Investors are increasingly choosing to hold investment trusts and shares, rather than conventional funds, in their investment portfolios. But are they paying their stockbroker too much to administer their investments?
Investment trusts are, like ordinary “open-ended” funds, pooled portfolios of assets, normally shares, but they are listed as a company in their own right, and investors buy shares in that company.
There are different costs associated with buying and selling investment trusts, relative to investing in ordinary funds. These differences need to be borne in mind when you look for the cheapest stockbroker through which to hold your investment trusts or other shares.
Although some investment trust managers allow you to invest with them directly, you get a wider choice of investment trusts and shares, plus easy switching and administration, at a “fund shop” – also known variously as investment shop, fund supermarket, platform or discount stockbroker. Examples include Hargreaves Lansdown, Barclays Stockbrokers and Fidelity Personal Investing.
Working out which will be cheapest can be complicated, as they don’t all charge in the same way. Some charge fixed fees, others a percentage of the amount invested. As a rule of thumb, the former work out cheaper if you have a large sum to invest.
We have already published tables that help you identify the cheapest or most expensive fund shop if you want to hold a mixture of funds, investment trusts and shares in an Isa or a self-invested personal pension (Sipp).
But because the calculations are different if you avoid ordinary funds and buy just shares or investment trusts, we publish today a table that sets out the cheapest fund shops for those circumstances.
The darkest green boxes denote the cheapest deals; the darkest red boxes indicate the most expensive. Simply pick the column that represents how much money you are investing to see which fund shop will be cheapest for you.
You can see the cost expressed as a percentage and in pounds and pence for a variety of portfolio sizes.
The table lays bare the huge cost of using the wrong fund shop for your Isa money – picking the wrong option could cost you thousands.