# cheapest lump-sum savings managed fund?



## Protocol (14 Sep 2006)

I think there was a Best Buy post on the cheapest savings managed fund, but I can't seem to find it.

For lump-sum investments of 50-100k, is it correct to say that even a 0.25% difference in the annual fund mgt fee can make a difference? That would 250 per year.

Is it possible to get a fund at nil or low commission through a discount broker, with 0.75% or even less fund mgt fee?


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## Taximan (14 Sep 2006)

You will do well to get anything for less then 1.25% management fee. generally they are between 1.25 and 2%.

There is what is known as the TER of a fund. this is the most accurate reflection of the costs that will be bourne by the investor.

The total expense ratio includes

Annual Mgt fee
custodian charge
Trustee fee
sub-custodian fee
Administration fee
Audit fee

all these additional expenses will add about 0.5% to your annual mgt fee so your fund will have to be uo the guts of 2% before you make a dime.This of course if there is no initial charge also. or the less then 100% allocation.


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## Protocol (15 Sep 2006)

Well my personal pension is invested in an Irish Life fund with a 0.75% fund mgt charge.

I was just wondering are there unit-linked savings funds with 0.75% or less?


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## SPM (15 Sep 2006)

Protocol,

With that kind of money to invest you might think of investing in Exchange Traded Funds (ETFs) through a stockbroker. For example, you can get the following ETFs on the London Stock Exchange with very low expense ratios:

iShares DJ Euro STOXX 50 – TER: 0.15%
NASDAQ-100 European Tracker – TER 0.20%

Other EFTs tend to have TERs ranging from 0.40% (for mature markets) to 0.75% (for emerging markets).

For London quoted ETFs see:
http://www.londonstockexchange.com/en-gb/pricesnews/prices/etf.htm

SPM.


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## Protocol (15 Sep 2006)

Thanks for that.  Those TER cost rates are very low.


I found the key post showing the best value unit-linked savings plans.

http://www.askaboutmoney.com/showthread.php?t=20916


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## Protocol (15 Sep 2006)

Quinn Life seem good, as their Freeway funds have no entry/exit fees, and charge 1% pa fund mgt fee.

But on a 100k fund, that's at least 1000 euro per year,

Whereas, if you had to pay 200 euro fee to a broker to access another fund that charged 0.75% pa, then your entry fee would be paid back within a year by way of lower annual fund mgt fees.  So with a big fund, it makes sense to try and get a really low AMC.

In the key post, see above, it mentions a New Ireland fund with a 0.625% AMC. This sounds very good.  But there is no info on the New Ireland website, or on 

Anybody know any fund with an AMC of less than 1%??


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## Protocol (15 Sep 2006)

I just looked up Fidelity Investments in the UK, and they have UK equity tracker funds with charges as low as 0.30% pa. Now that's competition.

[broken link removed]


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## Protocol (20 Sep 2006)

To be honest, I would prefer an Irish-based fund, with fund values in euros.

I know there are Irish ETFs, though I don't know much about them. Are they basically shares bought through a normal stockbroker that should track the value of the underlying index??

This seems to answe my question
http://www.ise.ie/index.asp?locID=440&docID=-1

Two queries: what happens to dividend income? And, are the commission rates on these the same as for ordinary shares?


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## SPM (20 Sep 2006)

The ISEQ-20 ETF is traded on the ISE in euros but it does have a relatively high TER (0.5%) for a mature market index tracker.

The iShares DJ Euro STOXX 50, traded in London, has a TER of only 0.15% at present. Even though it is quoted in £stg the base currency of the fund is euro (see http://www.ishares.co.uk/fund/overview.do). There is no underlying currency risk due to the fact that it is traded in £stg. The £stg price merely reflects the current EUR/GBP exchange rate.

If it makes you feel safer, though, this ETF is also traded on the major mainland European markets (quoted in euro). It may, however, be more costly to trade on these exchanges through a stockbroker.

The prospectus for the above ETF quotes the dividend policy as follows:
The Company intends to declare dividends on the shares of each Fund, in respect of each financial year, which are equal to the total income of that Fund net of any expenses for that financial year…… Dividends on shares will normally be declared with a view to their being paid in March, June, September and December of each year (“Quarterly Dividends”) and will be paid to the Shareholder’s account by way of electronic transfer or by cheque. Dividends will be declared in the Base Currency of the relevant Fund.

My read of this is that any income to the fund not accounted for in the share price (including dividends from underlying equities) over-and-above the 0.15% TER is distributed to shareholders as a dividend as set out above.

SPM.


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## Protocol (8 Jun 2007)

Just an update on low cost unit linked funds.

In the end we went with Eagle Star Matrix Investment Bond.  The gross allocation rate was 101%, as the amount was 100k.

The AMC is 1.5%.

However, as we went with a *discount broker*, the full 3.5% initial commission was added into the fund, leaving a net allocation rate of 104.5%.

Plus the AMC is cut to 1%.

So, in effect, the fund was given a day one *boost of 4,500*, by using a discount broker.

Nice one.


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## mercman (13 Sep 2008)

I know this is an old thread but I am posting to give investors a word of warning. I invested very large lump sums, directly into two connected financial institutions. Received NO allocation Bonus, a minuscule reduction in Management Charges and no exit penalties. Most companies operate a template system where bonus, extras are sorted out on your behalf.

Even more ridiculously, ordinary brokers (and discount brokers)are able to offer far better terms and a better deal instead of the companies themselves, for the same products. The Institutions know this themselves and they happily take the money from people (including existing customers, whether large or small) on lower offerings and without offering the advise of where they should go for a better deal in the same product. Doesn't cost them a cent extra. This practice occurs if you are an existing client or a new client and don't know your way around this maze. The level of honesty leaves an awful lot to be desired.

The Consumer Code is somewhat short on this kind of practice. Have spoken with the Regulator and intend on making a formal submission to the Regulator, The Minister for Finance and my local TD to have this ridiculous practice ceased.

Will post my findings on AAM if the MODS will allow.


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## Gondola (13 Sep 2008)

Extremely interesting posting, mercman. Will wait for an update as you go along with your action plan.

Are pension funds in Ireland as expensive to manage as investment funds?


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## odt (13 Sep 2008)

> Just an update on low cost unit linked funds.
> 
> In the end we went with Eagle Star Matrix Investment Bond.  The gross allocation rate was 101%, as the amount was 100k.
> 
> ...


Protocol, may I ask which broker you used? Thanks


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