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KBC Investment Funds

jams100

For Those of you interested KBC have set up investment funds.
https://www.kbc.ie/investments/investment-funds

The benefits (to the best of my knowledge) are:

That you can withdraw your money at any time and all funds are socially responsible funds
That when you do withdraw your funds they'll pay all the taxes on your behalf as the funds are Irish domiciled (That means you'll be paying 41% on any profits)
If your already with KBC it would be handy to just be able to view the account simply within your mobile app (convenience)
Ability to do lumpsum or regular deposits or both

The drawbacks (As opposed to buying individual shares yourself):

Government levy for new deposits into account = 1% (Which will be waived for anyone signing up before 9th April I think)
Management fees of 2.18% per year (for the fund I was looking into)
41% tax on encashment as opposed to 33% CGT if you were to go and buy individual shares yourself.
No history of funds past performance as these funds only went live two weeks ago

Could be good for anyone who doesn't want to put much effort into researching and are already with KBC.
Personally I'm just going to give up on searching for funds for the time being, going to keep going myself and track a few of the funds and see how I'm performing against them.

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howiya

Management fee seems fairly excessive for something that's going invest primarily in a master fund.

I assume its not possible to invest directly in the master fund?

jams100

howiya wrote: »

Management fee seems fairly excessive for something that's going invest primarily in a master fund.

I assume its not possible to invest directly in the master fund?

I agree 2.18% is way too much, now that's just for one specific fund, maybe the management fees on their other funds aren't as much?

Don't know what you mean by the second part of your statement, they have several different funds for different risk categories

daheff

Stay clear of these clowns. I talked with them before and was initially told the govt levy was an investment premium(ie a kbc charge). When I told them I wasnt going to pay this I was then told I had to as it was actually the govt levy. Bizarre from them.

I walked away after they misrepresented this to me.

richie123

I dont understand these funds,
Its daylight robbery.
why would people give there hard earned money to some individuals to invest in God knows what company in God knows where?
And get charged through the nose for the privilege.

howiya

jams100 wrote: »

I agree 2.18% is way too much, now that's just for one specific fund, maybe the management fees on their other funds aren't as much?

Don't know what you mean by the second part of your statement, they have several different funds for different risk categories

What I meant by the second part is that they invest at least 85% of the fund into another fund. It would be cheaper to invest directly in that fund but I assume they probably don't market the fund they invest in Ireland for people to invest in directly.

Instead there'll be all sorts of professional fees other than the management fee deducted from the fund so you'll end up paying these twice.

For example, the KBC Ireland Fund has a depositary and an administrator. They normally get paid from the assets of the fund. The master fund in Belgium will also have such service providers who also get paid. So by investing in the Ireland fund you're essentially paying for these twice.

jams100

richie123 wrote: »

I dont understand these funds,
Its daylight robbery.
why would people give there hard earned money to some individuals to invest in God knows what company in God knows where?
And get charged through the nose for the privilege.

I agree, the management charge on this one is ridiculous. (Now just to emphasise for clarity this was the charge for one particular fund, the other kbc funds might be less or the same, I dont know, I'd imagine they are all in and around the same amount though).

Why would people give institutions like Zurich etc. a lump sum? I imagine to get what should be a guaranteed return over the long term, individual investing requires a lot of time and effort and it certainly isn't for everyone. In fairness most institutions have a good track record and some are more reasonable with their charges than others, this KBC one was one of the worst I've come across to date, especially as these are new funds and hence have no track record unlike the likes of blackrock, fidelity etc.

JPup

richie123 wrote: »

I dont understand these funds,
Its daylight robbery.
why would people give there hard earned money to some individuals to invest in God knows what company in God knows where?
And get charged through the nose for the privilege.

These funds are aimed at retail investors who don’t know enough or don’t have the confidence to invest themselves. The fees are high, but the quality of the product should be fine for most people.

If anyone is seriously looking at these, make sure to look at all possible fees and not just the annual charge. Is there a one-off fee for taking your money out or switching between funds for example?

jams100

howiya wrote: »

What I meant by the second part is that they invest at least 85% of the fund into another fund. It would be cheaper to invest directly in that fund but I assume they probably don't market the fund they invest in Ireland for people to invest in directly.

Instead there'll be all sorts of professional fees other than the management fee deducted from the fund so you'll end up paying these twice.

For example, the KBC Ireland Fund has a depositary and an administrator. They normally get paid from the assets of the fund. The master fund in Belgium will also have such service providers who also get paid. So by investing in the Ireland fund you're essentially paying for these twice.

Yea, I get you now.
Yes your correct they have some fund managers working in Sandwich Street (Their HQ in Ireland) but the money gets pooled together, or at least a portion in Belgium.

jams100

JPup wrote: »

These funds are aimed at retail investors who don’t know enough or don’t have the confidence to invest themselves. The fees are high, but the quality of the product should be fine for most people.

