Virgin index tracker unit trust?

Broke_American_Chiquita

They have what people might think is a high annual charge of 1%, but there are no other charges and minimum monthly investment is £1 per month. It also seems very very flexible, which is great. I have seen some reviews on ciao.co.uk and they are quite highly rated. Does anyone hold one of these and if so, how is it? Do you regret your choice? Why?
How has it performed so far? comments much appreciated!

dunstonh

The Virgin financial products are all pretty weak. Both in terms of charges and options.

but there are no other charges and minimum monthly investment is £1 per month.

The AMC is 1% but most trackers are around 0.25%. Some lower. £1 min is low. Most are £50 but some are £20. To be honest though, if you are only looking at those sort of figures then you really shouldnt be bothering.

It also seems very very flexible, which is great.

I would probably class it as the most inflexible stocks and shares ISA you can get. So, what do you see that makes it flexible in your eyes?

I have seen some reviews on ciao.co.uk and they are quite highly rated.

By people that dont know any better.

Does anyone hold one of these and if so, how is it? Do you regret your choice? Why?

There are so many better options out there and so few that are worse.

How has it performed so far?

Depends on the period of past performance you would look at. It is in line with other FTSE trackers but its higher charges put it at a disadvantage. An all share tracker would typically be consistent in giving mid table performance.

Broke_American_Chiquita

dunstonh wrote: »

The Virgin financial products are all pretty weak. Both in terms of charges and options.

I am not too sure about the term 'weak'. From my understanding of what I have read so far, I would use this term in the context of describing the performance of a fund. There are many many finance houses that offer the same product as Virgin, but their performance is what differs. I wouldn't say Virgin is weak in terms of the products that are offered, maybe in term of performace?

wrote:

The AMC is 1% but most trackers are around 0.25%. Some lower. £1 min is low. Most are £50 but some are £20. To be honest though, if you are only looking at those sort of figures then you really shouldnt be bothering.

I understand what you mean by "if you are only looking at those sorts of figures, then you really shouldn't be bothering". There is a general assumption that this is the opinion of banks. This is traditionally the case, where banks would prefer to choose customers who have large sums of money to invest. This would put more money in their pockets in form of charges, regardless of how the fund does. However, I think that today, banks have realized that any amounts of money is worth something and if you have money, however much, it can be turned into something. I don't really know what is 'in it' for the banks today who accept GBP20.00 per month as invests into their funds. As a Financial advisor, I would like to ask you: In what way do you think banks will benefit from such a 'small' amount? The problem in the past is that there has been an underestimation of money. GBP20.00 per month for you or others could be something not to 'bother' about, however if you look at the prices of some shares today, GBP20.00 could at least buy you something. The fact that you can invest GBP20.00 per month today, shows that it is not something you 'shouldn't bother about'.

wrote:

I would probably class it as the most inflexible stocks and shares ISA you can get. So, what do you see that makes it flexible in your eyes?

Well, maybe not so important to you, however for me I like that you can invest from 'only' GBP1.00 per month (sorry, I do not have the 'Pound' sign on my keyboard), you can access valuations easily, there are no strings attached, i.e. there is nothing hidden and no hidden extra charges. Some other finance houses that claim to have low charges also have 'strings attached', i.e. hidden extra charges. Also, easy access to money yadda yadda.

wrote:

By people that dont know any better.

I don't think its very nice to judge someone's intelligence by who they wish to invest with. People who invest are in different situations, do it for different reasons and most importantly they do it according to what is right for them. What is right for me may not be right for you. I might not be in this country, in ten years time so why would I want to invest for the next twenty years, for example? Also, Virgin may not be the 'best' one around, however its a good starting point. For example, if someone wants to build a good credit history, they do it by getting the highest interest rate credit card available and then build credit that way in order to access better deals. You have to start somewhere. Sure, investments have their risks and this is why 'small' investments are better then investing large amounts of money, as this way at least you can limit the amount of money you are putting in the fat cats (Virgin's) pocket. If I am just starting out, why would I want to give Virgin (who have high charges) GBP10,000 and then risk loosing it all, or giving them a large chunk off my money? Investments are all about risking money that you can afford to loose. I can afford to loose the 'small' amount of GBP20.00 per month.

