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International
Review by hdeakin299
submitted on 17 October 2013
Likes: A
Dislikes: E
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Investment Fund (Unit Trust) Product:
Moneybuilder Income
Review by hdeakin299
submitted on 08 January 2013
Likes: TER 0.3%: In relation to costs and charges a good CORE fund (Cor! look how cheap it is)
Dislikes: none
This review is about the new Fidelity Moneybuilder US Index Fund A- Acc Class Fund (not the Moneybuilder Income fund as per heading)
I first spotted this fund as an advert in the Sunday Times 25 11 2012 . It said "New low-cost tracker. In the Star-Spangled manner." and it continued "The US is the largest and one of the most developed markets in the world. And thanks to pro-growth policies , her economy is in better shape than many others in the West .All of which is reflected in the S&P 500 Index- home to some of the biggest and best known global companies. And it's these bright stars that we can track , through our new ......." fund. This was of interest to me as the estimated TER is mentioned as being just 0.3%
HSBC has a similar tracker with a similar TER so one of the longer term aims (after several rewrites ) of this review will be to compare and contrast and see if there are any significant differences. Well this one is new . Investing in new ACTIVE funds can be worthwhile but maybe not so much with passive trackers like this fund.But I decided to switch into this fund as I had rather too much in some other low TER tracker funds. Also as there are relatively few of these very low TER funds I invested because it is good to see some new funds being set up with low TERs.
I notice that , in the information or "research- funds" section of their site the information tabbing for each fund has been vastly improved : unfortunately as this was a new fund not much past data could be put in so it appears more or less as a blank sheet . So not much to report on this one yet but it could be an important one for the future: I will give it a provisional 4 rating
And there is bit of writing space left over to put these cheap funds into a context (whether it is their proper context or not I don't know!) . Awhile ago when a lot of financial advice was often mainly advised , and when advisers were "advisers" and people mostly took their advice , rather than DIY investing , some IFAs used the concept of CORE funds as being a key part of a typical investors "ideal" portfolio . What is the equivalent now for the DIY investor? . Well I think the Fidelity range of funds costing less than half of one per cent fit into this category : I use Fidelity's platform almost exclusively for these funds ( my "deTERred" funds as they have a reduced TER or cost) . But at the moment ,although these cheap funds therefore form a useful CORE holding , they do not , on their own , cover as much ground as is really needed to give a broad enough coverage for most investors : they need a top-up with something that can "fill in the holes" so to speak. Today ETFs can easily be used for this "top-up" role , as today there is a good and growing range of ETF providing platforms that can fill this niche on a transactional and low cost basis. Fidelity does charge an additional charge for some funds like these ETFs so investors will have to decide whether they wish to use the Fidelity platform for these. It may suit some to pay this percentage fee whereas others may prefer a more "one off" transactional approach to paying charges
But I have to question whether the concept of CORE funds or platforms is useful for my multi-platform approach : it would seem that its usefulness (for me in particular) is limited to reducing charges.I now use Fidelity as my big core platform for largely historical reasons but within it my core low TER funds are now a key benefit of having this platform . However I realize there is a need for me to modernize my approach to a fully multi-platform one and make better use of the other platforms by topping up with cheap investments like ETFs .For this I think I may prefer the SippDeal ISA which has no service fee for ETFs.
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Investment Fund (Unit Trust) Product:
Moneybuilder UK Index
Review by hdeakin299
submitted on 09 November 2012
Likes: Total full "on the road "costs said to be approx .7% which is very good :The AMC is very low bargain price : High proportionate TER may be inevitable at this low AMC level: No additional platform charges
Dislikes: The TER is 3 times the AMC
Jessica Brown wrote in the Sunday Times of 25 9 05 :"Fidelity ,claims to be offering investors the cheapest ever way into the UK market after slashing the annual fee on its tracker fund from 0.5% to just 0.1%".This index fund tracks the shares in the FTSE Actuaries All Share Index of 611 UK Companies.So this low price has been available for about 7 years.The sector is UK Large Cap Blended Equity.
A recent Fidelity (a PDF) publication, called "Fee transparency: Annual Fund Supermarket and Service Fees" confirms this fund has a 0.1% is the Annual Management charge : the document also gives information about the "Standard Fund Supermarket and Service Fee (%p.a.) : here Fidelity lists this as N/A for its own funds : so this appears to rule out any extra platform charges being applied to its own funds. The Total Expense Ratio (or TER) is 0.3% : still cheap but 3 times the basic Annual Management Charge (or AMC) .Overall the TER still appears cheap and on the right side of the 0.5% TER that I apply as a kind of watershed ( to sort out cheap from dear funds). And ,as the PDF indicates, as per above , platform charges appear to be taken out of the equation and this is confirmed on "The Fidelity Index Tracker Comparision Tool" where it is stated : "No additional monthly platform fee."
Fidelity has just launched "Compare Your Tracker.com" which deals with UK based trackers. In an article called "The Truth about Trackers" on this site Tom Stevenson writes : "In the case of Moneybuilder UK Index we have kept the total expense ratio (TER) to .3% , Which is one of the cheapest on the market." He continues "The total cost of running the fund TER plus transaction costs and sampling error ) amounts to approximately 0.7%." So this is a very rare case where the approximate total full "On the Road " cost/charges are known and published by Fidelity..
Press commentators awhile ago indicated that about 80% of the All-Share is made up of the same stocks as the 100 Index but apparently many years ago this percentage was a lot lower . Nowadays perhaps the tracking costs of these 2 Indexes are broadly similar . Only the very largest All-Share tracker funds fully replicate the whole Index because of the costs involved.To help reduce these costs the compromise is to partially replicate or mirror the Index .
This fund has a Manager called Matt Jones. The role of an All Share tracker manager is to ensure that the returns ,or lack of them , are broadly in line with those of the FTSE All-Share : in this case , the fund gives full replication of larger companies and uses sampling techniques to identify a sub set of liquid small cap stocks. Apparently different tracker funds use different replication methods such as "stratified sampling " which is a statistical tool allowing the manager to buy just some of the companies in an index that they feel are representative of the total.This is done to reduce dealing and other costs.But even though the costs can be reduced by using these partial replication and sampling techniques we do not know how much money is saved as we do not know the final "on the road" cost of this or indeed of any other tracker. At least , it is good to know these sampling techniques help reduce the costs.
This fund's advantage is that ,at least the identifiable charges (the TER) are known as being on the right side of the 0.5% "TER watershed" . As stated above , we do not know exactly how much dealing costs are reduced by the statistical techniques but it it is also true that full "on the road" costs for funds are never published . I think it makes it more important to keep those charges we do know about (ie the TER) as low as possible and in this case the TER is reasonable and so it gets a good rating overal