Why has a Nationwide adviser recommended these?

Imnoexpert_2

My sister against all my advice uses the Nationwide as a financial adviser. It makes sense for her to invest in Stocks and Shares Isas - that I don't dispute. They charge her 3% up front for their advice - I've told her that she could do better but if she's happy.... Ido though try to fathom out their choice of funds (let's assume the asset allocation is appropriate).

They have chosen as additions to the pot

Fidelity Strategic Bond - A well known manager, an average performance
Aberdeen World Equity - An average performance, no great accolades
Kames High Yield Bond- I hadn't heard of the company - the results aren't great (other than over 5 years) and the new manager who has no track record joined them in September

I wouldn't have chosen any of these. Can anyone help me fathom out how these choices are made. I'm not saying they are wrong - I can't predict the future and as my name suggests I'm no expert.

jimjames

Their commission? The only funds on their list? Her choices for risk?

If she is happy to pay their commission despite you trying to help, I'd leave well alone

grizzly1911

Match her ATR?

Relatively low volatility, income and provision of a worldwide spread?

Kames High Yield was recommended (by an IFA) for a relative of mine, looking for high income, in a mid risk portfolio.

Bonds haven't had a good 12 months in some cases.

Linton

The strategy seems basic but not unreasonable to me, though it depends on the proportions. We have a global equity fund and a couple of bond funds. The strategic fund will move between bond sectors choosing appropriate ones for the market conditions. Not a bad idea at the moment. The Kames fund invests in higher risk corporate bonds which should behave more like an equity fund than a gilt fund and is one of the better performers in its sector. Again perhaps sensible given the over high bond valuations elsewhere.

So it looks to me like a run of the mill global fund diversified with bond funds chosen to try to minimise problems when the safe bonds fall from their current high valuation. In terms of bond funds I would consider doing samething similar in my unadventurous SIPP portfolio.

I cant see why they have chosen the Aberdeen fund. It has performed below average over the past 5 years although this may be because it is less volatile than some,. The geographic allocation seems a little odd with Switzerland being the third largest country, though it seems to have a well balanced industry allocation.

Whether 3% is excessive for something pretty basic depends on the size of her portfolio. 3% of £5K is very reasonable, 3% of £100K isnt in my view. You say this is an addition, one really needs to see the full picture before making any firm judgements, though the additions look to me more like a complete small portfolio. I cant quite see how the addition of the Aberdeen fund would improve an existing portfolio.