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Hargreaves adds ultra low-cost tracker to Vantage
by Michelle McGagh on Dec 05, 2011 at 07:33
Hargreaves Lansdown has added the ultra low-cost Swip tracker fund to its platform, giving investors access to the FTSE All Share and paying a TER of just 0.11%.
The launch of the fund on the Vantage platform comes after a furore over Hargreaves plans to charge £2 per month to investors using tracker funds while still taking kickbacks from fund managers.
The Swip FTSE All Share Index (Swip Foundation Growth) fund is one of the lowest cost funds available to private investors, carrying an annual management charge of 0.07% and a total expense ratio of 0.11%.
Vantage has also added 12 Vanguard funds to the platform with TERs and AMCs of between 0.15% and 0.33%.
Investors will be charged £2 per months for holding the tracker funds in their portfolios and the minimum single investment is £1,000 or £50 per month.
Danny Cox (pictured), Hargreaves Lansdown head of advice, said: ‘Our aim is to be the best place to buy any investment directly in the UK. In 2010 we saved clients £180 million in fund charges. We recently improved our share dealing tariff and service.
‘Extending our coverage of tracker funds and offering a wider choice is therefore complementary and important.’
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3 comments so far. Why not have your say?
david mann
Dec 05, 2011 at 11:23
will they offer a B2B service for IFAs? this is looking very interesting now (and if HL can do it at these fees, what about all the other platform providers?)
report thisDavid Watson
Dec 05, 2011 at 12:57
Maybe cheaper than Vanguard but SW fund has underperformed their equivalent fund by 1.24% since it launched in March this year......
report thisBert Poppins
Dec 05, 2011 at 13:12
It is an interesting and aggressive ploy that at a swipe almost kills off the old argument of "you can't use trackers or non-rebates" and comes from the safe house of £24bn assets under management and earnings of about £120m!
The challenge retail advisory platforms have is not only the distribution cost (which is broadly neutral) but the cost or procuring assets and supporting its distribution channel. Advisers want to see and meet people to help them use the platform, deal with problem cases and talk about the old times. They want highly qualified and competent people at the end of the phone.
Insurance companies also have legacy staff that earn a fortune (broker consultants - £100k min thank you) and have progressed through being good at selling to advisers historically.
We have relations with three platforms one independant and dynamic, one American, huge yet still dynamic and one that is a provider based platform. When we have meetings we meet with one person from each of the first two to discuss general things - when we meet the other it is like mobalising an army!
The point I'm making is that for a retail platform to be distributed through the conventional channels is expensive which is why analysts at Old Mutual and Standard state that they cannot live on less than 50bps. The math doesn't work.
If an adviser wants to take more of the value and lower the cost of the product then they need to take on more of the responsibility.
For HL taking calls, issuing news letters, speaking to PR and updating website is pretty efficient way to procure assets. And cheap.
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