Fundsmith T Class

[AndrewInDevon]

Many years ago I invested in Fundsmith directly, which automatically puts in T class shares.

I have recently opened an account with Interactive Investor to manage my ISA and non-ISA funds. I tried to transfer my ISA from Fundsmith to ii, but because ii only trade in I class shares (for institutional investors, lower cost but minimum £5m) the transfer ran aground. So this means my Fundsmith ISA is stranded. I can’t swap it into other funds within an ISA wrapper, it’s literally untouchable, unless I sell up.

Does anyone know if other platforms trade in T class shares or any ideas if there’s anything I can do?

Andrew

[simoan]

Many years ago I invested in Fundsmith directly, which automatically puts in T class shares.

I have recently opened an account with Interactive Investor to manage my ISA and non-ISA funds. I tried to transfer my ISA from Fundsmith to ii, but because ii only trade in I class shares (for institutional investors, lower cost but minimum £5m) the transfer ran aground. So this means my Fundsmith ISA is stranded. I can’t swap it into other funds within an ISA wrapper, it’s literally untouchable, unless I sell up.

Does anyone know if other platforms trade in T class shares or any ideas if there’s anything I can do?

Andrew

I would question why you want to move it? Fundsmith don’t charge anything for holding the ISA, unlike ii and similar brokers.

[AndrewInDevon]

The ii fee is a sunk cost and a fixed cash fee, so there’s no extra charge for adding in another fund. But the main reason is that I can’t move it out of Fundsmith into another fund within an ISA wrapper. It’s trapped within the Fundsmith ISA wrapper which offers 1 investment - Fundsmith!

[simoan]

The ii fee is a sunk cost and a fixed cash fee, so there’s no extra charge for adding in another fund. But the main reason is that I can’t move it out of Fundsmith into another fund within an ISA wrapper. It’s trapped within the Fundsmith ISA wrapper which offers 1 investment - Fundsmith!

So you’ll have to sell your T-class units, transfer the cash to ii, and buy another class of Fundsmith in your ii ISA. I don’t really see the point. I thought ii charged a percentage holding fee for OEICs which Fundsmith does not? I wouldn’t know as Fundsmith is the only OEIC I own and I hold it with Fundsmith directly. I have found their service excellent, so don’t understand why you’d want to move your holding to a shower like ii.

[mc2fool]

The ii fee is a sunk cost and a fixed cash fee, so there’s no extra charge for adding in another fund. But the main reason is that I can’t move it out of Fundsmith into another fund within an ISA wrapper. It’s trapped within the Fundsmith ISA wrapper which offers 1 investment - Fundsmith!

So you’ll have to sell your T-class units, transfer the cash to ii, and buy another class of Fundsmith in your ii ISA. I don’t really see the point. I thought ii charged a percentage holding fee for OEICs which Fundsmith does not? I wouldn’t know as Fundsmith is the only OEIC I own and I hold it with Fundsmith directly.

No, as AndrewInDevon says, ii has a fixed cash fee (£9.99pm). And he doesn't want to buy another class of Fundsmith in the ii ISA, he wants to "swap it into other funds".

Andrew, if that is indeed what you want to do then, if you were starting from scratch, you'd fill in the online ii transfer form and when you get to the nth page of the form titled Transfer investments simply select Sell all investments and transfer as cash (Encash). Then Fundsmith will sell the holding in their ISA and transfer the cash to ii where, once it arrives in the ISA there, you can then buy whatever other funds, ETFs, ITs, shares, gilts, etc, you want.

Having already initiated a transfer you'll have to either cancel it and start again or get it modified to be an "encash" one, and best you contact ii, either by phone or secure message (better the latter for having a written record), to see which of those would be simplest.

[nmdhqbc]

I would question why you want to move it? Fundsmith don’t charge anything for holding the ISA, unlike ii and similar brokers.

in effect Fundsmith do charge you for holding. the OCF for T class is 1.04% verses 0.94% for the I class you can buy in the main brokers. so 0.1% is essentially their platform fee. at a certain amount in the fund that gets more expensive than the alternatives.

[AndrewInDevon]

I will try that, I should have thought of the cash conversion route. I am a bit annoyed the ii people didn’t think of that as we had a bit of a conversation about the blockage when I tried to do the transfer. In the end I agreed to leave the Fundsmith ISA in place, whereas I’ve successfully transferred my other ISA pot to ii.

I’ve nothing against Fundsmith at all, but as I’ve just retired I want to consolidate my pots into one place and after lots of research chose ii as it has a fixed fee and the platform is easy to use. I also want to do some reallocations within an ISA wrapper which the ii platform allows, whereas the direct Fundsmith ISA is a one trick pony!

[simoan]

I would question why you want to move it? Fundsmith don’t charge anything for holding the ISA, unlike ii and similar brokers.

in effect Fundsmith do charge you for holding. the OCF for T class is 1.04% verses 0.94% for the I class you can buy in the main brokers. so 0.1% is essentially their platform fee. at a certain amount in the fund that gets more expensive than the alternatives.

Of course, all OEICs have fees, which is why I don’t hold any other than Fundsmith T class. I was only referring to the cost of the ISA wrapper itself, for which Fundsmith have no annual charge or dealing fees, unlike most retail brokers.

[nmdhqbc]

Of course, all OEICs have fees, which is why I don’t hold any other than Fundsmith T class. I was only referring to the cost of the ISA wrapper itself, for which Fundsmith have no annual charge or dealing fees, unlike most retail brokers.

That is what i mean by the words "in effect". in effect they charge 0.1% more a year than holding the fund with other broker. in effect that is their platform fee. officially no fee but IN EFFECT there is a fee in the form of a larger fund fee.

