Virgin S&S ISA - worth switching?

Seamonster_2

I've come up with a plan of sorts - any views on the feasibility of it would be welcome.

Assuming they will accept my Virgin shares (I've just got rid of the Climate Change holding and now only have the All Share Tracker), I first re-register them with Cavendish. I will then be free to choose another fund with Cavendish (eg. HSBC FTSE All Share tracker), into which I may make regular monthly payments. The Virgin shares would effectively lie dormant with Cavendish, and I would enjoy lower management charges than currently.

I also assume that I may not begin to pay into a new Cavendish ISA until April as I have been making payments into the Virgin one during this financial year; however I may carry out the ISA transfer any time.

Does the above sound correct?

Doshwaster

I switched from a long standing Virgin S&S ISA to HL last year and it's the best thing I've done, financially, in ages.

In the early years the Virgin ISA was great as it was easy to understand for a novice but over the years, the charges had mounted up and I wanted to become more of an active investor.

I was up over 10% last year (would have been even more apart from one dog fund dragging the portfolio down) so I'm very happy.

jimjames

Seamonster wrote: »

I've come up with a plan of sorts - any views on the feasibility of it would be welcome.

Assuming they will accept my Virgin shares (I've just got rid of the Climate Change holding and now only have the All Share Tracker), I first re-register them with Cavendish. I will then be free to choose another fund with Cavendish (eg. HSBC FTSE All Share tracker), into which I may make regular monthly payments. The Virgin shares would effectively lie dormant with Cavendish, and I would enjoy lower management charges than currently.

I also assume that I may not begin to pay into a new Cavendish ISA until April as I have been making payments into the Virgin one during this financial year; however I may carry out the ISA transfer any time.

Does the above sound correct?

Unfortunately the plan has a couple of flaws.

1) The management charge is set by Virgin so holding via Cavendish would not be any cheaper. Leaving the current investment dormant would not give you any advantages.

2) You transfer the ISA to Cavendish so once transferred you can carry on paying into it up to the limits. The only restriction is that you have to move the entire current year ISA to the new provider, you cannot move part of it.

I think your best option is to move the ISA as cash and then buy the funds once the cash gets to Cavendish. YOu can set the funds you want to buy on the transfer form which will minimise the time out of the market. I personally would ditch Virgin ASAP to get a cheaper tracker and benefit from the reduced charges as quickly as I could.

pqrdef

Seamonster wrote: »

I also assume that I may not begin to pay into a new Cavendish ISA until April as I have been making payments into the Virgin one during this financial year; however I may carry out the ISA transfer any time.

Don't pay any money into the new ISA until you're told the transfer is complete. At that point, the Cavendish ISA will have become your ISA for this tax year (your contribution record will have been transferred, as well as the funds) and you can start making payments into it.

You can sell the Virgin units and buy something else at any time. They're income shares, so you might want to wait for a distribution. You'll have to tell Cavendish how you want income disposed of - paid away, or held in cash, or automatically reinvested if they offer that.

Doshwaster

I'd also ditch the Virgin Tracker too, even if it means selling at a loss, as there are many better and cheaper ones out there. Look at something like the HSBC FTSE 250 tracker (up 26% last year)

Robert99

I think it is worth looking closely at the transfer/switch process.

Cash transfer
If you sell your Virgin assets and transfer the cash across to Fundsnetwork then it is quick. You can also specify the funds you want to purchase on Fundsnetwork that you will normally buy without any initial charge. You are 'out of the market' for a bit and you could lose or gain in this period.

Stock transfer
The assets are moved across to Fundsnetwork and then you switch. This normally takes longer and things can go wrong (especially if you have reinvestment of income going on). However, you are not out of the market. What I don't know and it worth checking with Cavendish is whether there is actually a switch fee because the Fundsnetwork terms and conditions they have says there is (http://www.cavendishonline.co.uk/index.php/download_file/view/339/212/ on page 4). I don't know if anybody can confirm whether this applies.

However, I would be very clear to stop your regular savings before you start the transfer process to stop things going wrong.

donniej

As Robert99 said, there are 2 types of transfer - one where the funds are sold on the original platform, transferred as cash to the new platform, then bought again on the new platform (aka cash transfer); and another where the ownership of the funds is changed (aka re-registration). In both cases, your money stays within the ISA, so you don't lose out on your ISA allowances.

I can't think of any providers that don't offer cash transfers, so at the worst you could do a cash transfer over from Virgin to another provider (e.g. Cavendish, HL, or anyone else - there are other options out there, some better , though none cheaper than Cavendish.) With a cash transfer, you will be out of the market for a bit, this could go in your favour or against you depending on the market movements over the period. If both Virgin and your new provider support re-registrations, then you don't have to be out of the market at all. Some providers charge for transferring out, but none charge for transferring in - so it's worth checking whether Virgin would charge you for that.

As others have said, if you aren't happy with the performance, it may be worth switching funds. Trackers are a good option because they're cheap and you know what you are getting (i.e. performance very close to an index such as the FTSE 100.) With active funds you can beat the index, but you can also do worse.

Seamonster_2

Just to provide an update to this...

I decided to bite the bullet and cash in the Virgin holding. I applied to Cavendish for an ISA transfer, asking them to sell the Virgin shares and re-invest the cash in four of their funds, all trackers.

Painful to accept losses on the Virgin shares, but hopefully the right long-term decision.