Newly Launched Investment Trusts

Freetrade Chat 🔥
#1

Good News -

Pacific Horizon and Manchester & London Investment Trusts have launched today meaning I could transfer my ISA from Hargreaves Lansdown (I have Scottish Mortgage, Edinburgh Worldwide, Manchester & London & Pacific Horizon in my investment portfolio).

Bad news -

They’ve both require a Plus Account at £10 a month (£120 a year). It is cheaper for me to keep my portfolio in Hargreaves Lansdown at 0.45% platform fee - capped at £45 and £1.50 per trade (if I trade in each IT once a month).

If they weren’t in the Plus option I would’ve transferred my ISA to the £3 a month option, but doesn’t seem Freetrade are attractive to long-term traders investing mainly in Investment Trusts. It’s surprising as thought this was a market they would target

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#2

If your trading only one a month and done mine when then HL sounds like it still fits your needs nicely.

Presumably they’re going for the simple option of a single fee. I’d imagine that it may be more attractive to a lot of people who also have funds and who also may sell their stocks.

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#3

The problem is only one of my investments is in Plus do would force me into a £10 a month subscription. If it is in the free option I would transfer as I think the £3 a month ISA is good value, but can’t justify £10 a month

#4

Hargreaves lansdown’s platform fee is not capped, it’s just tiered (i.e. decreases to ~0.20% or something after your first 250k in assets). Also, they charge £11.95 per trade, not £1.50. The £1.50 you refer to is only applicable when they force-sell shares you hold as a way of paying their fees (i.e. if you don’t have cash in your account).

Given the above, it’s actually still cost effective to use Freetrade Plus (assuming a £10k portfolio: ~£194 with HL per year, £120 with FT per year).

Whilst i’m also a little bit disappointed by the FT paywall, I acknowledge they have to make money somehow, and that it’s actually somewhat competitive pricing when you think about it. Also, the common misunderstanding of fees as illustrated above speaks volumes about HL vs Freetrade’s fee structure - FT are successfully pushing for simplicity and transparency.

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#5

Not sure where you’ve got your pricing from but can confirm that platform ISA charges, if you are trading in shares, investment trusts and ETF’s are capped at £45 a year.

Also trading is £1.50 a month as part of their regular trading programme.

My point being that the Plus subscription would need to be £5-£7 to be competitive.

Point being I could trade once a month in a x4 share investment portfolio on HL, with a greater choice of shares and at a lower cost

The misunderstanding of fees is at your end

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#6

I didn’t mean to sound so dogmatic, as I see now judging from your response I might’ve come across as rude. On reflection/research, I was wrong on one point, but I’m confident it’s still more cost effective to invest with freetrade overall. Let me clarify:

  • The account charge is capped at £45, but only if you’re dealing shares (and investment trusts). Funds aren’t capped, and this is where I was wrong/confused.

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  • There is a £12 charge on all trades (on shares and ITs) though, which makes Freetrade more competitive (£120/yr vs £432/yr on HL - assuming you invest in each IT once a month):

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all screenshots taken from HL’s ISA fees page

Would you agree with my calcs? Welcome any criticism.

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#7

Sorry in the spirit of reconciliation didn’t mean to be curt in my reply :slight_smile: I can confirm I only charged £1.50 per trade as part of their regular DD investment offer

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#8

Ah, i didn’t know about this direct debit offer! I stand corrected, sorry for trying to correct you there :sweat_smile:

I’m now also considering that £10 might be too steep…!

#9

Yeah, think it needs to be £5-£7 to be competitive and pick this investment market up which I presume is quite substantial

#10

You’re making the same mistake comparing HL to Freetrade that people making comparing Freetrade to HL. Its not like for like.

HL has a more complex pricing structure as you know. Do you actually only trade once per month? because your wording sounds like you don’t, in which case you need to take in realistic cost.

HL also cost to sell. Your estimated cost only works if you never make more than 4 trades a month via the monthly savings option which as you know is also restricted. And only if you never buy funds.

Freetrade has a single fee, no cost for buying and selling, and no restriction on stocks at that cost.

Just because HL is slightly cheaper (if you never sell) so long as you change to only buying 4 stocks per month at a time not set by you doesn’t mean Freetrade have to drop their price to be competitive. They aren’t offering the same product as HL. I think you need to step back and look at whats actually being offered and decide what offering is better for your needs.

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#11

I am a long term investor not frequent trader. I have a portfolio of four Investment Trusts which I’d like to trade in once a month each.

I really don’t get why people say HL’s fee structure is complex, because if we’re comparing like for like with FT, their platform fee is capped at £45 and if I invest via monthly DD the trading is £1.50. It’s pointless comparing funds because a) I don’t invest in them and b) Freetrade doesn’t stock them.

So it’s £45 a year platform fee plus £1.50 a trade, nothing complex about that whatsoever.

I appreciate totally it only works on a small size portfolio, but ii doesn’t, you can trade any type of product over 30 times a month (again via regular DD investing for the same platform price)

#12

Yeah, like i said at the beginning though, stay with HL and save £3 a year.

ii isnt for you since it costs £3 a year more like Freetrade does. The availability of stocks don’t matter since you’re not going to trade more than the 4 you already have and limited within the stocks they provide in their monthly saver option.

So there’s literally no point in moving from HL.

#13

You are putting a lot of effort into reviewing your platform costs while maintaining a portfolio with what, almost 100bps of ongoing charges? Obviously you shouldn’t pay more than you need to for your broker and if HL is better than fair enough, it just feels like you are focusing on the much smaller cost.

I realise I come off as a passive evangelist here, but if you are focusing on cost it might be worth thinking about this more holistically. Instead of £45 of platform fees + trading fees + ~80bp ongoing charges you could also consider other options (e.g. £3/month + 10-30bps for a passive portfolio)

#14

I’m comfortable with the management costs at the moment, as there’s no comparison between SMT, EWI, ATT performance and the passive trackers. If this changes I’ll review, but performance of the Baillie Gifford IT’s has been exceptional.

Does tend to feel like a cult on here when anyone dares to offer constructive criticism.

All I was originally saying was why put some IT’s behind the paywall

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#15

Ok that’s fine if you are happy, just wanted to flag it as something to consider - sounds like HL is best for you then.

I think a reasonable justification is that ITs are effectively already behind a paywall, if people are willing to pay 80bps already what’s another 10?

A famously good predictor of future returns

#16

I invest in it as I’ve scrutinized all their literature and buy into their investment strategy. Past performance has been vv good, but as with every investment is under continual review. I love the companies it invests in.

#17

I’m a long-term investor with investment trusts and have some of them in my Freetrade ISA.

The ones I have in my HL ISA will stay there - as you say, fees capped at £45 is decent so there is no need for me to transfer to Freetrade.

Like you, not all the ITs I want to invest in are available with Freetrade (Free or Plus) - it’s just given me the opportunity to further diversify and invest in other ITs.

#18

All the ones I trade in are now in FT and I would look to move my ISA, prob is three are in the free part and one in Plus, so not worthwhile moving now