What’s the deal?
A service rebating all commission on investments in hundreds of unit trusts and open-ended funds.
While many “fund supermarkets” and financial advisers offer discounted initial commissions, Alliance Trust Savings’ service also rebates the ongoing commission built into a fund’s annual charge.
This kickback is typically 0.5-0.75 per cent a year on funds with an annual management charge of 1.5 per cent.
However, Alliance does levy a flat £12.50 for online fund purchases and encashments, while phone or postal dealing is £20.
The discounts are available on funds bought through Alliance’s low-cost self-invested personal pension (Sipp), its individual savings account (Isa), or outside a tax shelter.
Is this good?
Alliance claims to be the only fund supermarket offering full commission rebates directly to private investors.
These rebates could add up to hundreds of pounds or more on bigger portfolios and over time.
Investors with higher-value fund holdings that they do not trade actively stand to benefit most from Alliance’s deal.
In many cases, the rebates also effectively halve annual management charges on funds. This makes unit trust-type vehicles more competitive.
For Alliance’s Select Sipp investors, who have become subject to a £75 plus Vat annual plan fee, the rebates are a way of offsetting this charge.
What’s the catch?
To access these rebates, investors have to pay Alliance’s dealing charges, and these will eat in to the overall benefit – particularly for actively-traded portfolios.
Many competitors, while rebating less of their commission, do not levy transaction fees.
The service also looks expensive for low-level monthly saving: there is a £5-a-month charge on these regular investments.
And while 750 funds are available initially, notable exclusions include those managed by Invesco Perpetual and Artemis.
What are the alternatives?
Hargreaves Lansdown offers more than 1,700 funds, most at no initial charge, and partial rebates of annual commissions on funds bought through Isas or directly.
Its Vantage Sipp does not rebate annual commissions, but it also makes no plan charge for investors only holding funds.
The financial adviser argues that, for more actively-traded and lower-value portfolios, its service offers better value than Alliance’s. It also offers free fund analysis.
Rival adviser Chartwell’s Investor Centre also combines no initial commission costs with a rebate of half the annual kickback.
How do I find out more?
www.alliancetrust.co.uk or 01382 201900; www.h-l.co.uk or 0117 900 9000; www.theinvestorcentre.com or 01225 823 915
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