Low cost tracker funds for a SIPP

piperlene

Hello, just found this thread. I've had an Alliance Trust SIPP for a couple of years and want to invest in some tracker funds. I did a bit of research and decided to go for the Hargreaves Lansdowne all share tracker as it had low charges. Was then told that HL don't accept Private Pension SIPP trustee accounts (presumably because they want you to have the SIPP with them?). Anyway so does anyone have any tips on where else I can get my tracker fund? Am I likely to find the same problem with other fund providers? Probably like everyone else I'm looking for a tracker fund with low annual charges.

Aegis

What about an ETF? Presumably you could purchase a fairly low cost tracker ETF within the Alliance Trust SIPP?

I should point out that I know next to nothing about the dealing/holding costs for Alliance Trust.

jawj

An hl sip filled with HSBC trackers I think is the lowest cost pension you could get. That's what I,ve setup. Alliance trust cheaper for shares etc though, but can open both. Invest in trackers and forget for 30 years. You,ll stand to make more in the long run.

dunstonh

An hl sip filled with HSBC trackers I think is the lowest cost pension you could get.

No. A skandia personal pension with Blackrock trackers is. (lower AMC and TER than HSBC)

g_senthil_mm

dunstonh - For interest sake, could you explain a bit or give some references explaining the taxation difference between Active Funds and Trackers in U.S.

dunstonh wrote: »

Of course they would. In the US, their taxation hits managed funds harder than trackers. We dont have that differential over here.

What you want to do is fine. Although dont put the whole lot on a FTSE tracker. Thats really bad investing. If you can pick up a SIPP/PPP provider that offers the blackrock trackers then they are your best bet. Lower TERs than HSBC & L&G and a wider range (including emerging markets).

dunstonh

g_senthil_mm wrote: »

dunstonh - For interest sake, could you explain a bit or give some references explaining the taxation difference between Active Funds and Trackers in U.S.

There is quite a lot on google. However, here is a copy and paste from Wiki

U.S. mutual funds are required by law to distribute realized capital gains to their shareholders. If a mutual fund sells a security for a gain, the capital gain is taxable for that year; similarly a realized capital loss can offset any other realized capital gains.
Scenario: An investor entered a mutual fund during the middle of the year and experienced an overall loss for the next 6 months. The mutual fund itself sold securities for a gain for the year, therefore must declare a capital gains distribution. The IRS would require the investor to pay tax on the capital gains distribution, regardless of the overall loss.
A small investor selling an ETF to another investor does not cause a redemption on ETF itself; therefore, ETFs are more immune to the effect of forced redemptions causing realized capital gains.

jamesd

g_senthil_mm, one other difference in the US is higher national and state taxes on investments that are purchased and sold within a year. The final effect of this in the US is to change outperformance of actively managed funds to underperformance, solely due to the effect of tax.

In the UK there's no difference in CGT for a year or less and you only pay CGT when you sell, not when the fund sells, so you can more easily time things to fully use your own CGT allowance and minimise or eliminate tax.

Take studies comparing active and passive funds in the US with a large grain of salt unless they control for the tax difference.