L&G International Index Fund charge for "dilution adjustment" of 0.15% for round trip - the what now?

[shlbycindy]

I was looking for a cheap Developed World fund and L&G International Index Fund (LGINTIA) came up in my search. The ongoing charge of 0.13% is attractive but on top if it there is a figure for dilution adjustment of 0.15%-round trip.

I have never seen this before in any other fund/ETF I was looking at. I'd rather now take Vanguard or HSBC for 0.14% with no dilution adjustment, tyvm. Is this a common fee? Do other funds charge this too but not disclose it?

 

[julia736]

@shlbycindy I've never heard of it before, but google brings up a number of UK providers discussing it.

 

[curiouseeker]

@shlbycindy The HSBC funds might use swing pricing instead. Similar idea to a dilution levy or dual pricing

 

[shlbycindy]

@curiouseeker The thing is that I have not seen this before when reading the KIDs and such. Are they this cavalier that they not disclose it? Hope this is not another PPI scandal.

 

[curiouseeker]

@shlbycindy The information is in the prospectus of the fund. The KIDs is summary information. The HSBC prospectus has a Dilution section which gives the range of adjustment that could be applied. For their FSTE All World tracker it’s 0.18-0.20%

The idea is that existing investors do not get penalised with the transaction costs of a net inflow or outflow to the fund.

 

[shlbycindy]

@curiouseeker This is very new to me.

Does it mean that if I buy HSBC Fund today and sell in 20 years to fund my RE I will have to pay that 0.2% fee on the withdrawn amount in 20 years?

 

[curiouseeker]

@shlbycindy The unhelpful answer is… it depends. If all the people putting money in balances all the people taking money out on a given day then there will be no dilution to apply. The fund does not need to buy or sell the underlying stock so doesn’t need to adjust for the transaction costs.

You can’t predict the net flow.