Taking advantage of the H&L Core Trackers

El_Torro

I have a pension from my previous employer and I'm thinking of tranferring it over to H&L as a Sipps pension. I know H&L aren't very popular on this forum due to their high charges but their trackers look pretty attractive for their low rates.

After having done a bit of research I plan to invest thusly:

Legal & General US Index Class C Acc - 24.83%
BlackRock Continental Euro Equity Tracker Class H Acc - 21.81%
Legal & General UK Index Class C Acc - 18.50%
BlackRock Pacific ex Japan Equity Tracker Class H Acc - 12.79%
BlackRock Japan Equity Tracker Class H Acc - 9.35%
Neptune Africa Fund Class C Accumulation - 6.49%
Aberdeen Latin American Equity Class I Acc - 6.23%

The total to invest is just under £40k.

The last two aren't trackers, I picked them cos I'd like to have some assets in those areas.

After doing some calculations based on where I have allocated the percentages, the annual management cost will be on average 0.13% for the fund and 0.45% for the platform (H&L). 0.68% total sounds good to me.

So does this look like a good idea? Are the funds I have chosen sensible? Would I be better off going to another platform?

Cheers.

grey_gym_sock

do you mean 0.23% average AMC (not 0.13%)?

you should really calculate average TER instead, which represents total costs more accurately.

you could pay a bit less with another SIPP provider - the fractionally cheaper "core" trackers won't fully compensate for the higher platform fee.

you could pay less with a personal personal than with a SIPP. however, while any PP would have equivalent trackers, i'm not sure whether they'd have latin american or (especially) african funds. if you're using a SIPP for the greater range of investments available, then that's a good reason.

the sort of amount you have in active funds (13%) is low enough to keep average costs low.

nothing very wrong with the overall allocations, except being 100% equities (and the spurious 2 decimal places precsion ).

masonic

You could use Snowman's spreadsheet to see for yourself how HL measures up to other platforms.

Since you're mostly investing in tracker funds with low charges, it follows that the platform charge is likely to be your biggest cost and savings on the platform charge are likely to outweigh savings on the fund management charges.

El_Torro

grey_gym_sock wrote: »

do you mean 0.23% average AMC (not 0.13%)?

Oh yes, silly me! The Latin American and African funds skew it heavily.

grey_gym_sock wrote: »

you should really calculate average TER instead, which represents total costs more accurately.

I quickly googled TER and I guess you mean the total cost. 0.68% is the total cost, there is no cost to buy or sell these funds.

grey_gym_sock wrote: »

nothing very wrong with the overall allocations, except being 100% equities (and the spurious 2 decimal places precsion ).

Every decimal point counts!

Is there a problem with having it 100% in equities? I had a property fund in my previous work pension but got rid of it because it just doesn't seem as good as equities in the long run. I'm not too keen on bonds or money markets either. I have 34 years til I retire so equities just seems like the best bet in the long run.

masonic wrote: »

You could use Snowman's spreadsheet to see for yourself how HL measures up to other platforms.

Thanks, that's pretty handy. If I'm using it correctly it looks like I could get as low as 0.25% on the platform charge. I just have to check to see if the cheaper options give the trackers I'm after or equally cheap equivalents.

masonic

El_Torro wrote: »

I quickly googled TER and I guess you mean the total cost. 0.68% is the total cost, there is no cost to buy or sell these funds.

Not quite. Looking at the HL core trackers shown here, you'll see there is a separate column for "Fund manager's other expenses". The AMC + other expenses = TER (or ongoing charges figure (OCF) more recently). It's important look compare TER/OCF because these "other expenses" can vary quite a bit between funds and even different classes of the same fund.

grey_gym_sock

El_Torro wrote: »

Is there a problem with having it 100% in equities? I had a property fund in my previous work pension but got rid of it because it just doesn't seem as good as equities in the long run. I'm not too keen on bonds or money markets either. I have 34 years til I retire so equities just seems like the best bet in the long run.

well, arguably 34 years is long enough for 100% equities. the counter-argument is that adding a small percentage of another (lower return) asset class only reduces your expected returns slightly, but provides some protection against worst-case outcomes.

that said, i'm nearer retirement than you, and i have 80% equities, 20% property in my pension. i may persuade myself to buy some bonds at some point. property seems to give only slightly lower returns than equities in the long run, and provides some diversification.