Most cost effective SIPP for UK/US index trackers?

_CC_

Hi all

I am look to set up a SIPP with simple UK and US index tracker funds, which I'll be making monthly contributions to.

Does anyone have recommendations on a pension company and funds which will offer me a low annual charge for the above?

I had a quick look at Aviva before and I think it had ~0.4% charge for them as the pension provider, and then any charge of the index trackers, so potentially around 1% in total annual charges which seems high, but unsure if unreasonable compared to others?

Thanks

dunstonh

I am look to set up a SIPP with simple UK and US index tracker funds, which I'll be making monthly contributions to.

That wont be very good diversification. Where are you Japanese, Asia, European, Emerging Mkts etc?

Does anyone have recommendations on a pension company and funds which will offer me a low annual charge for the above?

Most of them meet your criteria. However, do remember that cheapest tracker does not mean it is the best tracker as a more expensive tracker could have a better tracking error. You cannot measure by cost alone.

had a quick look at Aviva before and I think it had ~0.4% charge for them as the pension provider, and then any charge of the index trackers, so potentially around 1% in total annual charges which seems high, but unsure if unreasonable compared to others?

Depends on which Aviva product you are using but 0.4% total is possible.

_CC_

dunstonh wrote: »

That wont be very good diversification. Where are you Japanese, Asia, European, Emerging Mkts etc?

FTSE revenues and earnings for a large part come from over-seas, especially Europe. I may hold a smaller portion in something like a Pacific fund (I do the same in my ISA), but I'd be more than comfortable with it mostly being in UK/US indexes.

dunstonh wrote: »

Most of them meet your criteria. However, do remember that cheapest tracker does not mean it is the best tracker as a more expensive tracker could have a better tracking error. You cannot measure by cost alone.

Depends on which Aviva product you are using but 0.4% total is possible.

Yes, understood, plus I want a fairly large pension company which I know are likely going to be around for the foreseeable future, so I'm not basing it on cost alone.

I was more looking for recommendations on the most cost efficient trackers within the major pension companies as I'm assuming this is fairly common thing for people on MSE...

Thanks :beer:

dunstonh

FTSE revenues and earnings for a large part come from over-seas, especially Europe.

So, how do you explain the FTSE100 (where the multinationals tend to sit) being amongst the worst performing stockmarket for over 20 years?

Generation of revenues compared to actual location with currency fluctuation and legislation differences is not the same as earnings domiciled to a certain country.

Linton

_CC_ wrote: »

FTSE revenues and earnings for a large part come from over-seas, especially Europe...

Where the revenues come from is not the point. The key factor is the lack of diversification in industrial sectors. The FTSE100 is very high in Miners and Drillers, particularly ones which have no real connection to the UK. It is low in manufacturing, consumer electronics etc because the companies that do that sort of work in the UK are almost entirely foreign owned and not quoted on the FTSE100.

The net effect of this lack of diversification is that the FTSE100 is more volatile than its returns would lead one to expect and it has been badly caught out compared to global indexes by the large fall in commodity prices.

_CC_

dunstonh wrote: »

So, how do you explain the FTSE100 (where the multinationals tend to sit) being amongst the worst performing stockmarket for over 20 years?

The FTSE hasn't performed badly over the past 20 years if you DCA and reinvested dividends; i.e. what any sensible person would do if investing over the long term.

AlanP_2

_CC_ wrote: »

I was more looking for recommendations on the most cost efficient trackers within the major pension companies as I'm assuming this is fairly common thing for people on MSE...

Thanks :beer:

I suspect not. From what I have read on here I would suggest most who do their own thing use a DIY platform such as Cavendish / Fidelity, Hargreaves Lansdown, Charles Stanley Direct etc. as they offer access to a broad range of funds (trackers and active) as opposed to what may well be a more restricted offering from a major pension provider.

Agree with Dunston as well re Asset Allocation - there is a a lot of equity on offer outside US and UK that have a place in well diversified (geographic) portfolio.

Adding a Global ex-UK tracker might be worth considering. It will include the US as well so you might end up with that + a suitable UK one (that covers more than FTSE 100).

_CC_

Linton wrote: »

Where the revenues come from is not the point. The key factor is the lack of diversification in industrial sectors. The FTSE100 is very high in Miners and Drillers, particularly ones which have no real connection to the UK. It is low in manufacturing, consumer electronics etc because the companies that do that sort of work in the UK are almost entirely foreign owned and not quoted on the FTSE100.

The net effect of this lack of diversification is that the FTSE100 is more volatile than its returns would lead one to expect and it has been badly caught out compared to global indexes by the large fall in commodity prices.

And if combined ~50/50 with a US tracker?

_CC_

AlanP wrote: »

Adding a Global ex-UK tracker might be worth considering. It will include the US as well so you might end up with that + a suitable UK one (that covers more than FTSE 100).

Thanks - I'll look into other funds given what people have said.

Linton

_CC_ wrote: »

The FTSE hasn't performed badly over the past 20 years if you DCA and reinvested dividends; i.e. what any sensible person would do if investing over the long term.

I dont have access to 20 year data, but over 10 years the FTSE100 has gone up by 60% whereas the FTSE-World index has increased by 96%, both with income re-invested.

dunstonh

The FTSE hasn't performed badly over the past 20 years if you DCA and reinvested dividends; i.e. what any sensible person would do if investing over the long term.

yes it has. It is ranked 21 out of 23 in the major indices over 10 years (20 out 23 over 5, 23 out of 23 over 1 year).

This is the problem with picking a single sector in isolation. It may have gone up but you run a diversified portfolio to give you a variation of returns and to balance risks.

As you are picking single sectors, how frequently do you intend to rebalance them? What strategy are you using to work out how much should go into those sectors?