# Which is better direct ownership or gross roll-up?



## Brendan Burgess (20 Feb 2002)

Corncrake said:

To an investor dealing in any kind of half-reasonable size (like yourself!) gross roll-up must make investing through a unit-linked fund/unit trust a more attractive option.Admittedly at a price, the pooled approach provides tax efficiency,avoids dealing with dividends,and most importantly, provides diversification.It also saves small forests in terms of the paperwork which goes out to investors !

Sir Ivor said:

The GRU versus Direct is a horse which has been flogged to death. It is not the size of the investment that matters but the frequency of trading. If one is a frequent trader (and making capital gains) better with GRU. If one buys and holds better direct - to get the advantage of indexation and 20% CGT - note that Buy & Hold implicitly "rolls up" any gains. 

Corncrake said:

Sir Ivor is (almost) correct about 'buy& hold' being implicitly gross roll-up. Dividends are once again a significant part of the return to investors and these are taxable at the investor's marginal tax rate.This is currently a good deal higher than the exit tax and is also more immediate.

Whether GRU is better or worse is a function of many things,and Sir Ivor is correct to mention activity as one of them.Sorry if I have gone over ground previously covered,but dividends are back in fashion !



Sir Ivor said:

Let's see now, Corncrake. 

Irish Life Scope funds, for example, 1.65% management charge, dividend yield, say, 2% and the little left over subject to exit tax. 

I'll pay 42% tax on direct holdings any day.


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## The Advisor (20 Feb 2002)

*Sir Ivor should retire to stud*

WADR,  <!--EZCODE ITALIC START-->_ Sir Ivor_<!--EZCODE ITALIC END-->, is ignoring that management charges bring significant added value.  It is quite disingenuous to set management charges against dividends.  The management charges are for management and will add value.:rolleyes


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## Brendan Burgess (20 Feb 2002)

*Re: Sir Ivor should retire to stud*

Hi Advisor

If by "added value" you mean "increased return", I don't think that you will find many people on Askaboutmoney who will agree with you that fund managers add value. If you want to discuss this issue, please start a new thread or visit one of the old ones.

Joest asked about investing in gilts in the Savings and Investments Forum. I presume that an individual is better off investing through a gross roll-up fund if they are investing in gilts? Mind you, a 1% annual charge is 20% of the gilt return of 5%. And presumably, there is a lot less benefit from diversification in gilts.

Brendan


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