investment portfolio - fees too high?

swagman

I have £185,000 invested in a discretionary managed portfolio categorized as "cautious with risk" and avoiding some funds for ethical reasons. The portfolio has grown from £160,000 invested in February 2011.
The portfolio comprises 26% bonds; 36% UK equities; 30% overseas equities; 5% property; 3% cash. Everything is in ISAs. "Estimated annual gross yield 2.5%".
The total dealing and management charges are around £1,400 per annum.

I am a healthy and active 76 and fortunate to have a pension that I can live on. Other funds are spread among high earning current accounts.
I would value any comments on the following:
a) is this portfolio still about right for a person of my age?
b) are the charges what might reasonably be expected?
b) what are the pros and cons of moving the portfolio to platforms such as Hargreaves Lansdown.
I do not have the expertise to constantly monitor performance or to actively buy and sell.
Thanks.

BLB53

First of all, if you want someone to manage your investments, it will cost - currently you are paying around 0.75% which does not sound unreasonable in my opinion.

Secondly, at your age, I would want less exposure to equities - maybe around 25% and more in bonds.

Obviously if you wanted to manage the investments yourself, you could save quite a lot in fees but you will need to transfer to a diy platform - maybe look at the likes of Halifax Share Dealing who charge a flat fee of £12.50 p.a. and you will need to then purchase your investments - Vanguard LifeStrategy 20 (or 40) could be a simple solution. You would not have much more to do after that.

For more on diy options it would be worth getting hold of Tim Hale 'Smarter Investing'. Also have a look at the likes of https://www.monevator.com and https://www.diyinvestoruk.blogspot.co.uk

dunstonh

a) is this portfolio still about right for a person of my age?

Age has little to do with existing investments. Unless you want to derisk as you have enough to live on and dont care about the returns.

b) are the charges what might reasonably be expected?

You will be paying more as you are employing a discretionary investment manager. That is a layer on top. However, they are about right for a DIM service.

b) what are the pros and cons of moving the portfolio to platforms such as Hargreaves Lansdown.

Platform cost is likely to be higher. You have to DIY instead of someone doing it all for you.

I do not have the expertise to constantly monitor performance or to actively buy and sell.

There is also the a third option which is to put it in the hands of an IFA. That would lower costs a little and give you a half way house between discretionary investment management and DIY.

Linton

The total charges seem reasonable for a managed portfolio. I cant see any significant advantages in your moving it and serious disadvantages given your stated lack of knowledge.

I believe the allocation of around 50% UK in the equity part of your portfolio is excessive. It was once normal but now with the global economy you really need a more global allocation to ensure good diversification.

Whether your portfolio bond allocation is appropriate depends on what you want it for. If you plan to use a non trivial % of the money in the next 10 years then I wouldnt argue with your current allocation. However if it's effectively a forever portfolio to be passed on after your demise then I think you could increase the equity %. Especially as bonds have probably reached their highest capital value.

On the other hand at some time you may reach a point in life when stress becoms more difficult to manage, and as you dont actually need the money to be producing decent returns, it would be worth considering holding the whole lot in cash. Especially as at the moment bonds are not as safe as they traditionally were. At some point their capital value must decrease as there is little scope for an increase.

Sam_J12

I think it is important to consider what you want to achieve with the investments, before you know how appropriate the portfolio is. If you want to achieve maximum gains to pass on to children for example, then lots of equities are a good idea. Likewise if the investment is basically for fun and you just enjoy following the progress. If you will actually need the money at some point in the near future, consider reducing the proportion of equities.

Mind if I ask what your plans are for the money?

swagman

Thanks for your reply.
The most likely use of the money at my age of 76 and my partner's 66 will be for care home fees for either or both of us!

Sam_J12

swagman wrote: »

Thanks for your reply.
The most likely use of the money at my age of 76 and my partner's 66 will be for care home fees for either or both of us!

In that case it is pretty important you get things right! I don't know anything about the situation regarding funding of care homes and the extent to which your assets affect government subsidy. I would seriously recommend speaking to a financial adviser who has specialist knowledge of this, as this is so important for you and your partner's future happiness. My gut tells me you should think about protecting your capital and moving out of equities completely but do get some proper advice :-)

Al.

swagman wrote: »

Thanks for your reply.
The most likely use of the money at my age of 76 and my partner's 66 will be for care home fees for either or both of us!

In that case, difuse the emphasis on the style of fund management and/or costs. It's still important, and has to be addressed, but so is the bigger picture.

http://societyoflaterlifeadvisers.co.uk

Joking_Joe

How satisfied are you with the performance over the past year?

My cautious balanced (40% Fixed interest, 40% Equities and 20% alternatives) were doing well up until March this year and since then the trend has been downwards