Vantage could add to Woodford fund costs

The director of the Lang Cat said that investors needed to compare the full cost of using the Bristol-based fund supermarket to get the CF Woodford Equity Income fund with other direct-to-consumer platforms.

Mark Dampier, head of research at Hargreaves, said it had negotiated “hard” to bring down the annual management charge from 0.75 per cent to 0.6 per cent.

However, Mr Polson claimed that the firm’s platform charge of 0.45 per cent was up to 20 basis points above comparable charges levied by its competitors. Therefore, those investing £10,000 over 10 years in the fund through the Hargreaves Vantage platform would earn £84 less than those who had invested through a cheaper platform, such as Charles Stanley Direct.

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Mr Polson based his figures on a net growth assumption of 6.25 per cent a year, estimating that investors would earn £17,908 through Charles Stanley, even if it is likely that theywill have to pay the C share class figure of 0.75 per cent, compared to £17,824 on the Vantage platform.

On the Lang Cat blog of 27 May, Mr Polson wrote: “Through the power of basic arithmetic, we can deduce that if you get a 10bps discount on the fund and your platform is 10bps more than one without the discount, it all works out the same. And if your platform is 20bps cheaper, but your fund is 15bps more expensive, you get an extra £84 per £10,000 invested over 10 years.”

However, Mr Dampier said that customers using the firm’s Vantage platform were getting the fund at the “best price of any broker” on the market. Mr Dampier added that the fund had been accepted “without hesitation” into the Hargreaves Lansdown Wealth 150+ list.

The offer period for the new fund starts on 2 June and the estimated yield will be 4 per cent at launch.

Adviser view

Tim Atkin, founder of Yorkshire-based Wealth Tree Consultancy, said: “The hype surrounding Mr Woodford detracts from the fact that Mark Barnett, his successor at Invesco Perpetual, is a fine fund manager with an even better track record. But if you ring any IFA, they would not know that, such is the force of Mr Woodford’s reputation now.”

0.25% (Z share class)0.35% (Z share class)Hargreaves Lansdown (C + 5bps rebate)
Ongoing cost figure0.75%0.75%0.6%
Growth assumption7%7%7%
Net growth 6.25%6.25%6.4%
Platform charge0.25%0.35%0.45%
£10k over 10 years£17,908£17,740£17,824

Source: The Lang Cat