Hello
I just received my costs and Charges Annual Report and am confused what the transaction costs are. InvestEngine ISA is free, the two funds I invest in have no entry/exit fees, only low ongoing management fees (LGGG and VHVG). Wondering where the transaction charges come from?
Anyone else have something similar?
Yes, I wondered the same…
I was about to post the same.
Heres my report:
I contacted support to ask them but as of yet they havent provided a satisfactory answer.
The Total Expense Ratio (TER) may vary due to timing differences. The current TER will differ from what it was around April 23-24 or other specific dates.
Transaction costs, including brokerage fees, will depend on the ETFs you have selected. These costs will be detailed in the Key Investor Information (KII) document for each ETF under the charges section.
Now I will say that the ongoing charge value of 0.12% is below that of my portfolio (0.21%) but I wasnt active on invest engine until mid 2023 so this may explain the lower than expected value.
The transaction costs on the other hand seem completely wrong, I invested ÂŁ19k originally and have added ÂŁ100 per month since with two rebalances of my portfolio during that period. I find it baffling that the transaction costs are shown as 0.75% I expect something odd is going on with the report or there are charges that IE are not stating as from what I understand IE functions as its own broker. I also checked the ETFs I used and none of them state any costs other than the ongoing charge.
Im hoping they can provide me with more detailed breakdown or where these figures came from as they seem very steep.
Im sure some people in the community might be able to shed more light on where these come from and if its normal.
Transaction costs are, at a guess, the bid-offer spread of the ETFs, which are unavoidable.
But not entirely sure tbh and 0.75% seems very high unless you did a lot of switching around or invested in ETFs with high spreads.
without IE providing a breakdown of how this total was come to its impossible for me to find out.
Not an expert, but based on this: “Transaction costs, including brokerage fees” it’s costs within the etf or funds themselves, fir example the fees the fund has paid to brokers to buy/sell shares as part of the replication strategy
these dont seem to be listed clearly anywhere and shouldnt come to such a large amount in my opinion.
Searching the net suggests that lggg had transaction costs of 0.08% (via fidelity website)I’ll dig up the other
So less than what you see there, but not sure of the timeframes etc)
I checked the etfs on fidelity and the transaction fees are also really low. i would have had to trade everything 10 times to get to .75%
My etfs are:
JGRE
JGEP
EMIM
WLDS
VAGS
GIL5
GILS
XSH2
I think IE should publish this informations along with the other cost information on the etf page
Interactive Investor’s “Cost and Charges Report” provides an annual breakdown of costs per ETF or Unit Trust fund plus the number of transactions against each. Isnt this is a bit more useful to investors?
Is anyone from IE going to respond to this with a definitive answer?
Hello all! I understand your concerns.
Please be advised that transaction costs are incurred when buying and selling investments within your portfolio. These costs include brokerage commissions, liquidity impact, and spreads, which are standard across the industry
Thanks for the reply,
But IE should provide customers with a full breakdown of this per etf, so that they can make informed decisions regarding the costs related to each of them.
This should either be provided as a breakdown within the reports or as an average transaction cost on the etf information pages.
I have invested in SPXP and it states the TER is 0.5%
When I invest in SPXP with II it states 0.9%
(0.5% Ongoing Costs, 0.4% Transaction Costs)
Which one is correct?
I think II is probably giving you better estimate of the total cost. I think IE need to do a better job so people aren’t freaked out when they see unexpected levels of fees
I think IE is the ongoing costs only, with transaction costs being much more variable. Not sure what the official definition of TER is though.
@grimespjm maybe better to ask II about II rather than asking IE. 2 factors I see: your numbers are out by 10x (it’s 0.05%) and II are factoring in their charge (0.04% on top they estimate).
NOTE Subsequent investigations revealed additional fund costs outside the TER, see subsequent link to JustETF Article.
