# Standard Life My Folio fund - Charges



## 3CC (12 Nov 2012)

Hi,

I have been looking at the standard life Myfolio fund. I have posted a link to a fact sheet below.

The fund invests in a series of other funds (so I guess it is a fund of funds)

My question is regarding the charges. The quoted charge is 1.25% - does an investor also get charged the charges levied in the various sub-funds also even though this is not stated?

Many Thanks,

3CC

[broken link removed]


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## leroy67 (12 Nov 2012)

Going by the literature it looks like an amc of 1.25%, i would check with them if there is an additional charge for sub-funds but one would imagine that this should be cleary pointed out on the info sheet you have linked


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## mercman (12 Nov 2012)

In the first instance the Management Charge is only the start of the fun. You need to find out the TER of the fund which is likely to be 2% or higher. After reading the factsheet you attached, the TER on a number of the funds are likely to be higher. So if you are happy paying an amount of what could be 4% plus for managing your money, then fair play to you. You obviously love been ripped off.

Ask Standard Life what the TER is on their fund and they are likely to tell you that they are not obliged to tell you. In this regard they are correct as the Department of Finance allows these products to be sold without full disclosure of full costs.

Do yourself a favour and take a look at ETFs (Exchange traded funds). These offer a better mix and the Management costs and other costs are far less that the fund you fancy. Please use your loaf and stop been old fashioned in your choice of investments.
*
DO YOUR OWN RESEARCH AND GET EVERYTHING IN WRITING*


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## 3CC (13 Nov 2012)

Hi Mercman,

Thanks for the reply.

I probably gave you the impression in my first post that I had not thought this through so your comments, albeit a bit condescending, are deservedly so.

The full story is that my wife is moving job and therefore needs to do something with her company pension. The broker (who managed the pension for the original company) has advised her to go for a buy out bond which would hold the Myfolio fund of funds.

If she went for this, the broker has quoted 0.5% pa for his ongoing advice and there would also be the 1.25% for the Myfolio fund charge. 

I presume the underlying funds would deduct their charges from within the fund and the charges would be reflected in the price of these 'sub-funds'. If I am right in this, there is another layer of charges that are not immediately obvious. That would be a little devious if it is the case.

I am guessing that the blended rate for all the 'sub-funds' would be about 1.2% -just from looking at the list of charges ([broken link removed]).

So, if all of this is correct, missus 3CC would be paying 1.2% + 1.25% + 0.5% + 0.6% (pension levy) = 3.6% (when compounded)

That does not look like a very good deal to me. Any comments?

3CC


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## mercman (13 Nov 2012)

3CC, you have not given consideration to the TER (Total Expense Ratio) which bring the charges  to way over 4%. It is certainly not for me to advise anybody as to how they should invest their money. You will need to talk with a Qualified Financial Adviser. Personally and speaking from past experience, I have no trust in persons selling Financial Products who are working on Commission. The more you pay the more they earn and without any expert direction being offered.


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## 3CC (13 Nov 2012)

Mercman,

I did not take into account the TER because I just do not know how to calculate it. I accept that it could be much higher than the annual charge quoted for both the Myfolio fund and the sub-funds which would compound the problem. If I was to assume 4% for both of these and then add the levy and the broker charge, the total charge would be heading for 10%!!!

Just for comparison, I have some ISA's from when I lived in the UK and the TER for them is typically ~1.7%.

I am a bit sceptical of commission based advice also.


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## ashambles (13 Nov 2012)

Have a look at the UK site to see if you can get an idea of the TER they advertise there for similar products. This seem similar to yours http://uk.standardlifeinvestments.com/O_MF_III/getLatest.pdf, if you search for TER it looks like they’re claiming it’s 1.75% for retail investors.

Many of the more interesting products sold by Irish pension companies are rebranded funds available from UK companies. This can lead to funds that don’t contain what you’d expect, e.g. a European fund offered by Irish Life excludes UK based companies while including non-euro area countries such as Switzerland - which is a little brain dead for an "Irish" European fund. [broken link removed]

At least you do get the advantage of better information than the local company will provide.

However there’s still significant criticism in the UK at hidden fund costs despite regulations regarding TERs.


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## offiah (13 Nov 2012)

To clear things up, the extra expenses on the MyFolio range of funds in Ireland are a max 5 bps. All 5 funds are designed for Irish investors - Barrie and Hibberts strategic asset alloction is for euro investors. Higher allocation to European assets (equities and bonds) and some assets are hedged back to euro. 
The UK MyFolio range of funds are mutual funds and are designed for UK investors. They have higher extra expenses due to their structure.
The AMC for the MyFolio III fund is 1.25% and the TER is 1.3%. There is no extra charges from Standard Life. For pension investors there is the pension levy of 0.6%.
In terms of advisors there are many different ways they charge clients. Some take up front commissions, while others don't but charge a yearly fee. There are ways to get a reduced TER on Funds, ask your advisor.
So fee would be 1.3% + 0.6% for pension investors.


