Financial Advisor

doubleJackD

dunstonh wrote: »

My goodness, I think he may be getting it.

but the average consumer appaears to think that IFAs recommend most financial products. Just look at JamesD, he seems shocked that IFAs largely only recommend UTs.

dunstonh

doubleJackD wrote: »

but the average consumer appaears to think that IFAs recommend most financial products. Just look at JamesD, he seems shocked that IFAs largely only recommend UTs.

IFAs can and do recommend most financial products. However, most financial products are not suitable for the average consumer and are easily eliminated on the grounds of suitability.

These are the same average consumer who is cautious in risk, low in knowledge and requires consumer protection of regulated products covered by the FSCS who would likely complain if they didnt get that. So, why do you think these average consumers should have non-regulated investments they dont understand with no consumer protection or FSCS coverage?

Where is jamesd shocked?

saveonarola

gadgetmind wrote: »

I don't have a problem with portfolio funds, nor with the asset allocation being tactically managed, and not even with them being a fund of funds. In fact, I hold one such fund myself, but the TER is 0.5% showing that such management can be done for a reasonable cost.

Just out of interest, what fund is that?

gadgetmind

jamesd wrote: »

I'd like to see more people here posting about ITs. I think they can be quite interesting options sometimes, provided it's not just claims that they are cheaper but forgetting the extra costs.

Interestingly, quite a few ITs have recently increased their TER slightly but dropped performance fees. I guess this is part of preparing for RDR.

I don't mind extra costs to get higher returns and some ITs deliver.

I mainly use close-ended funds for anything that's illiquid and/or harder to value. So, trackers for anything large and liquid, and then REITs for property, the likes of HICL for infrastructure, RIT for private equity, and Templeton Emerging and Scottish Oriental Smaller Companies because they seemed like a good idea at the time!

I also occasionally pick up ITs that seem to be on unjustifiably large discounts. I did this with JEO and HEFT earlier this year and recently sold as the discounts had closed and their NAVs had also risen.

gadgetmind

saveonarola wrote: »

Just out of interest, what fund is that?

It's the Friend's Life "Balanced Index Enhanced Fund of Funds". It's a trifle UK-heavy for my liking, so I also hold a Blackrock Global tracker alongside, and I've added an active emerging market fund but the latter is being watched very closely to make sure it's justifying its rather hefty TER.

saveonarola

gadgetmind wrote: »

It's the Friend's Life "Balanced Index Enhanced Fund of Funds". It's a trifle UK-heavy for my liking, so I also hold a Blackrock Global tracker alongside, and I've added an active emerging market fund but the latter is being watched very closely to make sure it's justifying its rather hefty TER.

Interesting. First time I've heard of this fund. Looks like a good solution if you want a blended index fund with a bit of active asset allocation (although personally I regard that as a bit of a paradoxical strategy!). But you're not paying much for the management, so I suppose it doesn't hurt too much to roll the dice. The factsheet has 'indicative net charge' of 1%, so I assume your 0.5% TER includes rebate of trail commission?

BTW, I do think you should have mentioned in your first post that it was a fund of index funds, because someone could easily have got the impression that you had a fund of managed funds for a 0.5% TER. That wouldn't buy the managers many yachts!

jamesd

gadgetmind wrote: »

Interestingly, quite a few ITs have recently increased their TER slightly but dropped performance fees. I guess this is part of preparing for RDR.

The AIC members also decided to hide their TERs by ceasing to publish them. That'll presumably help to hide those performance fees.

gadgetmind wrote: »

I mainly use close-ended funds for anything that's illiquid and/or harder to value.

I think that can be a good approach.

I was particularly unimpressed by forcing sale at the bottom of the market for all holders of the New Star Out of Africa Fund. Exactly what those investing in that should have known about and tried to avoid, so the FSA forced it on them anyway. With "helpful" regulators like that who needs bad managers to cause losses!?

doubleJackD wrote: »

Just look at JamesD, he seems shocked that IFAs largely only recommend UTs.

I know that IFAs were generally prohibited by regulation from recommending ITs and shares, because those were covered by the stock broker authorisation instead. I'm not in the least shocked by regulations I've known about for years.

doubleJackD wrote: »

All very valid points, but you've still not made clear if you are paid to post on here?

If MSE was to choose to pay people to reply here that'd be fine IMO. I won't be surprised at all if that's why we have a section for CAB now. We certainly do already have some people posting here who are paid to do so, an assortment of company reps.

JamesU

jamesd wrote: »

The AIT members also decided to hide their TERs by ceasing to publish them. That'll presumably help to hide those performance fees.

What does AIT stand for Jamesd? I notice the AIC has differentiated "ongoing charges" from ongoing charges + performance fees, is this what you are referring to?

JamesU

gadgetmind

saveonarola wrote: »

Looks like a good solution if you want a blended index fund with a bit of active asset allocation (although personally I regard that as a bit of a paradoxical strategy!).

It doesn't tend to tactically under/over weight by any massive amount, but is currently very light on gilts, which suits me. It also uses passive for liquid markets and active elsewhere, which again makes sense.

I'm not sure about "paradoxical" - this is a mainstream investment approach of having passive core and active satellites.

But you're not paying much for the management, so I suppose it doesn't hurt too much to roll the dice. The factsheet has 'indicative net charge' of 1%, so I assume your 0.5% TER includes rebate of trail commission?

It's performed well over a variety of timeframes, I only pay 0.5% in my GPP as that's what we negotiated, and I'm not prepared to pay additional fees for externally managed funds other than for specialised areas.

BTW, I do think you should have mentioned in your first post that it was a fund of index funds, because someone could easily have got the impression that you had a fund of managed funds for a 0.5% TER. That wouldn't buy the managers many yachts!

Not all the components are passive index funds, just where it makes sense, which happens to be nearly everywhere.

As for yachts, I fear that my past use of high-fee active funds has probably already bought them one or two.

saveonarola

gadgetmind wrote: »

It doesn't tend to tactically under/over weight by any massive amount, but is currently very light on gilts, which suits me. It also uses passive for liquid markets and active elsewhere, which again makes sense.

A-ha - I hadn't picked up that the emerging markets fund was actively managed.

I'm not sure about "paradoxical" - this is a mainstream investment approach of having passive core and active satellites.

When I said 'paradoxical', I just meant the idea of paying someone to guess about asset allocations of your passive funds, but mea culpa: any equities/bonds asset allocation is a guess, if I understand correctly, so why not, especially if you know their strategy and are comfortable with it, and you're only paying a smidgen more than, say, a LifeStrategy fund, for what looks like a slightly wider range of investments (international bonds and an actively managed EM fund). Actually, it's a very interesting looking fund, but it sounds like there's a catch (large minimum? very limited range of platforms?). Good deal, though.

EDIT: When I say 'guess', obviously I just mean in the sense that the future is unknowable. Of course, you can model historical volatility based on different asset allocations and extrapolate into the future.