If anyone is seriously looking at these, make sure to look at all possible fees and not just the annual charge. Is there a one-off fee for taking your money out or switching between funds for example?

Read OP, no charge for taking money out, that's one of the few benefits.

The quality of product should be good I agree but with no track record that should feed into a slightly reduced management fee (imo).

howiya

jams100 wrote: »

Read OP, no charge for taking money out, that's one of the few benefits.

The quality of product should be good I agree but with no track record that should feed into a slightly reduced management fee (imo).

Speaking of the OP do you have a link to where they refer to the 1% government levy. As someone else said I think this is bogus

[Deleted User]

Management fee and then 41% tax at the end. No chance.

Bacchus

Mind if I jump on the thread with my own query?

We've had an investment account for the past 4 years with KBC ("safe" savings option for kids in 15-18 years time). I've reviewing the options at the moment. The existing account is doing ok but as they no longer offer it, I can't increase the monthly payments to it. I'd have to close it and set up a new one which won't have as good a return. So I've been looking at others like Zurich but part of me is wondering would I be better off sticking the money across 4 or 5 ETFs that I can manage myself? Sure we'll still pay the 41% tax and there's that 8 year rule, but no management fees and I feel like some well picked ETFs could bring a better return over that time period than what they are offering. Are there other options I'm overlooking?

BTW, their investment accounts are otherwise very accessible and at least do earn interest. Much better place to keep your money than a savings account earning nothing (though usual caution applies that you don't want to be needing the money during a rough patch).

Shedite27

howiya wrote: »

Speaking of the OP do you have a link to where they refer to the 1% government levy. As someone else said I think this is bogus

Government levy is standard on most Irish savings products.

The management charge on these are ridiculous tho, most companies would do it for 0.75%

VonLuck

I naively put in a small lump sum with them about 5 years ago into a medium risk fund. Currently up about 5%. That's 1% per annum. Partly my own fault by not investing regularly. I would have been better off putting it into a savings account.

Bacchus

VonLuck wrote: »

I naively put in a small lump sum with them about 5 years ago into a medium risk fund. Currently up about 5%. That's 1% per annum. Partly my own fault by not investing regularly. I would have been better off putting it into a savings account.

Pretty much the same. I'm thinking of switching to some ETFs instead. Sure there's the 41% tax but I was paying that anyway with KBC. I want this money to be a bit safer/diverse and less work, than my other investment portfolio so I'm coming around to the idea.

jams100

VonLuck wrote: »

I naively put in a small lump sum with them about 5 years ago into a medium risk fund. Currently up about 5%. That's 1% per annum. Partly my own fault by not investing regularly. I would have been better off putting it into a savings account.

Wow, that's a pretty bad return considering S&P500 has doubled in the past 5 years! Seems like poor management to me...

[Deleted User]

Bacchus wrote: »

Pretty much the same. I'm thinking of switching to some ETFs instead. Sure there's the 41% tax but I was paying that anyway with KBC. I want this money to be a bit safer/diverse and less work, than my other investment portfolio so I'm coming around to the idea.

Be very careful if choosing regular ETF payments. You'll have a deemed disposal for every purchase. KBC would deal with all that tax hassle.

Investment Trusts a better option. 33% v 41%. No deemed disposal headache.

Or a portfolio of blue chips shares.

Or a mixture of both options.

After maxing out pension and paying off mortgage obviously.

VonLuck

jams100 wrote: »

Wow, that's a pretty bad return considering S&P500 has doubled in the past 5 years! Seems like poor management to me...

I think I bought in maybe 2 or 3 days before a large dip in the Chinese stock market in 2015. Didn't even break even from that until maybe a year ago.

Timmaay

VonLuck wrote: »

I think I bought in maybe 2 or 3 days before a large dip in the Chinese stock market in 2015. Didn't even break even from that until maybe a year ago.

Dollar average is the important lesson here.

VonLuck

Timmaay wrote: »

Dollar average is the important lesson here.

Yes. Mentioned that earlier.

Bacchus

6 wrote: »

Be very careful if choosing regular ETF payments. You'll have a deemed disposal for every purchase. KBC would deal with all that tax hassle.

Investment Trusts a better option. 33% v 41%. No deemed disposal headache.

Or a portfolio of blue chips shares.

Or a mixture of both options.

After maxing out pension and paying off mortgage obviously.

I spotted the investment trust option alright but haven't investigated yet. I'll look deeper at it. Are they handy to set up?

KBC investment would also have the 8 year deemed disposal rule, and according to the consultant I spoke with last week, I'm responsible for it, not KBC. So to me, an ETF (or several ETFs) is cutting out the KBC middle man (in a a sense). I can have something that's low maintenance, reasonably low risk and reasonably good return. I will look in to the investment trust though.

Yup, pension maxed out. Overpaying mortgage by a decent chunk... could go higher... may do so in future.

Shedite27

Bacchus wrote: »

I spotted the investment trust option alright but haven't investigated yet. I'll look deeper at it. Are they handy to set up?