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## mercman (13 Nov 2012)

offiah said:


> The AMC for the MyFolio III fund is 1.25% and the TER is 1.3%. There is no extra charges from Standard Life. In terms of advisors there are many different ways they charge clients. Some take up front commissions, while others don't but charge a yearly fee. There are ways to get a reduced TER on Funds, ask your advisor.
> So fee would be 1.3% + 0.6% for pension investors.



And who says so. Why don't Standard Life place this in writing ?? What about the funds this fund is investing in ?? They charge an annual Management Fee as well ??

And I have never heard about having the TER reduced. Or is this another fantastic kinumdrum from an Irish Financial Provider.

I just wish that the Financial Fraternity would realise that the dark days of pulling the wool over punters eyes are over, We're not as thick as you lot think.


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## Marc (13 Nov 2012)

Of course the *TOTAL *expense ratio or TER is not really the total fee paid by an investor.

All funds include additional fees in the form of transaction costs, brokerage commissions, stamp duty, bid offer spreads etc.

So, even if you could get a TER figure for an Irish Fund you would still need to know the portfolio turnover in order to be able to assess the likely impact of transaction costs.

Actively managed equity funds in both the USA and UK typically turnover around 70% to 80% of their holdings each year. An occasional paper by the UK Financial Services Authority estimated that for a typical Uk retail equity fund, the additional costs arising from portfolio turnover could add an additional 1.44%pa in "hidden" costs.

There are indeed "ways to get a reduced TER on Funds" it is by buying a low-cost index fund.

http://www.sensibleinvesting.tv/Default.aspx


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## mercman (13 Nov 2012)

At last a professional View on it MARC.

It really is amazing the bad Habits that quality non-Irish Financial Providers pick up when entering the Irish market. Good companies have begun by making some seriously careless mistakes in Ireland, but would be classed as unforgiving in the UK.


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## PMU (13 Nov 2012)

mercman said:


> Ask Standard Life what the TER is on their fund and they are likely to tell you that they are not obliged to tell you.


 This is more evidence of how the scales are weighed against the retail investor in Ireland.  
  If you invest in a fund that is a UCITS, under EU legislation, since last July, the fund provider must provide you with a KIID (key investor information document), which shows you any charges taken when you invest ,  ongoing charges taken from the fund and charges taken from the fund under certain specific conditions (e.g. performance fees).  
  However, if you invest in a fund that  is authorized under Irish legislation  there does not appear to be an equivalent obligation on the fund provider.


  The Central Bank is the statutory regulator of all investment funds in Ireland and, as far as I am aware; the only obligation it imposes on financial providers is to provide to investors in indigenous funds “a general statement of the charges imposed directly by the regulated entity;”.  This also does not appear to be a statutory obligation but comes under the CB’s Consumer Protection Code.  

There is all the difference in the world between the statutory obligation to provide detailed information on charges for UCITS funds and a “general statement of direct charges” for IE retail funds.


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## mercman (13 Nov 2012)

PMU, Thank you for putting this into meaningful English. 

Whilst Standard Life are probably the best of the bunch, the others lkeave an awful lot t be desired. So for all that are willing to invest in IE funds, please, for your own sakes, get everything in writing first as when the cheque is cashed it is too late to find out your mistakes.


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## offiah (13 Nov 2012)

I say so. Cos I asked!! Have you??
I'd say they don't put it in writing cos they are not obliged under most product wrappers. 
MyFolio is a bundled solution and thus the MyFolio III fund buys the zero percentage share class of the underlying funds. Thus there is no double charge.  
The Irish fund range is cheaper as the funds are structured differently. The UK Standard Life pension MyFolio funds buy units in mutual funds. Most of the extra expenses are excluded from the AMC of these funds.  Whereas in Ireland the MyFolio funds don't buy units in any MyFolio mutual fund. Also the underlying funds that the Irish MyFolio funds invest in incorporate more extra expenses than in the UK. Thus TERs are lower. 
As there is only one daily price on the funds, there is a swinging single price on all Standard Life funds in Ireland. What this means is there is a bid, mid and offer price for all funds and any fund can change to any of these prices depending on flows in and out of funds. This incorporates sell side charges, stamp duty etc. The bid offer spread is approx 1% on the MyFolio funds in Ireland. It is important to note that if flows are consistently positive than funds will generally be on the offer price and thus there is no extra charge. 
I'd argue that it is the active managers job to turnover assets in line with his/her skill to choice the asset/stock etc to acvieve an outperformance.  This cost will reduce the outperformance but isn't in the AMC or TER. Its not a hidden cost its a function of active management. 
As the Irish MyFolio funds don't buy units in an underlying MyFolio fund range of UCIT funds there are no KIID docs for these funds, unlike the UK. However ask them to tell you the TERs on the funds


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## mercman (13 Nov 2012)

offiah said:


> However ask them to tell you the TERs on the funds



Ask them to put it in writing. A verbal conversation isn't worth the paper its written on. I'm sorry to say that most pf what is written in offiah's post means nothing. Unfortunately Standard Life have got sucked in to the Irish Financial industry methodology which sucks. Bad habits die hard.


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