Getting money out of an Index Tracker ISA

[Clariman]

My wife and I have funds in L&G Index Trackers inside ISA wrappers managed by Fidelity. I understood that it was possible to simply withdraw funds from Index Tracker ISAs. Is that correct?

When I go on to the Fidelity website it offers options to Buy and Sell? Is Selling actually involved? If it needs to be sold in some way, how do I know when it will happen?

Many thanks
Clariman

[DrFfybes]

It sounds like these are fund units held withing a Fidelity nominee account? If so then surely you just sell the units/value required, which will take place at the next valuation point?

I can't see how you can withdraw invested money without selling the investment, or am I missing something?

[mc2fool]

Ok I take it your index trackers are funds not ETFs. So what you have to do is put in an order to sell them, and funds have a trading point, which is usually midday, so you'll have to wait a day or two, depending on the speed Fidelity execute the order, and then it will take a day or two to settle and the money will appear in your ISA, and then you can just simply withdraw the cash.

[Clariman]

It sounds like these are fund units held withing a Fidelity nominee account? If so then surely you just sell the units/value required, which will take place at the next valuation point?

I can't see how you can withdraw invested money without selling the investment, or am I missing something?

You are only missing my lack of experience and knowledge about how these funds work

Yes it does appear I have to sell the funds and then withdraw the proceeds. Thanks for confirming. Would the "next valuation point" tend to be the following day?

Thanks

[Lootman]

It sounds like these are fund units held withing a Fidelity nominee account? If so then surely you just sell the units/value required, which will take place at the next valuation point?

I can't see how you can withdraw invested money without selling the investment, or am I missing something?

If you had enough uninvested cash in the same account then you could, but I assume that is not the case here.

So with my ISA (not L&G or Fidelity) it is a 2-step process. First sell, then when the trade settles 2 days later, transfer out the cash. Most funds trade daily.

[monabri]

In a similar-ish vein... I hold some shares in M&G Trackers, held in ISAs. I could log on to the M&G accounts and sell the units, the cash would then be transferred back to my linked bank account. However, I don't want to do this as I would be moving the cash out of a tax free (ISA) wrapper.

What I want to do is move the funds as cash to my interactive investor (ii) account so this involves a transfer which is initiated by filling in a form with ii. They should get in contact with M&G and arrange for the cash to be transferred without losing the tax free ISA status. To convert to cash, M&G will have to sell the shares.

[EthicsGradient]

One thing to add: funds (which we think these are, being "L&G"), normally take 4 days to settle (they do with II, for instance), rather than 2. Though its possible that Fidelity could decide to be generous and allow you to take the money out earlier, I suppose, but I'd be surprised at that (especially if they haven't trumpeted it as why they're better than other ISA providers).

[GeoffF100]

One thing to add: funds (which we think these are, being "L&G"), normally take 4 days to settle (they do with II, for instance), rather than 2.

With iWeb, the trade happens the same day if you place the order before the cut-of point. The money appears on my account later that day or the next day, depending on the fund. I should then be able to withdraw it (but I have not tried). iWeb, however, still uses BACS, so money typically takes a couple of days to arrive in my bank account.

Vanguard appears to be a little quicker at crediting money to my account and uses Faster Payments. The money arrives in my bank account very quickly. On the other hand, Vanguard can be very tardy at paying ETF dividends.

[GeoffF100]

One thing to add: funds (which we think these are, being "L&G"), normally take 4 days to settle (they do with II, for instance), rather than 2.

With iWeb, the trade happens the same day if you place the order before the cut-of point. The money appears on my account later that day or the next day, depending on the fund. I should then be able to withdraw it (but I have not tried). iWeb, however, still uses BACS, so money typically takes a couple of days to arrive in my bank account.

Vanguard appears to be a little quicker at crediting money to my account and uses Faster Payments. The money arrives in my bank account very quickly. On the other hand, Vanguard can be very tardy at paying ETF dividends.

Small correction. With iWeb,the money is credited the next day, early for some funds, late for others.

[EthicsGradient]

Interesting - AJ Bell say "There is a standard settlement period of four business days for unit trusts and OEICs."

