Converting your funds – what investors need to know

We offer access to two classes of funds, unbundled and inclusive. 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.

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.

COMPARE FUND CHARGES AND SAVINGS

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’ll 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 rise as well as fall 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. You can’t convert over the phone.

You don’t need to convert all your funds at once. You can choose how many you want to convert. Once you’ve given us your instruction, you can continue to trade in your inclusive fund or cancel the conversion at any time – that’s as long as your order is still ‘pending’ and hasn’t been submitted to the fund groups. You’ll stay invested throughout this process, so you’re not out of the market.

There are no charges to convert and conversions won’t count as disposals for capital gains tax purposes.

CONVERT YOUR FUNDS ONLINE NOW

If you're not currently registered for our online service, you can register now.

When will my conversion take place?

We place conversion instructions quarterly (March, June, September and December). We expect to submit the next round of conversion instructions to the fund groups on Thursday 16 December 2021. If you’d like to submit a conversion instruction this quarter, you’ll need to give us your instruction before 5pm on Wednesday 15 December 2021.

What happens during a conversion?

Once your instruction to convert units has been given to the fund group, you’ll be unable to buy or sell units in the inclusive fund for up to two weeks. We’re dependent on the fund groups, so sometimes this can be longer. But 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 when you’re logged in. While the conversion is underway, you’ll be able to add to the unbundled versions (but not to the inclusive class) of any units you’ve asked us to convert.

The conversion itself won’t affect the value of your holding. However, as unbundled units usually have a different price to the inclusive units, you’ll hold a different number of units after the conversion has completed. Your confirmation letter will show you everything you need to know, as well as the conversion ratio which will have been applied.

Once the conversion has taken place, you can’t 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 can’t withdraw this as cash or use it to cover fees. We’re required to do this where there are changes to your holdings after April 2014.

FREQUENTLY ASKED QUESTIONS ABOUT CONVERTING FUNDS

Switches

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 give us 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 we’ve received 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 won’t be able to sell your units.

If you switch, a bid-offer spread, or dilution levy might apply, which could affect the value of your investment. You’ll also hold cash while the switch takes place, therefore you won’t benefit if the market goes up until your money is reinvested. If your funds are held outside an ISA or SIPP, there’s also the risk that switching could create a capital gains tax liability. You can avoid this by converting instead.

This article is not personal advice. If you're not sure if something’s right for you, ask for expert financial advice. Remember, tax rules can change, and benefits depend on personal circumstances.