Tiered annual Service Fee (GBP Fractional Bonds)

The following applies only to investments in the GBP Fractional Bonds. EUR Fractional Bonds have 0% Service Fees. All investments made in EUR Fractional Bonds before the end of 2019 will continue to have 0% Service Fees until maturity.  

WiseAlpha charges clients a tiered annual Service Fee based on all principal amounts of Fractional Bonds invested in. Fees are collected on a pro rata basis when a borrower makes an interest payment (this is either on a quarterly, semiannual or annual basis). The Service Fee is rounded to the nearest whole penny in your account.

Example calculation:

  1. If you held £50,000 in principal amounts of Fractional Bonds you would be charged 1% on the first £20,000 and 0.75% on the next £30,000 giving an effective annual fee rate of 0.85%.

  2. If you held £120,000 in principal amounts of Fractional Bonds across all of your WiseAlpha accounts (individual, SIPP, corporate) you would be charged 1% on the first £20,000, 0.75% on the next £30,000, 0.5% on the next £50,000 and 0.25% on the final £20,000 which would give an effective annual fee rate of 0.60%.

In the event that a borrower suspends its interest payments or misses a capital repayment WiseAlpha does not charge the Service Fee until payments are resumed.

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Using another example, let's say you purchased £98 of principal on 4/10/2020 and received an interest payment on 22/2/2021 and were charged £0.38 fees.

Days between 4/10/2020 and 22/2/2021 = 142 days

Calculation of fees is = Price of Principal X Fee Rate X Days Held / 365

so £98 X 0.01 X 142/365 = £0.38.

Have a look at the table below to understand the difference in fees when you hold a bond for a longer period.

Purchase Price

Coupon

Bond Purchase Date

1st Coupon Date

Days between purchase and 1st coupon payment

Fee

98

5%

04/10/2020

22/02/2021

142

£0.38

98

5%

04/10/2020

22/03/2021

170

£0.46

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