Fidelity, when they include time to get it to a bank account, seem to say they can be slower still:

Settlement times
When payment is made
We usually make payments within seven business days of receiving your full and valid instructions although there are some differences with payments made on investments held outside an ISA wrapper, as follows:

Fidelity Cash Fund – we normally make payments within one business day
OEIC and Unit Trusts – we normally make payments within four business days
Investment trusts and ETPs – we normally make payments within two business days
Offshore Funds – we normally make payments within five business days
How payment is made
We will normally send the payment to your bank or building society account. Payments are usually processed via BACS, which can take up to two business days to show in your account.

https://www.fidelity.co.uk/legal/before-you-invest/

[GeoffF100]

This thread is relevant:

https://forums.moneysavingexpert.com/di ... ment-dates

Some (most?) platforms credit the money to the client's account when they know it is going to arrive. (The same is true for share sales. They let us reinvest the proceeds of a sale immediately. We do have to wait for settlement.) That is not always reflected in the T&Cs though. Vanguard says that fund switches can take up to 7 business days:

https://www.vanguardinvestor.co.uk/need ... to-another

That does not seem to happen in practice. Some adviser platforms credit pension tax relief months before it actually arrives.

[GeoffF100]

I think that it is worth adding that when I was able to withdraw sale proceeds from Vanguard very quickly, I had sold to raise about £20K from a £500K+ holding. Vanguard was not taking much risk there, particularly as it was settling the £20K itself.

[GeoffF100]

With iWeb IIRC, I have had to wait until after settlement to withdraw cash from share sales. I believe that Customer Services can transfer cash from a Dealing Account to an ISA. I wonder whether they can do that before settlement?

[monabri]

In a similar-ish vein... I hold some shares in M&G Trackers, held in ISAs. I could log on to the M&G accounts and sell the units, the cash would then be transferred back to my linked bank account. However, I don't want to do this as I would be moving the cash out of a tax free (ISA) wrapper.

What I want to do is move the funds as cash to my interactive investor (ii) account so this involves a transfer which is initiated by filling in a form with ii. They should get in contact with M&G and arrange for the cash to be transferred without losing the tax free ISA status. To convert to cash, M&G will have to sell the shares.

ii update received today. 4 weeks to complete the transaction! 4 weeks to sell 2 trackers and shuffle the cash from M&G to ii.

(Still, I'm used to poor service....iWeb and ITI Crapital, particularly ITI Crapital...it's less than a year ).

[GeoffF100]

ii update received today. 4 weeks to complete the transaction! 4 weeks to sell 2 trackers and shuffle the cash from M&G to ii.

I believe 4 weeks is the regulator's target.

[BobbyD]

In a similar-ish vein... I hold some shares in M&G Trackers, held in ISAs. I could log on to the M&G accounts and sell the units, the cash would then be transferred back to my linked bank account. However, I don't want to do this as I would be moving the cash out of a tax free (ISA) wrapper.

What I want to do is move the funds as cash to my interactive investor (ii) account so this involves a transfer which is initiated by filling in a form with ii. They should get in contact with M&G and arrange for the cash to be transferred without losing the tax free ISA status. To convert to cash, M&G will have to sell the shares.

ii update received today. 4 weeks to complete the transaction! 4 weeks to sell 2 trackers and shuffle the cash from M&G to ii.

(Still, I'm used to poor service....iWeb and ITI Crapital, particularly ITI Crapital...it's less than a year ).

Transfer involves getting a response from the other party, they'd be mad to promise anything better than the target both parties are bound to. Sometimes it happens a lot faster, sometimes it happens a lot slower, and sometimes it takes months and then falls over because dwapitw checking with both brokers before initiating it it turns out they don't have a common point of contact through which to transfer your holding....

[Harry23]

L&G has their own unit trusts but outsourced the administration of them to Fidelity in 2021. So yes, I agree with the advice here that you sell units back to the fund manager, which credits cash to your account, that you can transfer out to a regular bank account.

[Laughton]

It's one of the reasons I no longer invest in "funds". IMHO ETF's are a better way to track indexes - many/most/all also pay dividends so no need to sell shares if you're only wanting to draw the dividend equivalent.

You pay the price quoted and you get the price at the time you want to sell - none of that selling today but at tomorrow's price or next week's nonsense.

[GeoffF100]

It's one of the reasons I no longer invest in "funds". IMHO ETF's are a better way to track indexes - many/most/all also pay dividends so no need to sell shares if you're only wanting to draw the dividend equivalent.

You pay the price quoted and you get the price at the time you want to sell - none of that selling today but at tomorrow's price or next week's nonsense.

Most open ended funds have income versions. ETFs can get wide spreads and/or trade at big discounts or premiums to NAV. That does not happen with open ended funds. The professionals have the information to see what is happening. You do not. With ETFs you know the trade price, but you do not know whether it is fair. With open ended funds, you do not know the trade price, but you know that it will be fair. You can also trade unlimited amounts of money with open ended funds, but there are limits on the amount that market makers will trade.

[Dod101]

You can also trade unlimited amounts of money with open ended funds, but there are limits on the amount that market makers will trade.

Trading 'unlimited amounts' with open ended funds depends on their being sufficient liquidity. There is not always, as events in recent years have shown.

Dod