Stocks & Shares ISAs

dunstonh

Thanks all, I would prefer two different stocks and shares ISAs just to spread/diversify risk.

How would it diversify risk?   Especially if you pick the same investments in both.

Whole of market ISA platforms are just software administrators. You are not investing in the ISA platform.  You are investing in the funds you select.   If you want to diversify fund houses, then pick two different ones in the same ISA.   There is no point making your life more difficult unnecessarily.

RoadToRiches

dunstonh said:

The question of why you want 2 ISA managers is pertinent.  

FSCS protection?

masonic

RoadToRiches said:

dunstonh said:

The question of why you want 2 ISA managers is pertinent.  

FSCS protection?

The assets are ring-fenced, so it is not like saving money with a bank where your money is gone if the bank fails. FSCS protection does come into play for administrators' fees, but the fee per investor is relatively small and in previous broker failures has been capped well below the FSCS limit. Providing you stick with large mainstream providers (and mainstream investments), the risk is infinitesimal - likely far lower than the investment risk you'll be taking on within your S&S ISA. Split your ISA up and you make it more likely you'll have to suffer the inconvenience and admin associated with a platform failure. The more accounts you hold, the more likely you'll end up having to compromise on quality and pick a provider with a higher risk of failure.

The most recent UK investment provider to fail was SVS Securities, an obscure broker that was involved in a dodgy carbon credit trading scam and VAT fraud. When the FCA shut it down, investors were eventually charged no more than ~£15k each and this was paid directly from FSCS to the administrators. Prior to that, Beaufort fees were capped at £10k per investor I believe. These were both small providers with a complex service offering, so the cost per investor was very high.

Dravid1

Thanks all, I take your points about the platform provider being less risky than the actual funds invested in. I am definitely planning to go with large, mainstream platform provider(s). 

Springbankmp

masonic said:

Nardge said:

Good Morning,

A few years ago I made my first venture onto this thread and following the useful guidance have now invested £60,000 with Vanguard Life Strategy (75% in the 80 % Equities, 25% in the 100% Equities). 

I intend to keep investing in 'global-index trackers', but recall reading that £50,000 was about the right amount to invest with the above and perhaps other platforms, as for larger amounts, cheaper platforms existed...

If you are investing direct with Vanguard then the annual platform fee for investments valued at £50k would be £75 per year. However, if you are investing at Hargreaves Lansdown you'd be paying three times that, £225 per year.

Charges vary from time to time and it is unlikely that the break-even point for a fixed fee provider will be in the same place now as it was a few years ago. For example. iWeb now has a £100 account opening fee, and Interactive Investor has a different pricing model.

You may be able to realise a saving with some providers by building a DIY version of Vanguard Life Strategy using Vanguard (or other) ETFs to take advantage of fee caps.

The other factor to consider is that your current platform may not charge you anything to buy and sell funds, while fixed fee providers invariably do.

Not sure if I'm missing something re charges - agreed HL charges are higher than say AJ Bell (0.45% vs 0.25%), but looking further I see taking Lindsell Train Global Equity as an example, the annual charge is 1.15% with AJ Bell vs 0.5% with HL. Net result HL 0.95% vs AJ Bell 1.4%.  Am I making the correct comparisons here?  I appreciate the fund charges vary between each fund so this may not always be the case but should we be considering the total management fees, not just the platform managers?

grumiofoundation

Springbankmp said:

masonic said:

Nardge said:

Good Morning,

A few years ago I made my first venture onto this thread and following the useful guidance have now invested £60,000 with Vanguard Life Strategy (75% in the 80 % Equities, 25% in the 100% Equities). 

I intend to keep investing in 'global-index trackers', but recall reading that £50,000 was about the right amount to invest with the above and perhaps other platforms, as for larger amounts, cheaper platforms existed...

If you are investing direct with Vanguard then the annual platform fee for investments valued at £50k would be £75 per year. However, if you are investing at Hargreaves Lansdown you'd be paying three times that, £225 per year.

Charges vary from time to time and it is unlikely that the break-even point for a fixed fee provider will be in the same place now as it was a few years ago. For example. iWeb now has a £100 account opening fee, and Interactive Investor has a different pricing model.

You may be able to realise a saving with some providers by building a DIY version of Vanguard Life Strategy using Vanguard (or other) ETFs to take advantage of fee caps.

The other factor to consider is that your current platform may not charge you anything to buy and sell funds, while fixed fee providers invariably do.