So, what fund would you recommend then? And I am sure with you being a Financial Advisor, you will of course not be biased

wrote:

Depends on the period of past performance you would look at. It is in line with other FTSE trackers but its higher charges put it at a disadvantage. An all share tracker would typically be consistent in giving mid table performance.

I agree. I haven't made any decisions yet and I am still looking. I am shopping around and learning and its an awesome experience. I am looking at fidelity, friendly scoiety's etc... Ill see what I can find and I am planning to spreading investments to lower my risk. Will open a cash ISA, maybe a Stocks and Shares ISA, then a trust unit and probably and an American tracker. This way, I can at least have a higher chance of getting something back and if not, then at least I have my cash ISA to fall back on. I think my GBP20.00 here and there will do me good.

dunstonh

I am not too sure about the term 'weak'. From my understanding of what I have read so far, I would use this term in the context of describing the performance of a fund. There are many many finance houses that offer the same product as Virgin, but their performance is what differs. I wouldn't say Virgin is weak in terms of the products that are offered, maybe in term of performace?

Lack of choice and expensive. Thats what makes it weak.

As a Financial advisor, I would like to ask you: In what way do you think banks will benefit from such a 'small' amount? The problem in the past is that there has been an underestimation of money. GBP20.00 per month for you or others could be something not to 'bother' about, however if you look at the prices of some shares today, GBP20.00 could at least buy you something. The fact that you can invest GBP20.00 per month today, shows that it is not something you 'shouldn't bother about'.

You were talking about figures around the £1 pm mark. That isnt worth the effort. £20pm is fine if you are looking at 15-20 years (with perhaps increases later).

you can access valuations easily, there are no strings attached, i.e. there is nothing hidden and no hidden extra charges. Some other finance houses that claim to have low charges also have 'strings attached', i.e. hidden extra charges. Also, easy access to money yadda yadda.

You have just described most ISA managers. Nothing special or unique to Virgin.

I don't think its very nice to judge someone's intelligence by who they wish to invest with.

I never commented on their intelligence. Just their lack of knowledge. Anyone with any investment knowledge would not use Virgin trackers or most Virgin Direct financial products.

The people writing positive reviews are probably doing so to make themselves feel happy about their purchase. If they realised that they are paying nearly 10 times more in charges than they need to for the same thing then they may not be as happy.

So, what fund would you recommend then? And I am sure with you being a Financial Advisor, you will of course not be biased

The "I" in IFA means independent. So I have no bias. However, board rules and FSA rules mean I cannot make recommendations on the board. I don't know your objectives, risk profile, investment knowledge and tax position (important as you are an American). That said, not a recommendation but something you should perhaps investigate is L&G or if you cant go to their minimum then M&G have a £20pm minimum and their trackers are a third of the cost of Virgin.

I am looking at fidelity, friendly scoiety's etc

Friendly society plans are obsolete and should have been abolished years ago. Hopefully your research has already helped you come to the same conclusion.

jamesd

For a more competitive range of products look at Hargreaves Lansdown's ISA. Around two thousand different fund choices available including FTSE all-share trackers with lower annual charges. Do check that the one(s) you look at don't have the 0.5% extra annual charge that HL make for those with the very lowest annual charge. Even with that extra charge they still would be cheaper than the Virgin product.

For funds that charge the common 1.5% annual charge HL would normally rebate 0.25% to 0.5% to your loyalty bonus account. You can withdraw that to your bank account or invest it, whichever you prefer.

Hargeaves Lansdown does have a higher minimum monthly contribution requirement, so it's not suitable at the very lowest levels.

If you want a fund with a good history of doing better than the FTSE all-share index you could consider Invesco Perpetual Income, accumulation units. It's one of the most popular funds in the UK, with good reason.

Broke_American_Chiquita

wrote:

Friendly society plans are obsolete and should have been abolished years ago. Hopefully your research has already helped you come to the same conclusion.

Really? So how come Seffield Mutual and Victoria Liverpool still exist?

Broke_American_Chiquita

jamesd wrote: »

For a more competitive range of products look at Hargreaves Lansdown's ISA. Around two thousand different fund choices available including FTSE all-share trackers with lower annual charges. Do check that the one(s) you look at don't have the 0.5% extra annual charge that HL make for those with the very lowest annual charge. Even with that extra charge they still would be cheaper than the Virgin product.