KBC investment would also have the 8 year deemed disposal rule, and according to the consultant I spoke with last week, I'm responsible for it, not KBC. So to me, an ETF (or several ETFs) is cutting out the KBC middle man (in a a sense). I can have something that's low maintenance, reasonably low risk and reasonably good return. I will look in to the investment trust though.

Yup, pension maxed out. Overpaying mortgage by a decent chunk... could go higher... may do so in future.

I realise being mortgage free is a great achievement and milestone for everyone, but from a purely financial perpective, when you've a mortgage at 2.1% - 3%, and stock markets returning 10%, it's definietly not the option to optimise your financial position

[Deleted User]

Shedite27 wrote: »

I realise being mortgage free is a great achievement and milestone for everyone, but from a purely financial perpective, when you've a mortgage at 2.1% - 3%, and stock markets returning 10%, it's definietly not the option to optimise your financial position

10% before or after CGT? Regardless, you'll never make that every year, no chance.

Maxing pension and paying off mortgage are the two best and easiest ways to build wealth. Pension especially with the huge tax break. Even more so if your employer pays a chunk of it.

Useful after tax cash for investments then.

Shedite27

6 wrote: »

10% before or after CGT? Regardless, you'll never make that every year, no chance.

Maxing pension and paying off mortgage are the two best and easiest ways to build wealth. Pension especially with the huge tax break. Even more so if your employer pays a chunk of it.

Useful after tax cash for investments then.

S&P average for the last 50 years is 11% , closer to 14% in the last 10 years. So a passive index fund will get ya that. Anyone putting a bit of work into avoiding the crap companies should be returning more than that (before CGT admittedly).

The J Stands for Jay

jams100 wrote: »

Read OP, no charge for taking money out, that's one of the few benefits.

That hardly makes it unique among the retail funds available in Ireland.

The J Stands for Jay

Bacchus wrote: »

KBC investment would also have the 8 year deemed disposal rule, and according to the consultant I spoke with last week, I'm responsible for it, not KBC. So to me, an ETF (or several ETFs) is cutting out the KBC middle man (in a a sense). I can have something that's low maintenance, reasonably low risk and reasonably good return. I will look in to the investment trust though.

If that consultant is right, then that's pretty poor by KBC. Other providers look after 8 year deemed disposals for you.

Shedite27

McGaggs wrote: »

That hardly makes it unique among the retail funds available in Ireland.

A lot of the investment options with the likes of Zurich, Irish Life, Aviva would have early enchantment charges, penalties of the money is withdrawn within 5 years

Cute Hoor

6 wrote: »

10% before or after CGT? Regardless, you'll never make that every year, no chance.

Maxing pension and paying off mortgage are the two best and easiest ways to build wealth. Pension especially with the huge tax break. Even more so if your employer pays a chunk of it.

Useful after tax cash for investments then.

Doable - and this is an example, take VOO, which requires little DYOR, performance over last 10 years.

100 VOO bought on the 1st April 2011 would have set you back $12,480 (€8,782), today you could sell for $36,816 (€31,276).

Today VOO is trading at $368.16, that is 11.91% pa on average over the last 10 years (if my sums are correct) and that includes 2 years of slightly negative returns.

You would also have received $4,025 in dividends, if you had reinvested those dividends the annual return would be well more than the 11.91% pa.

Of course you could pick stocks/investments that would be well better/worse than that, I just picked one bog standard one. And of course, what happened over the last 10 years is no guarantee of what will happen over the next 10.

I hope all those sums are right.

BTW, I'd heartily agree with you on the pension, but would question the value of paying off mortgage, particularly if you have a low interest rate, I presume everybody is switching to the Avant 1.95% mortgage.

daheff

6 wrote: »

After maxing out pension and paying off mortgage obviously.

Disagree on paying off mortgage before investing.

Credit card debt yes, as it's a high rate. Mortgage depends on your rate. Most would be 2.5-4% currently.

Can you achieve a better return than 4% (well 6.7% before tax) in stock market with well picked stocks/funds?

I say so....so you would be better off getting that higher return than repay a low cost mortgage.

[Deleted User]

daheff wrote: »

Disagree on paying off mortgage before investing.

Credit card debt yes, as it's a high rate. Mortgage depends on your rate. Most would be 2.5-4% currently.

Can you achieve a better return than 4% (well 6.7% before tax) in stock market with well picked stocks/funds?

I say so....so you would be better off getting that higher return than repay a low cost mortgage.

Surely depends on your mortgage?!

Picking 300k and 3 different mortgage rates purely for display purposes. I know 300k might be small or big depending on location.

300k mortgage at 4% over 30 years will cost 515k total

300k mortgage at 3.25% over 30 years will cost 470k total

300k mortgage at 2.5% over 30 years will cost 426k total

There amount of interest that can be saved paying of a mortgage early is staggering.