Which SIPP provider?

dunstonh

I moved my Sipp to HL just over a year ago, as I was disappointed with James Hay and Friends Provident. In the last 6 months my funds have grown by 6.2% and they are a selection of 5 Funds which I selected myself. HL is not so bad, but you need to be able to research your own funds and review them yourself, which is not difficult, just time consuming.

To be fair, James Hay would have offered the same funds and Friends Provident have a couple of hundred funds on their contract including a couple of decent passive portfolio funds which utilise the blackrock trackers. FP would probably be cheaper than HL in many cases.

HL is not bad but they keep the IFA trail commission in full and keep the platform commission as well as marketing payments (fund houses buying shelf space on platform). So, if you are going to DIY, you have to decide if paying all those fees is worth it. SIPPdeal looks better than HL as at least you get half the IFA trail commission back.

jamesd

SIPPdeal looks to pay a bit less than the commission back that HL pays on their ISA, not on their SIPP, but to charge dealing fees for fund buys and sells, unlike HL. So of the two HL is probably better for accumulating, SIPPdeal for holding but Alliance Trust probably beats either for buy and hold once the amounts get significant. As would fee-based IFA deals without ongoing advice.

gadgetmind

dunstonh wrote: »

Friends Provident have a couple of hundred funds on their contract including a couple of decent passive portfolio funds which utilise the blackrock trackers

I use one of these (balanced index enhanced fund of funds) in my Group Personal Pension and am also using it as the benchmark for my "roll your own" BestInvest SIPP portfolio. The latter is mainly in Vanguard trackers and bond ETFs, but I've added carefully-selected REITs, infrastructure companies and heavily-discounted ITs for both variety and spice.

Based on what the OP has said, a BestInvest SIPP might be well worth a look as the £120pa fee covers as many Vanguard trackers as you like and equity holdings. Sadly, they don't (yet?) let you buy individual gilts or corporate bonds, and neither does their online dealing let you buy some of the more exotic preference shares etc.

snowcat53

I spoke to Sippdeal today and they confirmed that you can buy Vanguard or other funds not in their list - the annual fee of £50 covers as many as you want to have.

For Alliance Trust, I haven't been able to locate on their website and documents which funds they get a discount on and how much it is, but they do rebate it all, which is good. They also say that most funds have no initial charge. So intend to phone to ask that so can compare likely costs between them and Sippdeal.

I am guessing Alliance may be long term cheaper if one did want funds that are not vanilla low cost trackers and have a larger holding (as you say jamesd).

Will take a look at Bestinvest too. What is their discount /rebate policy ?

jamesd

For AT it'd be nice to have confirmation from them that it really is all, not just the 0.5% IFA portion but also the 0.25-0.3% or so platform portion. Easy to see how a provider might neglect to mention still keeping the platform part.

snowcat53

AT -It looks pretty clear on the website & the pdf guide "We pay 100% of fund rebates received from fund managers back to your Select SIPP." And they say rebate is typically 0.5 to 0.75% on a 1.5% AMC fund. That is clearly their big plus.

Just looked at Bestinvest - by far the best website and info, not sure re the product yet. Looks similar on rebates to Sippdeal (up to 0.5%).

Also a question from what I have read - when buying a share tracker fund is the 0.5% SDRT payable ?

bowlhead99

snowcat53 wrote: »

Also a question from what I have read - when buying a share tracker fund is the 0.5% SDRT payable ?

It may vary by product. A couple of weeks ago I bought some Vanguard lifestrategy 100% (effectively a fund of tracker funds) within my Sippdeal SIPP. There was no direct SDRT to pay, but Vanguard have a 0.22% "dilution levy" for new subscriptions into this fund which they put towards dealing costs and SDRT etc within the fund when deploying the new investors' capital. It's not completely transparent how they justify that exact number, but it basically improves fund performance for the other existing investors who are just holding all year and not causing the fund to go out and buy more assets.

So on my contract note I had a £9.95 dealing fee and around £12 of dilution levy, meaning only around 99.635% of my £6k contribution went to buy units at their official price.

If I'd gone for Vangard's UK equity tracker, the initial cost would be the full 0.5% (representing SDRT). But if I'd bought their US tracker, which is also structured as a UK domiciled OEIC, the initial fee is zero - I presume because the US shares in the fund don't have stamp duties and they don't feel the need to collect an extra chunk of cash from new investors to preserve fund performance for existing ones. The Lifestrategy fund-of-funds (20% equity, 100% equity etc) end up with a different percentage one-time fee, depending on their blend of assets held. This initial charge isnt rebated to the platforms (as far as I know) so you probably get charged it with all providers. Although I read on here that HL for example simply scale up the unit price and you don't see it separately on the contract note.

I think the way this is dealt with works differently between different fund managers' trackers ; I was broadly happy with the overall charge from Vanguard so I didn't search exhaustively to try and get a lower fee from another house.

jamesd

For the UK equity tracker it's almost impossible for the full 0.5% to be for SDRT. That would imply no corresponding sales at all. And people do sell. It looks more like a scheme to pad and reduce the tracking error using a cross-subsidy from new investors to make their fund look better for more new investors who look at the tracking error.

Better to be charged an amount that represents the real cost of buying, whatever that is at the time.

bowlhead99

jamesd wrote: »

Better to be charged an amount that represents the real cost of buying, whatever that is at the time.

Good point, that would be a more transparent way of doing it and result in a worse performance for the fund as a whole, because there would be no 'free money' from new investors.

With this method, depending on how long you stay in the fund, you may be a net winner or loser from the new investor fees. I wonder how long it would take for such a fund to reach 100% investor turnover, if at all? At that point, you'd be a net winner. Certainly an admission charge shared between other investors as a dilution levy is better than having an unrebated initial management fee, but I take the point that it masks true performance - the bid to bid charts will look better, because they don't show the buy-in fee.

snowcat53

Following gadgetmind's suggestion I had a closer look at the Bestinvest SIPP. As I already said I am extremely impressed by their website - clearly laid out, with all information on funds, rebates and charges very accessible and clear.

The annual fee for holding Vanguard funds (or others they dont get a rebate from ) is 100 which is higher than Sippdeal (50) and there are various other charges higher than the other providers )altho no set up, transfer in, or annual charges). They also do not rebate all the commissions (but are very clear what it is for which fund)

However Bestinvest has some other big plus points compared with AllianceTrust and Sippdeal:
- no fee for fund purchase/sale
- no fee for online fund switching
- an Investment Advisory Service that offers a free portfolio review for those with more than £50,000 to invest.

So for those (like me) intending to hold mostly low cost tracker funds (where the rebate is not the important factor) Bestinvest looks a very strong contender. If you want to hold actively managed funds then AT may be better.

What is hard to assess of course is customer service - any views on any of these?