Investment platform AJ Bell Youinvest has announced fee increases that could see some customers pay substantially more to hold investments with the company. The firm has won acclaim as one of the cheapest and most comprehensive providers, which has helped make it an increasingly popular choice with MoneyWeek readers, according to our reader surveys.
But it is now raising the annual charge it makes for holding open-end funds (unit trusts and Oeics) from 0.2% to up to 0.25% of their value (cheaper rates will apply on holdings worth more than £250,000). The platform is also abolishing the £200 cap on such fees that it previously applied, which means investors with large portfolios will now pay substantially more.
An investor using AJ Bell to hold funds worth £100,000, for example, will now pay £250 a year for the service, a 25% increase on the maximum £200 charge that previously applied – although a reduction in charges for buying and selling funds (from £4.95 per trade to £1.50 per trade) could still mean that those dealing frequently will be better off.
AJ Bell is also introducing charges for holding shares, including investment trusts and exchange-traded funds, for the first time, though here its 0.25% annual fee will be capped at £30 a year for investors with individual savings accounts (Isas) and £100 a year for those with self-invested personal pensions.
The new fees will take effect from 1 October 2016. Despite the increase, AJ Bell’s fees will remain competitive for many customers. The company insists the changes are revenue-neutral and that the changes are necessary in order to ensure that some groups of investors do not pay charges that effectively subsidise other groups.
Nevertheless, the company will risk the ire of investors by not following the lead of other platforms in waiving exit fees for a period following the introduction of higher charges. In most cases, customers who decide they want to transfer investments to rival platforms will have to pay £25 per holding to do so. A spokesperson for AJ Bell was unavailable for comment.