[simoan]

Of course, all OEICs have fees, which is why I don’t hold any other than Fundsmith T class. I was only referring to the cost of the ISA wrapper itself, for which Fundsmith have no annual charge or dealing fees, unlike most retail brokers.

That is what i mean by the words "in effect". in effect they charge 0.1% more a year than holding the fund with other broker. in effect that is their platform fee. officially no fee but IN EFFECT there is a fee in the form of a larger fund fee.

Yes, but what I was saying is that there is no additional fee for the ISA wrapper. That is not the case with most retail brokers.

[nmdhqbc]

Yes, but what I was saying is that there is no additional fee for the ISA wrapper. That is not the case with most retail brokers.

ii (OP's broker) don't charge extra for the ISA wrapper nor my ISA provider (iWeb) so that distinction did not register with me.

[mc2fool]

Yes, but what I was saying is that there is no additional fee for the ISA wrapper. That is not the case with most retail brokers.

ii (OP's broker) don't charge extra for the ISA wrapper nor my ISA provider (iWeb) so that distinction did not register with me.

For most people there's also the matter of marginal cost. Even if your provider does charge for an ISA, if you've already got one and, like ii, they don't charge ad valorem, then adding an extra fund is "free" in that there's no additional fee over what you're paying already. As the OP says, "The ii fee is a sunk cost and a fixed cash fee, so there’s no extra charge for adding in another fund".

[simoan]

Yes, but what I was saying is that there is no additional fee for the ISA wrapper. That is not the case with most retail brokers.

ii (OP's broker) don't charge extra for the ISA wrapper nor my ISA provider (iWeb) so that distinction did not register with me.

Sorry, I've completely lost track of the ii charging structure it's changed so many times since I left them several years ago. I believe they used to have a specific fee for the ISA wrapper. Both Hargreaves Lansdown and AJ Bell have a fixed annual charge for the ISA wrapper of £3.75 and £3.50 per month, respectively.

[swill453]

Both Hargreaves Lansdown and AJ Bell have a fixed annual charge for the ISA wrapper of £3.75 and £3.50 per month, respectively.

Well kind of. AJ Bell's charge for the ISA is exactly the same as their charge for a standard dealing account, so you're not really paying for the ISA wrapper as such.

(and it's not a fixed charge, it's 0.25% with a maximum of £3.50 per month.)

Scott.

[AndrewInDevon]

AJ Bells fee for funds is 0.25% up to £250k of funds, then 0.1% above that.
The £3.5 max figure a share custody fee for individual stocks.

Interactive Investor has a fixed monthly fee of £9.99 which covers an investment account and an ISA (£4.99 if your funds are <£30k).
Not sure there’s anything cheaper if your funds exceed £50k, and the platform is pretty good, easy to use.

I’ve recently moved from Barclays Smart Investor (0.2% for funds) which is pants in comparison!

[mc2fool]

Not sure there’s anything cheaper if your funds exceed £50k, and the platform is pretty good, easy to use.

IWeb. Has a £100 account opening charge (covers both dealing a/c and ISA) but currently has a £100 cashback offer.

Good and simple to use, but only covers "vanilla" stuff (shares, ETFs, ITs, OEICs, gilts, etc), not anything that requires "sophisticated investor" status.

https://www.iweb-sharedealing.co.uk/

[AndrewInDevon]

So you’ll have to sell your T-class units, transfer the cash to ii, and buy another class of Fundsmith in your ii ISA. I don’t really see the point. I thought ii charged a percentage holding fee for OEICs which Fundsmith does not? I wouldn’t know as Fundsmith is the only OEIC I own and I hold it with Fundsmith directly.

No, as AndrewInDevon says, ii has a fixed cash fee (£9.99pm). And he doesn't want to buy another class of Fundsmith in the ii ISA, he wants to "swap it into other funds".

Andrew, if that is indeed what you want to do then, if you were starting from scratch, you'd fill in the online ii transfer form and when you get to the nth page of the form titled Transfer investments simply select Sell all investments and transfer as cash (Encash). Then Fundsmith will sell the holding in their ISA and transfer the cash to ii where, once it arrives in the ISA there, you can then buy whatever other funds, ETFs, ITs, shares, gilts, etc, you want.

Having already initiated a transfer you'll have to either cancel it and start again or get it modified to be an "encash" one, and best you contact ii, either by phone or secure message (better the latter for having a written record), to see which of those would be simplest.

Thanks for the help. I’ve contacted ii by secure message and they have confirmed that it’s possible to do as you suggested…..sell the T class units and convert to cash, all within the Fundsmith ISA, then transfer the cash to my ii ISA for me to invest with. It’s now in train.

[RajK]

Hi

As an example I held Lindsell Train Global Equity Class D on the Hargreaves Lansdown Platform. Hargreaves Lansdown do not allow you to purchase the fund in the B Class. I later became an Interactive Investor customer and they only offered the B Class, interestingly enough owning the B Class on II was cheaper overall as II don’t charge the ridiculous 0,45 % platform fee on top. Anyway I requested a transfer of my Class D on HL to Class B on II and it worked. Even though HL did not offer class B directly they were able to instruct the fund manager to convert the class from D to B so it could be transferred to II. This was done without selling and without time out of the market etc. Yes I did have to engage a bit more correspondence with HL so they understood but it got done.

Can you not tell Fundsmith platform to convert them to I class before the transfer or ideally it will be a process in the transfer. If HL can do it then I see no reason why Fundsmith can’t do it for their own fund. You may need to spell this out to any representative you talk to or better write it in an email to them. I do not see any reason why one cannot transfer from one class to another on different platforms in situ. It just requires a bit of extra work from the outgoing fund House.