Changing my investment strategy -this a good idea?

^opm^

Hi,

At moment i have a substantial pot off money invested via bestinvest select service in a multi asset fund with a total TER of 2.29% altho i do currently get a rebate of 0.25% so this brings it to a total TER of 2.04%.

Mulling over idea of moving money around so that 25% is invested in a vanguard lifestyle fund, thought the 60% shares/40% bonds would suit me as i'm 42 and wont work past 55 at very latest.

With the other 75% i was gong to swap it into their investment management service which has a slightly lower TER of 1.95%, but they still do all decisions about what funds to buy, when to buy etc.

Does this sound a good re-balancing act for my money or should i maybe go to a higher percentage in vanguard then 25%?

I know that investing into a vanguard fund via bestinvest will cost me a custody fee of £60 a year but it proportion to investment size its neither here nor there.

As a last point on bestinvest site comparing the funds together where i am invested now and to the vanguard 60/40 in a rising market the vanguard did better but in a falling market the bestinvest fund did better although i can only compare over a short period of time as vanguard ain't been out long.

So idea's, discussions etc please

Is bestinvest the best or easiest place to do my vanguard through if that's way to go?

JohnRo

I've fallen out with BI, I just don't like the website, the account info they provide, which can change, and they're slow to deal in my experience.

Costs...

£60 annual custody charge for Vanguard with Best Invest.

Cheapest for small amounts (afaik) is 0.25%pa with Charles Stanley

If you're investing anything over £24,000 in a single Vanguard fund it's cheaper with BI versus CS.

But in that case there's a cheaper cost option for higher amounts in a single Vanguard fund portfolio using HL @ £24pa

bowlhead99

I haven't used Bestinvest but if you say £60 p.a. is no big deal in the scheme of things then it probably doesn't matter if you use them, or sippdeal at £50 plus a dealing fee, or H-L at £24pa (currently) or whomever. If you're investing at the level that an additional flat £60 a year on a fund with TER of a fraction of a percent is inconsequential, it's likely that a 0.25% at Charles Stanley or a 0.35% at TD Direct would be more expensive for you. For much smaller amounts as JohnRo suggests it would make sense to go with a percentage based fee.

But you have the hassle of switching, and being out of the market for even a day can make or lose you half a percent if the last week or two is anything to go by.

In terms of whether to put more or less of your eggs in the Vanguard basket, it depends what you want to hold. It is a basket of index funds and very transparent about what proportions will be in what indexes. It's cheap and you get what you pay for (i.e. virtually nothing) in terms of market-beating potential - you get what it says on the tin. Whether the best way to access all global markets is through indexes is up for debate but this thread is probably not the best place for it. Personally I wouldn't use the 40% bond flavour as I think the bond element can be better serviced in this environment by a strategic bond fund manager (or picking my own choice of active manager in different bond sectors), and the equity indexes are not quite as wide vs the 100% version.

There is a huge Vanguard lifestrategy thread, of which some is garbage and some better if you have the time to go through it from beginning to end. But basically, a multi-manager multiasset fund is going to be more expensive but you can see what asset classes it covers and which managers it uses, and likewise you can see what broad indexes (of bonds and largecap equities) the Vanguard covers, so the only person that can decide if that works for you, is you.

Doesn't seem to be any reason the Vanguard could not have a place in your portfolio but whether you would miss anything covered by your multiasset fund in the next x years, is unknown. The only thing you can say is that if the multiasset fund did better in an up or down market you would regret moving and if the vanguard fund did better in an up or down market you would be happy to have moved. We don't know what market we are going to get next week or next year. On that basis a broad selection of global asset classes seems sensible; the Vanguard has some of them and I don't know what your existing fund has.

redbuzzard

Is the managed service really going to be 1.95% all up? It will depend on the AMCs of what they invest in plus their fees?

Pal of mine is using HL for that. They charge 1% up front and 0.35% pa IIRC, plus VAT. His other costs are the same as DIY I think.

dunstonh

Pal of mine is using HL for that. They charge 1% up front and 0.35% pa IIRC, plus VAT. His other costs are the same as DIY I think.

In theory, the "other" costs should be cheaper because they would be clean class. DIY hasnt got the advice charge but it does have a retail cost. I dont know if they use clean or not. They should do (or rebate the full amount if they dont).

redbuzzard

dunstonh wrote: »

In theory, the "other" costs should be cheaper because they would be clean class. DIY hasnt got the advice charge but it does have a retail cost. I dont know if they use clean or not. They should do (or rebate the full amount if they dont).

I don't know whether they are, or not. But at 0.35% p.a. managed, that would make the ongoing management free wouldn't it? The commissions/platform charges for DIY must be in the order of 0.35%?

Apology to OP for drift. I was trying to tease out some sort of benchmark.

EDIT: Another friend has just moved from Towry. He told me they had his trousers off as well as the shirt off his back! I've just looked at the charges which they publish as 1.5% up front (dropping to 1% >£250k) and annual charge starts at 2% p.a. on the first £200k. So that's not going to come in at 1.95% all up for sure!

^opm^

To answer a few questions-

If i invested 25% of my total fund into a vanguard it would be about 45k so in relation its easier to stay with bestinvest at £60 then mess about just to save less then £40.

They have told me that the managed service is 1.95% this is made up of 1% plus vat management charge plus about 0.75% fund charge making 1.95% total.

In relation to where my money is invested now, its mixed like this -

equity 68%
high yield bonds 8%
quality bonds 7%
property 2%
commodities 3%
hedge 7%
cash 5%

placed in these proportions

uk 44%
europe 13%
N. america 18%
japan 8%
pacific 12%
other 5%

and size wise like this

large caps 68%
mid caps 21%
small caps 11%

Basically as they say most managers fail to beat the index they say over time so i was thinking should i cut a few costs by investing a proportion in a low cost fund like the vanguard lifestyle to help cut a few costs but still leaving the majority in a managed fund?

robtgossard

Do you have some tangible assets in your portfolio, like real estate, physical gold bullion or other commodity? Supplementing your portfolio with investments other than stock and bond holdings can help guard your overall investments from a sudden plummet in the stock market.

atush

I have to say, with more than 10 years to a very early retirement at 55 (and when you might use DD over annuities?) that the 60/40 fund is a bit conservative. I would have thought 80/20.

but then again, you haven't said/don't know what your other 75% will be in and if there are no bonds in that, it isn't too conservative.

Glen_Clark

^opm^ wrote: »

If i invested 25% of my total fund into a vanguard it would be about 45k

Vanguard funds are already very well diversified, so why not invest 60% plus - with over £100k you can invest with Vanguard direct - no middlemen

gadgetmind

2% is a massively ridiculous level of fees that is going to seriously impact your long term returns. You need to either DIY and get the fees right down or pay an IFA to get them at least a big lower than they are now.

The latter is easier post RDR but the former is still mired in doubt and complexity, which I personally find rather frustrating.