Convert your holdings
Many of you may still be invested in what are called implicit, or bundled funds. In these funds you will be charged typically 1.5% AMC (annual management charge). From this 1.5%, around half was kept by the fund manager and the remaining half was returned to the platform and broker as commission.
Following an FCA review, platforms and brokers are no longer able to receive commission, and new clean share classes or explicit funds have been created. In these funds you will be charged around 0.75% (AMC) plus 0.4% Chelsea service charge and 0.2% Cofunds platform charge, saving you 20% on your investments.
No hidden charges
The way you see these charges will differ from the old explicit funds. To begin with, you will actually see the Chelsea (service) and Cofunds (platform) charge on your transaction history. The 0.60% Chelsea and Cofunds combined charge is an annual charge and will be taken, in arrears, on a monthly basis. The 0.75% AMC will continue to be taken at source by the fund provider.
These are the only charges for investing through Chelsea FundStore, powered by Cofunds. There are no extra charges for dealing over the telephone, paper statements, re-investing income, or any other transactional charges that may be incurred with other brokers.
Other firms may appear to be cheaper, but hidden charges can add up and some even charge for investing via direct debit – it pays to read the small print.
Chelsea charges explained
The Chelsea FundStore is powered by Cofunds. Cofunds' and Chelsea's fees are taken separately from each investor, and are tiered as follows (combined amount across all products and wrappers):
Up to £250,000 held with Chelsea
Cofunds' platform fee 0.20%
Chelsea's fee 0.40%
Amounts from £250,000 to £500,000
Cofunds' platform fee 0.20%
Chelsea's fee 0.35%
Amounts from £500,000 to £1,000,000
Cofunds' platform fee 0.20%
Chelsea's fee 0.30%
Amounts from £1,000,000 to £2,000,000
Cofunds' platform fee 0.15%
Chelsea's fee 0.25%
Amounts over £2,000,000
Cofunds' platform fee 0.15%
Chelsea's fee 0%
Each fund manager will also charge an annual management charge, which differs from fund to fund, but is typically around 0.75%.
These are the only charges for dealing through the Chelsea Fundstore, powered by Cofunds. We do not charge for switching, selling down units to cover charges, along with other charges that other intermediaries charge for.
What you need to do
If you have not yet converted to the new charging structure, simply download a share class conversion form, complete, and return it to us here in the office.
If you do not have printing access, please email us at info@chelseafs.co.uk or call our free brochure line on 0800 071 3333 to request one.
What will happen
Once we have received the form(s) we will send them to Cofunds who will contact the relevant fund managers to convert your funds. This is currently taking around five working days for the process to be completed, although could take longer. During this time, you are not out of the market, although you may not be able to deal, until this has process has been completed.
Once all of your funds have converted you will receive confirmations from Cofunds to this effect.
This confirmation will show the fund you were invested in and the fund you are now invested in. You may note a very small change in fund name (for example from A to B share class), but please note that the assets that you are investing in are the same, as are their ex dividend dates. The only thing that differs is the charge, and, therefore, maybe the unit price. The value that converts will remain the same, but you may note a different fund price and therefore unit amount.
Charges will be taken on a monthly basis, in arrears, and will be taken from your Cash Account.
There are a number of ways that your Cash Account can be funded.
1) By Cofunds automatically selling an amount of units from the highest valued fund in your portfolio.
2) By Cofunds automatically selling an amount of units from one fund of your choice.
3) By you putting money in your Cash Account to cover the charges.
For option three, you can either send us a cheque, made payable to Cofunds Ltd, or make a bank transfer. If you are paying by either standing order (this can be set up with your bank) or BACs transfer you will need your Cash Account reference number, which can be found on documentation from Cofunds, or by contacting us here in the office. It usually starts with the letter “A” and is around 10 digits long.
If paying cash into the Cash Account we would suggest that you make the payment a month before it is due, so that there is enough time for the money to clear.
If you choose to have your units sold down, there is no extra charge for this, with Chelsea.
Things to bare in mind
Designated or joint holdings have their own respective Cash Accounts and therefore will need to be funded separately.
Cofunds will check your Cash Account at the beginning of each month for cash. If there is money held in the Cash Account they will take this at the end of the month. If however, there is not money in there, a “sale for regular payment” will be set up to sell units held in respective funds to raise money for the charges. This money will then be placed in your Cash Account, and taken at the end of the month.
Any income that is set to pay out to you, will not be affected.
If you hold investments elsewhere why not consolidate them with us. Simply complete a re-registration form for investments held outside Cofunds or a change of agency form to move your holdings to our agency.