14 June 2018
We offer access to two classes of funds, unbundled and inclusive. The difference between these two classes is that unbundled versions of funds will usually have low annual charges and low, or no loyalty bonuses.
Inclusive funds on the other hand will usually have higher annual charges, but also higher loyalty bonuses. These higher loyalty bonuses offset the higher charges, meaning the cost to you will, in many cases, be similar whichever class of fund you hold.
If you’ve bought funds before 1 March 2014 they’re likely to be inclusive funds. The majority of these are also now available as unbundled funds. Some clients will prefer to convert to the newer unbundled funds, while others may choose to continue holding inclusive funds. We give you the choice.
You can compare the charges and savings of a fund’s unbundled vs inclusive units by selecting both fund classes from the filter when searching for a fund.
Alternatively, once logged in select the account you want to view and then the ‘Account Administration’ tab and ‘Convert my funds to new unit types’. Here you will find a list of inclusive funds you hold and a comparison of the charges.
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
How do I convert?
The easiest way to convert your funds is online, but you can also do this in writing. It’s not possible to convert over the phone.
You don’t need to convert all your funds you can choose to only convert one or some or not at all if you prefer. Once you’ve given us your instruction you can continue to trade in your inclusive fund or cancel the conversion at any time, as long as your order is still ‘pending’ and hasn’t been submitted to the fund groups.
Your money stays invested throughout this process, so you’re not out of the market.
There are no charges to convert and HMRC has confirmed that conversions will not count as disposals for capital gains tax purposes.
If you're not currently registered for our online service you can register now.
When will my conversion take place?
We place conversion instructions on a quarterly basis in March, June, September and December.
We expect to submit the next round of conversion instructions to the fund groups from Friday 15 June. If you would like to submit a conversion instruction this quarter you will need to provide your instruction before 5pm on Friday 15 June.
What happens during a conversion?
Once your instruction to convert units has been passed to the fund group you’ll be unable to buy or sell units in the inclusive fund for up to two weeks.
We are dependent on the fund groups so this can sometimes be longer, though we expect most conversions to complete in less than two weeks.
You can check the progress of your conversion and cancel a pending order from within the ‘Pending orders’ tab of your online account. While the conversion is underway you will be able to add to the unbundled versions (but not to the inclusive class) of any units you have asked us to convert.
The conversion itself will not affect the value of your holding. However as unbundled units usually have a different price to the inclusive units, you will hold a different number of units after the conversion has completed. Your confirmation letter will clearly show all the detail, as well as the conversion ratio which will have been applied.
Please note: Once the conversion has taken place, you cannot convert back to inclusive units. As a result of the conversion, any future loyalty bonus payments you receive on your new fund holding must be reinvested in further fund units, you cannot withdraw this as cash or use it to cover fees. Our regulator requires us to do this where there are changes to your holdings after April 2014.
If you’d prefer not to convert your holdings you’re able to switch from one class of fund to another (e.g. inclusive units to unbundled units), online, by post or by calling us.
When you switch you’ll provide us with a single instruction, we’ll then sell and repurchase the new version of the fund. The sale will normally be placed by the end of the following working day, after receipt of your instruction. The purchase will then normally be placed by the end of the following working day after that. The advantage of switching is that you avoid the potential period outlined above where you’ll not be able to sell your units.
It’s important to be aware that a bid-offer spread or dilution levy may apply that could affect the value of your investment. You’ll also hold cash while the switch takes place therefore you won’t benefit from growth in the market until your money is reinvested. If your funds are held outside an ISA or SIPP, there is also the risk that switching could create a capital gains tax liability. All of this can be avoided by converting.
Tax rules can change and benefits depend on personal circumstances. All investments can fall as well as in rise in value so you could get back less than you invest. This article is not personal advice, if you're unsure of the suitability of an investment for your circumstances please seek personal advice.