question which is what is the Transaction Cost (as opposed to the Ongoing Charges Figure). It is pathetically small in comparison but perhaps is higher for other funds etc. Is it also an annual charge? Is it also possible they didn't mean to add the % sign so in fact it is 0.00296 (or 0.296%) meaning £29.60 ?

[Aminatidi]

Geoff is a little harsh in calling iWeb's numbers "nonsense"; they show the numbers provided by the fund or when they give a "typical" figure of 0.5% they do say it is so and not the actual figure for the fund, although I'd agree that their presentation isn't as clear as it could be.

When I last looked, iWeb gave a huge transaction cost for a Vanguard tracker that clearly did not have that cost. iWeb did not say that the cost was typical rather than actual. It was a source of great confusion to posters on these boards. Hopefully, iWeb has changed the wording.

I don't think they've made it any clearer.

Every now and then I look at them and it's just a poor website IMO as you can never work out exactly what you'll be paying.

They also seem to have quite a few funds with initial fees whereas other platforms either have those fees discounted, or IWEB are poor at making it clear that they're discounting them.

They may be a cheap platform but the website looks a bit like something from the late 1990's which doesn't instil confidence.

[GeoffF100]

I don't think they've made it any clearer.

Every now and then I look at them and it's just a poor website IMO as you can never work out exactly what you'll be paying.

They also seem to have quite a few funds with initial fees whereas other platforms either have those fees discounted, or IWEB are poor at making it clear that they're discounting them.

They may be a cheap platform but the website looks a bit like something from the late 1990's which doesn't instil confidence.

Funds often have many different classes with different fees. iWeb does not have all the funds available, or necessarily have the cheapest class for every fund. You always have to check precisely what is on offer, and you always need to study the fund manager's documentation.

As for what you are paying, it is fiver plus whatever the fund manager levies for that fund class, plus whatever you pay for the units.

It is better to have an old website than a new one that has lots of bugs. iWeb provides a reliable service, but the information they provide is sometimes confusing or even wrong. Hargreaves Lansdown is said offer a better service than iWeb, but at a higher cost.

[nmdhqbc]

I don't think they've made it any clearer.

Every now and then I look at them and it's just a poor website IMO as you can never work out exactly what you'll be paying.

They also seem to have quite a few funds with initial fees whereas other platforms either have those fees discounted, or IWEB are poor at making it clear that they're discounting them.

They may be a cheap platform but the website looks a bit like something from the late 1990's which doesn't instil confidence.

The way I see it, the funds and their classes are the same regardless of the platform you buy them on. You can either buy them on iWeb or you can't. So I just use other websites to research them and buy on iWeb at the low price. Best of both worlds. I don't think I've even looked at the iWeb fund info pages.

[mc2fool]

Does beg the question which is what is the Transaction Cost (as opposed to the Ongoing Charges Figure). It is pathetically small in comparison but perhaps is higher for other funds etc. Is it also an annual charge? Is it also possible they didn't mean to add the % sign so in fact it is 0.00296 (or 0.296%) meaning £29.60 ?

It's the direct costs the fund incurs buying and selling the investments within the fund, i.e. dealing fees and, where applicable, stamp duty. It's quite possible for those costs to be very small if it's a large fund that doesn't change its constituents very often. E.g. figure out what your transaction cost %pa would be if you had a £4m portfolio and you only made one sell and buy each month ... and you used IWeb for your broker.

This recent thread covers the topic: viewtopic.php?f=88&t=21078