The major player in UK investment platforms, Hargreaves Lansdown, has announced the special discount rates it has negotiated on several index funds.
On the surface, these exclusive share classes look like some of the cheapest trackers available. From UK equities to emerging markets, you can build a broadly diversified portfolio using Hargreaves’ discounted range, which includes reputable funds from BlackRock and L&G. Those discounts are a result of Hargreaves’ negotiating power and scale.
However, the funds’ low ongoing charges don’t tell the whole story. When you add the platform fee charged by Hargreaves Lansdown, the overall cost picture changes. In many cases you can assemble a cheaper portfolio by choosing standard-priced index funds available through a more competitively priced broker.
The table below shows the full cost picture once platform charges are included. It compares representative Hargreaves-exclusive index funds against broadly equivalent regular index funds available at Charles Stanley Direct, listing the fund Ongoing Charge Figure (OCF), the platform fee and the combined total cost.
Every Hargreaves Lansdown exclusive in this sample is more expensive overall than its Charles Stanley equivalent when both OCF and platform fees are combined:
| Hargreaves exclusive index funds | OCF (%) | Platform fee (%) | Total (%) | Charles Stanley regular index funds |
OCF (%) | Platform fee (%) | Total (%) |
| L&G UK Index C | 0.1 | 0.45 | 0.55 | Royal London UK All Share Tracker Z | 0.14 | 0.25 | 0.39 |
| L&G US Index C | 0.12 | 0.45 | 0.57 | BlackRock US Equity Tracker D | 0.17 | 0.25 | 0.42 |
| BlackRock Continental Euro Equity Tracker H | 0.12 | 0.45 | 0.57 | BlackRock Continental Euro Equity Tracker D | 0.18 | 0.25 | 0.43 |
| BlackRock Japan Equity Tracker H | 0.12 | 0.45 | 0.57 | BlackRock Japan Equity Tracker D | 0.18 | 0.25 | 0.43 |
| BlackRock Pacific ex Japan Equity Tracker H | 0.15 | 0.45 | 0.60 | BlackRock Pacific ex Japan Equity Tracker D | 0.21 | 0.25 | 0.46 |
| BlackRock Emerging Markets Tracker H 1 | 0.25 | 0.45 | 0.70 | BlackRock Emerging Markets Tracker D 2 | 0.29 | 0.25 | 0.54 |
| L&G International Index C |
0.2 | 0.45 | 0.65 | Fidelity Index World Fund I | 0.15 | 0.25 | 0.40 |
| L&G All Stocks Gilt Index C |
0.1 | 0.45 | 0.55 | Vanguard UK Government Bond | 0.15 | 0.25 | 0.40 |
Note: Dealing costs are zero. The table above is a representative sample of the HL exclusive range used for comparison.
What’s the difference?
Using a simple, illustrative portfolio made up of equal weightings of the main equity categories in the table, Hargreaves Lansdown’s combination of low OCFs plus a higher platform fee ends up costing more overall than the Charles Stanley alternatives.
Under the assumptions used here (an equally weighted portfolio of the seven categories, excluding the International fund, and portfolio size under £250,000 so no reduced-rate tier applies), the weighted total cost is 0.59% at Hargreaves Lansdown versus 0.44% at Charles Stanley. That equates to paying roughly 34% more overall to hold those Hargreaves exclusive trackers.
For a small portfolio of £10,000 the difference is modest: about £59 per year at Hargreaves versus £44 at Charles Stanley. But as the portfolio grows the gap becomes meaningful. On a £50,000 portfolio the annual costs look like this:
- £295 per year to Hargreaves Lansdown
- £220 per year to Charles Stanley
- £99 per year to a fixed-fee broker such as Interactive Investor or iWeb (assuming dealing costs stay within an £80 threshold, which a passive investor can reasonably manage).
If the portfolio returns 3% that year (£1,500 on £50,000), Hargreaves’ charges would consume approximately 20% of that return; Charles Stanley would take about 15%; the fixed-fee broker under 7%. Over time these differences compound and can materially affect net returns.
Higher-return years reduce the relative impact of fees, but long-term investors should expect returns closer to modest averages rather than very high single-year gains. That’s why platform fees matter, not just headline fund discounts.
Fidelity’s exclusives
Fidelity has also introduced its own exclusive low-cost tracker share classes. But the same dynamic applies: discounted fund OCFs can be offset by platform fees, leaving the overall cost higher than comparable options elsewhere.
| Fidelity exclusive funds | OCF (%) | Platform fee (%) | Total (%) | Charles Stanley regular index funds |
OCF (%) | Platform fee (%) | Total (%) |
| Fidelity Index UK | 0.09 | 0.35 | 0.44 | Royal London UK All Share Tracker Z | 0.14 | 0.25 | 0.39 |
| Fidelity Index US | 0.09 | 0.35 | 0.44 | BlackRock US Equity Tracker D | 0.17 | 0.25 | 0.42 |
| Fidelity Index Europe Ex UK | 0.16 | 0.35 | 0.51 | BlackRock Continental Euro Equity Tracker D | 0.18 | 0.25 | 0.43 |
| Fidelitity Index Japan |
0.15 | 0.35 | 0.50 | BlackRock Japan Equity Tracker D | 0.18 | 0.25 | 0.43 |
| Fidelity Index Pacific Ex Japan | 0.2 | 0.35 | 0.55 | BlackRock Pacific ex Japan Equity Tracker D | 0.21 | 0.25 | 0.46 |
| Emerging Markets 3 | 0.27 | 0.35 | 0.62 | BlackRock Emerging Markets Equity Tracker D | 0.29 | 0.25 | 0.54 |
| Fidelity Index World | 0.18 | 0.35 | 0.53 | Fidelity Index World Fund I | 0.15 | 0.25 | 0.40 |
Note: Dealing costs are zero.
In this sample, Fidelity’s exclusive share classes are more expensive overall than Charles Stanley’s regular institutional share classes. The weighted total cost shown here is 0.51% for Fidelity exclusives versus 0.45% for the Charles Stanley alternatives — about 13% more in total cost. That gap becomes meaningful as portfolio size increases.
Super-clean share classes aren’t magic
Don’t be fooled by marketing terms such as “super clean” or “exclusive” — these are simply low-cost share classes of existing funds. The fund’s economics are the same aside from the lower OCF. If the discounted OCF plus a platform’s fee ends up higher than an alternative elsewhere, the investor is worse off despite the marketing spin.
Always focus on the total cost of investing: look at the OCF (or Total Expense Ratio) and add platform charges to determine the true annual drag on returns. Ignore confusing label variations such as Annual Management Charge if they obscure the real ongoing cost.
Another practical issue is portability. An exclusive share class that isn’t available on multiple platforms can complicate future switching. You may have to sell the exclusive fund into cash and buy a more widely available fund, which risks time out of the market and potential tax or exit considerations.
Bottom line: don’t be seduced by headline discounts. Big-brand platforms will always try to leverage their scale, but attentive DIY investors should compare overall costs across providers. Often the hungrier, more competitive brokers deliver better long-term value because they charge lower platform fees in addition to reasonable fund OCFs.
Take it steady,
The Accumulator
- Full name is BlackRock Emerging Markets Equity Tracker H[↩]
- Full name is BlackRock Emerging Markets Equity Tracker D[↩]
- Full name is Fidelity Index Emerging Markets[↩]
- The assumed portfolio consists of equal weightings of the six equity funds in the table once the World fund has been excluded. This is being generous to Fidelity as the portfolio doesn’t include a gilt fund, a common category where it does not offer a discount.[↩]