Not sure if I'm missing something re charges - agreed HL charges are higher than say AJ Bell (0.45% vs 0.25%), but looking further I see taking Lindsell Train Global Equity as an example, the annual charge is 1.15% with AJ Bell vs 0.5% with HL. Net result HL 0.95% vs AJ Bell 1.4%.  Am I making the correct comparisons here?  I appreciate the fund charges vary between each fund so this may not always be the case but should we be considering the total management fees, not just the platform managers?

Yes in principle. But as you say need to look across all funds. 

But in this case looks like 0.65% on AJ bell as well, so still cheaper (0.65 + 25% versus 0.5% + 0.45%). Although also factor in AJ bell charges 1.50 for fund dealing.

 https://www.youinvest.co.uk/market-research/FUND:B3NS4D2

masonic

Springbankmp said:

masonic said:

Nardge said:

Good Morning,

A few years ago I made my first venture onto this thread and following the useful guidance have now invested £60,000 with Vanguard Life Strategy (75% in the 80 % Equities, 25% in the 100% Equities). 

I intend to keep investing in 'global-index trackers', but recall reading that £50,000 was about the right amount to invest with the above and perhaps other platforms, as for larger amounts, cheaper platforms existed...

If you are investing direct with Vanguard then the annual platform fee for investments valued at £50k would be £75 per year. However, if you are investing at Hargreaves Lansdown you'd be paying three times that, £225 per year.

Charges vary from time to time and it is unlikely that the break-even point for a fixed fee provider will be in the same place now as it was a few years ago. For example. iWeb now has a £100 account opening fee, and Interactive Investor has a different pricing model.

You may be able to realise a saving with some providers by building a DIY version of Vanguard Life Strategy using Vanguard (or other) ETFs to take advantage of fee caps.

The other factor to consider is that your current platform may not charge you anything to buy and sell funds, while fixed fee providers invariably do.

Not sure if I'm missing something re charges - agreed HL charges are higher than say AJ Bell (0.45% vs 0.25%), but looking further I see taking Lindsell Train Global Equity as an example, the annual charge is 1.15% with AJ Bell vs 0.5% with HL. Net result HL 0.95% vs AJ Bell 1.4%.  Am I making the correct comparisons here?  I appreciate the fund charges vary between each fund so this may not always be the case but should we be considering the total management fees, not just the platform managers?

Yes, special discounts will narrow the gap, but those are only offered for a select few funds (and not any from Vanguard). It would be ill-advised to be gravitate towards the very limited number of funds attracting a HL discount if it is not something you'd otherwise invest in. The above example was a comparison between Vanguard and HL when holding Vanguard LifeStrategy. It should not be generalised to all platforms and funds where other factors may come in to play. Someone with £60k to invest at HL or AJ Bell could save even more money by holding a portfolio of investment trusts and ETFs and benefit from the cap on platform charges (£45 pa at HL and £42 pa at AJ Bell).

moorster

I wonder if anyone can tell me whether the fact that my (cautious) stocks and shares ISA has dropped by about 7.5% from Dec 2021 to May 2022 reflects what would be expected or whether it suggests the fund managers have taken their eye off the ball. I have a financial advisor who should have an overview on things, but I feel like I need to check. Thanks.

eskbanker

moorster said:

I wonder if anyone can tell me whether the fact that my (cautious) stocks and shares ISA has dropped by about 7.5% from Dec 2021 to May 2022 reflects what would be expected or whether it suggests the fund managers have taken their eye off the ball. I have a financial advisor who should have an overview on things, but I feel like I need to check. Thanks.

If you're paying a financial advisor then they are the obvious place to ask, rather than anonymous strangers on the internet, but -7.5% doesn't seem unreasonable in declining markets where much more substantial losses have been incurred by those further up the risk scale.

If you post more detail of what you're actually invested in then posters can comment on whether they'd agree it's suitable for a cautious portfolio, although obviously nobody on here will have the level of information that you'd have supplied to your adviser when starting off....

masonic

moorster said:

I wonder if anyone can tell me whether the fact that my (cautious) stocks and shares ISA has dropped by about 7.5% from Dec 2021 to May 2022 reflects what would be expected or whether it suggests the fund managers have taken their eye off the ball. I have a financial advisor who should have an overview on things, but I feel like I need to check. Thanks.

Sounds reasonable for a cautious allocation. Perversely, lower risk portfolios have tended to fall further than higher risk ones driven mainly by a sharp and unexpected rise in interest rates. This is going to be self limiting and doesn't impact the income stream from the lower risk investments. In fact, it is the general increase in bond yields that has caused existing bond prices to fall, so looking ahead the income stream is more attractive.