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User Reviews for HSBC: American Index

Type of service: Investment Fund (Unit Trust)

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Review by hdeakin299 submitted on 14 July 2012

Likes: Low Total Expense Ratio (TER) : Well received in the national press

Dislikes: none

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This is available via the Fidelity FundsNetwok Platform/Supermarket.An interesting Fidelity document available in PDF form called "Fee Transparency : Annual Fund Supermarket and Service Fees" gives the following information : The Annual Management charge is given as 0.25%. The "Standard Fund and Service Fee" (I think this is more generically called a "platform charge") is given as 0.1%. The fund fact sheet gives the Total Expense Ratio (TER) as 0.26%.

So I am wondering if this "platform charge" is outside the AMC but within the TER ( as the 0.25% AMC plus the 0.1% service fee equals the TER of 0.26% .!!!???) I am puzzled about this as elsewhere Fidelity gives an" example" AMC of 1.5% of which the Net Asset Management fee is 0.75% and the Service Fee is 0.75% . So in their "more expensive" example the Service Fee is within the AMC . With the HSBS example , the "maths" seem to indicate that the Service Fee is outside the AMC but I suppose it might not be and it could be just coincidence.

I have been trying to reduce the charges in my Investment portfolio with Fidelity and this HSBC tracker seems like a good one to mention because of its very low cost or Total Expense Ratio (TER). For me another reason to consider this fund is that press coverage has also been favourable.

Another reason for "digging it out" for special attention is that I feel that a lot of the "bargains" that are available in the investment world are not "flagged up" as such : people are left to find them and it is all to easy to end up with a more expensive product when selecting investments from all the funds available on a fund supermarket .However I suppose I cannot have it "both ways" as Fidelity present in a generally unbiased way and flagging up cheap products is not necessarily unbiased

Some digging is necessary but I was lazy and up till fairly recently on this platform I have been paying the higher charges in more expensive active funds so I feel it is beneficial to point out the cheaper funds that are available but which may not be very visible on this platform

As mentioned above , Fidelity's Factsheet for this fund gives it a TER of .26% :( the AMC is .25%) : so a TER just over a quarter of 1% : that is cheap and well below the TER watershed of half a per cent which , for me , represents the new dividing line or watershed between cheap and more expensive funds.This fund therefore fits in well with my approach of getting my portfolios TERs below half of one per cent : a process of deterring high charges by going through all the investments one by one and checking to see if they fall below this level . I call this process "deTERring" my Fidelity supermarket holdings.( so , "these days" there is no need to defer to high charges just "deTER" them !)

Recently in the Sunday Times 24 06 12 Elizabeth Colman writes "Adrian Lowcock , at Bestinvest, said "Investors go for trackers because they want to avoid heavy charges - but even a charge of 0.5% will compound over the long periods you are invested in your pension fund. Less than 0.5% is what you're looking for" Lowcock points out that some trackers manage to outperform the index." Over 10 years the HSBC FTSE All Share tracker since cutting the fees "it has outperformed it, returning 35.19% against the All-Share's 31.78% " "

In another article in the Sunday Times dated 13 11 2011 Ali Hussain writes : "Adrian Lowcock at Bestinvest the adviser said : "The US has been a graveyard for poorly performing funds , partly because the market is so well researched it makes it hard for fund managers to identify opportunities" "So why should investors pay 1% or more for access to the sector/" Consider the HSBC American Index tracker with a .25% charge " . "

So this fund comes well recommended

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