Hargreaves Lansdown’s tracker bombshell

Fund manager Hargreaves Lansdown has changed the way it charges for many of its tracker funds. Here's how it affects you.

"Hargreaves Lansdown (HL) drops a tracker bombshell," says the Motley Fool. As Britain's biggest direct seller of investment funds to private investors, any big change the firm makes will always hit the headlines. So what has it done?

The change to its fund supermarket platform Vantage comes into effect from 31 December. Up until now, if you held certain tracker funds (which simply track an underlying index), through the platform, you had to pay the annual fee levied by the product provider and beyond that, a 0.5% Vantage charge capped at £45 per year (for the individual savings account option). The problem from the firm's point of view is that unlike most unit trusts, trackers typically don't pay a trail commission. These small regular payments are an important source of extra income to a broker well after a product has been sold.

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