Comparing Platform Fees

Salaams

I really need some help. I am a customer with Wahed (Moderate Portfolio, under 10k) and I am trying to compare the fees here with Hargreaves Lansdown and AJ Bell but I cannot understand this. Please can you help in a step by step way? I am aware that the mainstream platforms do not offer access to the Sukuk element of the portfolio and do not offer rebalancing.

Also some of these ETF’s are priced in dollars and so income is in dollars and then converted into pounds, is this a good thing or not?

Thanks

Walikum as salam Esk,

  1. This video will help you understand the fee structure: https://www.youtube.com/watch?v=kJQ66bbPlrw&list=PLlqeAQqQK7TcG9QNlRJ_QjI8iX_q_I8jo&index=4

  2. Look at IFG’s screener and i am sure there would be some sukuks being offered. I have not seen Sukuk funds widely available. Having discussed with AJ bell (as they have one of the cheapest platform fee in relation to availability of Shariah fund) they are willing to add Franklin Templeton’s Global Sukuk fund but require a cumulative initial investment of £85k to setup (can be a pool of various customers). Once it’s setup then anyone can invest with any amount.

  3. Re Balancing - yes the platforms will not do it automatically but you can do it yourself.

  4. USD denominated ETFs: There is nothing right or wrong. It will depend on what is your view of the GBP/USD FX rate in the future. If you think that GBP will get stronger in the future, then any USD denominated ETF will lose in GBP terms and vice versa.

Hope that helps.
May Allah help you.

Jzk for the reply, will definately watch the video and take your advice on-board

Hello ,
1-how about to buy HLAL separately through any investment platform (the cheapest), save myself the mgmt fees and learn investing hands-on with my free time vs utilizing a Robo platform. I wish there were more Halal ETF options with lower expense ratios bc those .5% are not minimal. Would i be able to have an expense ratio by doing this ? because from what i read i got to have a minimum of 200 k in order for the expense ratio to be of .5 %

“1-how about to buy HLAL separately through any investment platform (the cheapest),”
HLAL is not available in UK - you cannot buy a US ETF directly in UK.

“save me the mgmt fees and learn investing hands-on with my free time vs utilizing a Robo platform.”
Absolutely bro, if one can invest some time to learn then that is the way to go i.e. DIY. The video I shared earlier shows how much charges can make an impact on the return on the longterm.

" I wish there were more Halal ETF options with lower expense ratios bc those .5% are not minimal."
Agreed, the shariah-compliant funds are expensive - not good especially the passive index trackers. some of them charge very high fees relative to mainstream funds - though one has to accept that these funds will have more compliance.

“Would i be able to have an expense ratio by doing this ? because from what i read i got to have a minimum of 200 k in order for the expense ratio to be of .5 %”
Not sure i understand your point here. TER is usually the fund charges, not sure how increasing your investment amount will decrease this. Are you referring to Platform fee that some providers charge on slab basis…

yes, this is waheds platform

ok with you.

Be aware that AJ bell only charges 0.25% regardless of the amount you invest via them. If you know the funds you want to invest then that can be a cheaper option

Salaams

Yes that is exactly what I was thinking, the 0.99% Wahed fee seems high compared to AJ Bell.

However, Wahed list other charges too. They do not charge these themselves but the Funds charge Wahed, who then pass the cost on to customer. Wahed lists these for transparency -

Annual Investment Fund Cost 0.76%
Annual Market Spread 0.05%

So the total cost to me is 1.80% (including the 0.99% Wahed fee).

What I would really like to know is if I go to AJ Bell for example, where can I find the Annual Investment Fund Cost and Annual Market Spread that Funds charge them so I can also compare this to Wahed, to get a complete picture?

Thanks

Did you have any luck with finding this?

Walikum As salam Esk,

As you would note from the video above that there are various types of charges associated with investing in funds. Broadly speaking these can be categorised as:

1. Annual Investment Fund Cost: This charge go to the fund manages for managing the investment fund i.e. fee charged by HSBC/Ishares/Franklin Templeton etc. This should be same regardless of which platform you chose. It does not go to either Wahed or AJ Bell or any other platform/broker. It’s a bit difficult to dissect Wahed’s portfolio charges as they are probably based on the weighting of different funds in the portfolio. Below are the stand-alone fund charges of fund from AJ Bell’s website that are also used within Wahed’s portfolio.

Fund Charge	

Global Stocks
iShares MSCI World Islamic ETF USD Dist - LSE:ISDW 0.60%
HSBC Islamic Global Equity Index IC GBP - FUND:BDCVVD1 0.49%

Emerging Market Stocks
iShares MSCI EM Islamic ETF USD Dist - LSE:ISDE 0.85%

Sukuk
Franklin Global Sukuk Fund W(Qdis) 0.90%
Point to note that this fund is not yet active on AJ bell as they would need an initial one-off £85k investment to add this to their platform but once setup anyone can put any amount of money in it.

