Can you hold the same investments but with lower costs?

Our ethical management approach ensures lower fees… resulting in more performance staying in your pocket.

Can you hold the same investments with lower costs?

 

  • The answer to this question in many situations is yes….
  • Lower Charges = More of the investment return staying in your pocket

 

Most of the managed / mutual funds that are available have multiple ‘share’ classes of the same fund, designed for specific end clients (average retail client via an adviser, investment banks, other fund management groups, charities). The difference in the annual management fee charged by the Fund Manager for the various share classes can be significant and in some cases, well over 1%pa difference. 

In general, a normal retail investor would be invested in a retail or standard share class of the fund which in most cases would be the most expensive. From the annual management fee, the Fund Manager would then pay an amount to maybe a platform provider and/or to a financial adviser as a Trail Commission. 

As different funds have a different % rate of trail commission being paid, our view of that is this can result in advisers possibly only recommending funds that pay higher commissions and as such, maybe the client is not being provided the best advice and being invested in the better funds.

However, most Fund Managers now offer commission free share classes (commonly known as Clean Class) which results in the investor having lower management charges….. resulting in more of the return being retained by the investor.

I have provided an example below…………… The Baillie Gifford Global Discovery Fund is a very highly rated fund and has performed very well for investors over the years.

Investors of Ethical Offshore can access the A class version or the B class version of the fund. It is the exact same fund, so exact same investment strategy for both A class & B class but with different management fees

A class = 1.54%pa          B class = 0.79%pa

 

10 YEAR PERFORMANCE

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  • Baillie Gifford Global Discovery A class – (10 year performance 542.4%)
  • Baillie Gifford Global Discovery B class – (10 year performance 594.7%)

So an investment of £ 10,000 over the same period, experiencing the same gross investment returns and volatility, by investing in the B class, our investors would have an extra £ 5,230 of value (an additional 0.95%pa of compounded return).

Another example of this benefit is with the Guinness AM Global Equity Income Fund, which is a common fund held in many offshore portfolios. The below example is comparing the C class version of the fund (which seems to be the version more widely held for offshore portfolios) and the Y class version which can also be accessed through Ethical Offshore.

C class = 1.85%pa          Y class = 0.85%pa

5 YEAR PERFORMANCE

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  • A. Guinness AM Global Equity Income C – (5 year performance 82.4%)
  • B. Guinness AM Global Equity Income Y – (5 year performance 91.7%)

So an investment of £ 10,000 over the same 5 year period, experiencing the same gross investment returns and volatility, by investing in the Y class, our investors would have an extra £ 930 of value (an additional 1.13%pa of compounded return).

 

WHY ARE WE DIFFERENT?

We charge a client management fee, and are therefore not biased towards any individual fund manager.
As such, we concentrate on providing guidance on what we feel are the best fund managers and investment strategies, while using the lowest charging fee structure available. 

If you would like to see if there are lower cost versions of the managed funds that you are holding (Same Investments with Lower Costs), press Compare Fund Management Costs

Example of the Fund Managers we use: