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HSBC World Selection – charges explanation please

Index tracking funds and ETFs
TopOfDaMornin
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HSBC World Selection – charges explanation please

#218953

Postby TopOfDaMornin » May 2nd, 2019, 12:48 pm

I have an ISA with HSBC invested in product “HSBC World Selection - Dynamic C (A)”.

On a recent statement the charges are as follows:
Service costs % of Investment Amount = 0.25%
Product costs % of Investment Amount = 0.85%
Total Costs % of Investment Amount = 1.10%

Am I right is saying the Service costs (0.25%) is this what is sometimes referred to as the Annual Platform fee, and the Product costs (0.85%) is what HSBC are charging me for ‘this product’?

The reason I ask is because 1.10% seems high but according to https://monevator.com/compare-uk-cheape ... e-brokers/ the 0.25% charges are reasonable.

Secondly, I am considering ‘swapping’ this for a Vanguard Funds plc (VWRL) FTSE All-World UCITS ETF. However, according to http://www.morningstar.co.uk/uk/funds/s ... F00000OWOV the performance of the HSBC World Selection - Dynamic C (A) appears pretty good.

How do you think the 2 compare?

Regards

ToDM

hiriskpaul
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Re: HSBC World Selection – charges explanation please

#219005

Postby hiriskpaul » May 2nd, 2019, 3:50 pm

Never heard of it before, but HSBC World Selection Dynamic seems to be a market timing fund. They will switch between regions and asset classes in the hope of a better long term return than the market. Sometimes they will get their market timing right, sometimes wrong, but all the time you will suffer higher management fees and turnover costs compared to a basic tracker. For example, the HSBC FTSE World fund has an OCF of 0.19% and should have negligible turnover costs. Comparing the 2 funds at hl.co.uk shows the Dynamic fund has a reasonably close trajectory with the HSBC World tracker fund, but with consistent underperformance. However, the dynamic fund might be taking less risk as they have the option of switching to bonds. The performance is not terrible, but personally, I would just hold the World tracker fund, perhaps with 10% in a global bond fund if you want slightly less downside risk.

By the sound of it Service costs refers to a platform fee. You could avoid that by switching to a different platform that does not charge a platform fee, such as iWeb.

p.s. HSBC World Selection Dynamic Portfolio C Acc 5 year performance +60%, VWRL +81%, both according to hl.co.uk. Curiously, when I add a Vanguard 80 Lifestrategy fund (80% equity/20% bond), the track is almost identical to that of the HSBC dynamic fund. And the Lifestrategy got that result without any market timing and probably less in equities!
Last edited by hiriskpaul on May 2nd, 2019, 3:56 pm, edited 1 time in total.

Lootman
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Re: HSBC World Selection – charges explanation please

#219006

Postby Lootman » May 2nd, 2019, 3:55 pm

hiriskpaul wrote:Never heard of it before, but HSBC World Selection Dynamic seems to be a market timing fund. They will switch between regions and asset classes in the hope of a better long term return than the market. Sometimes they will get their market timing right, sometimes wrong, but all the time you will suffer higher management fees and turnover costs compared to a basic tracker. For example, the HSBC FTSE World fund has an OCF of 0.19% and should have negligible turnover costs. Comparing the 2 funds at hl.co.uk shows the Dynamic fund has a reasonably close trajectory with the HSBC World tracker fund, but with consistent underperformance. However, the dynamic fund might be taking less risk as they have the option of switching to bonds. The performance is not terrible, but personally, I would just hold the World tracker fund, perhaps with 10% in a global bond fund if you want slightly less downside risk.

By the sound of it Service costs refers to a platform fee. You could avoid that by switching to a different platform that does not charge a platform fee, such as iWeb.

It would be pretty mean of HSBC to charge a platform fee if the only holding you have with them is a HSBC open-ended fund. Most fund issuers will not charge for a direct holding.

hiriskpaul
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Re: HSBC World Selection – charges explanation please

#219008

Postby hiriskpaul » May 2nd, 2019, 3:57 pm

Lootman wrote:
hiriskpaul wrote:Never heard of it before, but HSBC World Selection Dynamic seems to be a market timing fund. They will switch between regions and asset classes in the hope of a better long term return than the market. Sometimes they will get their market timing right, sometimes wrong, but all the time you will suffer higher management fees and turnover costs compared to a basic tracker. For example, the HSBC FTSE World fund has an OCF of 0.19% and should have negligible turnover costs. Comparing the 2 funds at hl.co.uk shows the Dynamic fund has a reasonably close trajectory with the HSBC World tracker fund, but with consistent underperformance. However, the dynamic fund might be taking less risk as they have the option of switching to bonds. The performance is not terrible, but personally, I would just hold the World tracker fund, perhaps with 10% in a global bond fund if you want slightly less downside risk.

By the sound of it Service costs refers to a platform fee. You could avoid that by switching to a different platform that does not charge a platform fee, such as iWeb.

It would be pretty mean of HSBC to charge a platform fee if the only holding you have with them is a HSBC open-ended fund. Most fund issuers will not charge for a direct holding.

This is true, but I have noticed that those that don't, such as L&G charge more for the units! They sell "Retail" units instead of "Clean" units.

Hariseldon58
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Re: HSBC World Selection – charges explanation please

#219107

Postby Hariseldon58 » May 2nd, 2019, 11:37 pm

You can hold ETFs, shares and Investment Trusts with HSBC Invest Direct, the platform charge is £10.50 quarterly.


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