Gold
Royal Mint Physical Gold ETC GBP - LSE:RMAP 0.22%

Other shariah funds available with AJ Bell:
Aberdeen Standard Islamic Glbl Eq A GBP - FUND:B1CHMW1
BNP Paribas Islamic Hilal Income P - FUND:BYTBKW3
HSBC Islamic Global Equity Index BD GBP - FUND:BJLVT96
iShares MSCI World Islamic ETF USD Dist GBP - LSE:ISWD
iShares MSCI USA Islamic ETF USD Dist GBP - LSE:ISUS
iShares MSCI USA Islamic ETF USD Dist - LSE:ISDU

2. Platform Fees: This is the fee which is charged by the platform/broker to buy the funds.
Wahed - 0.99%
AJ bell - 0.25%

3. Transaction Cost:
Wahed - Not 100% sure but I think its included or probably 0.05% spread you noted - its an immaterial charge in the grand scheme of things.
AJ Bell : £1.5 per trade for funds

So my personal view from a DIY perspective (not a recommendation):

  • Annual Investment Fund Cost would be what it is regardless of which platform you would go
  • Transaction cost is immaterial.
  • Platform: This is an area where it appears money can be saved if one is willing to put in some time and DIY by simply copying Wahid’s portfolio. - a saving of 0.74% which in long run matters significantly. You may also find this thread interesting Diversifying portfolio :slightly_smiling_face:

Note: As a general rule, please double-check the numbers and research for yourself before.

Hope this helps and may Allah guide you.

Regards
Zeeshan

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Jzkl for taking the time to post such a detailed reply - my knowledge has increased and things are much more clearer now.

Thanks, really appreciate your help!

Thank you Zeeshan , you seem very informed would you be able to share your portfolio as its difficult to find islamic ones online.

my second question is why dont you go with trading 212 instead of paying for AJ bell charges ? as i read somewhere in the form that you are using AJ bell.

Jazakallah Musa for you kind words.

  1. Sure. My Pension fund is 100% invested in HSBC Islamic Global Equity Index Fund with Legal and General as that is what my employer has chosen as the pension provider and their fee is very minimal due to the corporate rate agreed. As I am ~20 years away from needing to drawing any money out of it, I have chosen to be 100% in equity and also this fund is heavy towards growth stocks that should do well in long run in my view.

But listen, brother, every individual has their unique circumstances and what’s good for me may not be suitable for you… the more we educate our self about investing, the more informed decisions we can take. In terms of Islamic Options available, you can refer IFG’s Compare Halal Investments section.

  1. Trading 212: Very good point. Yes, Trading 212 works best if you are interested mainly in stock picking as they have limited Islamic ETFs/funds (Vs AJ Bell) i believe the “Ishares” one I mentioned in the earlier post. One thing to be aware of is that their “Investment” account has been disallowed by muftis in this forum @ Which broker do I choose now? but their “ISA Account” should work.

Goodluck

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Thank you for your comprehensive reply ,

I think im gonna open with trade 212 ISA account for the etfs im interested in which is the iShares World islamic as there is no platform fees besides the outraging expense ratio of 0.60 % the ETF is taking already and i think ill carry out my stock picking with them through my ISA account.

I haven’t found any cons for the trading 212 isa account so far, im not sure why AJ bell is more popular.

Im looking for a reason to open with AJ bell as you can see.

For the purpose, you have mentioned I would agree that you open trading 212 ISA account which is best if you are interested in stock picking or if the limited Islamic ETFs they are offering is sufficient for you.

Stock picking is not something that everyone should get engaged especially if someone is just beginning their investment journey (a general comment not towards you). I also have an account with trading 212 for only “playing” with shares with a minor amount. Stock picking is not something that I feel comfortable. I like the satellite style of investing where the bulk is invested in a fund/ETF and then a minor amount for shares trading.

With regards to AJ bell being popular - it would probably be down to the number of Islamic funds they offer. I have not seen any other platform offering that many.
Good luck

Thank you Zeeshan,

for reference to anyone who would like to know which islamic funds both platforms offer:

AJ bell:

Trading 212 :

I have found this amazing article

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Wa Salaam Esk.

Firstly, Wahed is a discretionary Fund Manager meaning that we invest in assets that we feel will work best in line with your chosen risk profile. The service is provided using a wrapped fee charge. Meaning that all dealing and custody charges are wrapped in one fee that you pay Wahed. Importantly, this includes the purification report which all customers received earlier this year for the investments they held over the course of 2019

This service is different to what stock brokers such as HL or AJ usually offer. They charge a custody fee and transaction fees in addition to what the fund managers charge. If you wish to compare like-for-like services, Hargreaves have an equivalent service to Wahed which is called Portfolio Plus.

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Thank you Abul for your entry, its a bit aching when i calculate the ER over the next 15 to 20 years in comparison to the vanguard ones which cost less than 0.1 %. I mean the fact its passive it should be lower than this.