For funds that charge the common 1.5% annual charge HL would normally rebate 0.25% to 0.5% to your loyalty bonus account. You can withdraw that to your bank account or invest it, whichever you prefer.

Hargeaves Lansdown does have a higher minimum monthly contribution requirement, so it's not suitable at the very lowest levels.

If you want a fund with a good history of doing better than the FTSE all-share index you could consider Invesco Perpetual Income, accumulation units. It's one of the most popular funds in the UK, with good reason.

Thanks for the great recommendations! Ill check those out!

dunstonh

Really? So how come Seffield Mutual and Victoria Liverpool still exist?

LV transact a lot in areas of insurance companies. They are increasingly becoming an insurer rather than a friendly society.

The smaller Friendly societies rely on direct marketing. With direct marketing, they can retail obsolete products that are rubbish as no advice is involved and there is limited FOS protection. The products are also damned expensive and profitable to the company issuing them.

Broke_American_Chiquita

dunstonh wrote: »

LV transact a lot in areas of insurance companies. They are increasingly becoming an insurer rather than a friendly society.

The smaller Friendly societies rely on direct marketing. With direct marketing, they can retail obsolete products that are rubbish as no advice is involved and there is limited FOS protection. The products are also damned expensive and profitable to the company issuing them.

Sorry, I am a little confused. I agree with the liverpool victoria thing become more insurance geared, however Sheffield Mutual seem to have good products, with majority offering 'guaranteed returns'. They do not have their own financial advise and I do not see that as a bad thing, in fact according to their website, they provide access to 'IFA's' (which I understand you are!), and I think is probably better then the biased advised they would give you, if they had their own advising. A lot of people, and many people in this forum have said rightly that you shouldnt rely on advise given by financial institutions, because again, bias. However, you are highlighting the fact that they dont have advise as a bad thing? This is my confusion. I seriously do not know the consequences of dealing with or having an 'obsolete' product. As far as I understand, an obsolete product is an internal thing within the company and it doesn't mean that if you have a product with them, it will not perform.

jem16

Broke_American_Chiquita wrote: »

Sheffield Mutual seem to have good products, with majority offering 'guaranteed returns'.

Their "guaranteed returns" only guarantee a minimum sum assured. The final value still depends on investment performance.

They do not have their own financial advise and I do not see that as a bad thing, in fact according to their website, they provide access to 'IFA's' (which I understand you are!), and I think is probably better then the biased advised they would give you, if they had their own advising. A lot of people, and many people in this forum have said rightly that you shouldnt rely on advise given by financial institutions, because again, bias. However, you are highlighting the fact that they dont have advise as a bad thing? This is my confusion.

He's not saying advice is a bad thing. What he is saying is that IFAs will not recommend these products due to the high costs and poor performance compared with other investments that are available. So the friendly societies rely on direct marketing of their products.

For example in the Tax Exempt Savings Plan offered by Sheffield Mutual, the charges are 50% of the premiums paid in year 1 followed by 6% of the annual premium each year. So if you paid £25pm in the first year you would have charges of £150 in the first year and £18 for each subsequent year. Nice little earner for the friendly society.

http://www.sheffieldmutual.com/documents/TESP%20Key%20Facts.pdf

I seriously do not know the consequences of dealing with or having an 'obsolete' product. As far as I understand, an obsolete product is an internal thing within the company and it doesn't mean that if you have a product with them, it will not perform.

They are obsolete in the sense that nowadays there are much better products available with much lower charges.

dunstonh

Sheffield Mutual seem to have good products, with majority offering 'guaranteed returns'.

As Jem says, its only a guaranteed basic sum assured.

In fact Jem has answered your post well leaving little left to say.

Just look at those charges.

As for obsolete, products often continue to be sold direct long after financial advisers stop recommending them. The Friendly Society savings plans are little more than an endowment policy sold on the gimmick of it tax free when the tax savings are probably worth around 0.1% a year compared to doing it unwrapped and no difference to being in an ISA. The charges though are going to equate to around 2-3% a year an an annual equivalent (averaged over the term).

Just take a look at the AXA cashbuilder thread in this section as thats virtually an identical product. The plan was obsolete by around 1995. Good ones stopped recommending it in the mid 90s, the not so good ones by around 98. AXA still offered it for sale direct to consumer without advice (via adverts) to around 2004.