Best Stakeholder Pension for 5yr old?

TrickyTrotter_2

I know he won't thank me for it for another 50years, but I've decided to take out a stakeholder pension for my 5 yr old. Probably put in £20 a month.

Anyone suggest a good provider for this scenario?

dunstonh

Obviously, what you want is advice and that cannot be given here like this without falling foul of the FSA guidelines. However, if you want a provider to investigate in your research...

.. Norwich Union, Clerical Medical or Legal and General as they reduce the fund charge on high balances. The balance wont be high for many many years but it will be at some point.

However, you could argue that any provider would be ok really because you cant tell what the stakeholder pension would look like in 10 years time and what the rules applying to it are and providers can alter their terms how they like within the stakeholder rules.

mutley74

go for a SIPP if i was you, and inves the money in a multi manager fund. good example is HL Multi manager funds.

Pal

If you want to choose the assets (e.g. stocks and shares) but do not want to choose and keep reviewing an active investment manager then I suggest an equity tracker fund, in which case someone like L&G would do you fine.

If you want the money actively managed then I agree with Chipz, you should use a multimanager fund (also often called "manager of manager" or "fund of funds"). These are funds where another company of experts chooses the managers for the fund and switches the money to another manager if the existing one starts underperforming.

Don't bother with a SIPP though. You do not need a SIPP just to invest in a multi-manager fund. A normal personal pension will do the job fine and the fees are likely to be cheaper as you do not need the SIPP facilities to carry out your own trading.

I would recommend anyone to use a multimanager fund rather than choose their own active funds, simply because you are paying an expert to choose your funds rather than relying on blind luck (or worse, part performance) by choosing them yourself.

dunstonh

I'm not a big fan of multi manager funds.

I know that most of them dont have much of a track record but they arent exactly setting the world on fire with the rate of return. In addtion the asset allocation spread may not be to your liking. The idea is sound in theory and is a lazy person's way to invest but I prefer to select the funds to build my own portfolio in the recommendations. However, i use investment goals/risk assesment software to build the correct asset allocation and recommend funds based on that. So its probably no surprise that i dont use multimanager funds much.

To be honest though at £20pm, I would probably recommend a multimanger fund because i couldnt justify the the time to prepare the report on just a £20 premium ;D

mutley74

HL dont charge any fees for a SIPP, unless you invest in shares then you will pay the share dealing charges.
HL may allow a £20/mth ina fund if you ask them, but dont know many providers who take a £20 for UTs/OIECS.

A multimanager fund means that you get the best from a selection of good fund managers, rather than taking chances with just 1 fund manager. I like them, and see better returns at lower risk than some funds.
I find trackers boring...to much instability and no active management, less chance for growth.

dunstonh

A multimanager fund means that you get the best from a selection of good fund managers, rather than taking chances with just 1 fund manager. I like them, and see better returns at lower risk than some funds.

Or to modify your quote.

It means you get a selection of external fund managers covering different areas within one fund.

Whether it is the best is a different matter.

Also, you can still pick different managers of individual funds with many pension providers. Therefore creating your own multi manager fund.

Pal

How do HL make their money on SIPPS then? Presumably a commission kickback? Bid/offer spreads on the underlying funds?

I would only suggest using multimanager funds within a specific asset class. You still need to choose a range of different asset classes to match your profile.

The key advantages are that it allows a small portfolio to be invested across two or three specialist managers within each asset class and that you have a professional looking after the choice of managers for you. This removes a huge element of luck.

Most of these funds have only been around a few years so past performance statistics are still largely a reflection of random market movements, but given that the theory is sound, I would rather have a professional choosing my funds than do it myself (or worse, use a past performance jockey IFA. )

At the very least if the performance was bad I could legitimately blame the multimanager instead of my own misinformed choices! ;D

dunstonh

You are not getting a professional choose your funds with a multi manager fund. You are getting an insurance company giving you a fund made up of companies that it has negotiated terms with. Who says that they are the best companies?

Pal

As I was beginning to suspect, we are talking about different things then.

I am talking about manager of manager funds, such as those run by Northern Trust, Frank Russell, Escher Asset Management and so on. All of these are funds where the money is pooled and invested with specialist managers chosen by the MoM company. They review the managers and hire & fire them as required to try and obtain top performance.

What you are describing is effectively a balanced fund, which IMO is to be avoided.

mutley74

How do HL make their money on SIPPS then?  Presumably a commission kickback?  Bid/offer spreads on the underlying funds?

I have a SIPP, and they make their money from the renewal commision on funds, but they have high charges if deal outside UT/OEICS. They dont share the renewal commission in SIPPs back, but they do with ISAs.