Tracker Fund - Go direct or via platform?

grey_gym_sock

dunstonh wrote: »

100% investing in one area is bad investing.

yes, but idea was to chuck the lot in VLS80, and that is not all in 1 area - it is a "portfolio fund", which may be suitable for all of somebody's investments. of course, there are other portfolio funds, and this may or may not be the most appropriate. for instance, VLS80 is apparently a bit higher risk than most investors would go for - VLS60 might be nearer the average. and there are other ranges of portfolio funds, apart from vanguard's.

i do think a portfolio fund is a reasonable interim solution. there is no need to over-complicate it (e.g. using ETFs), at least until you're more confident what you're doing.

re iii issues: there would be a lot less that could go wrong if only holding VLS80 with them. some issues ppl have mentioned include:

- errors in payment of rebates: not applicable to VLS, since it doesn't pay rebates. (some funds have higher charges and then rebate part of the charge to you. no vanguard funds do this.)

- missing or late payment of income: you could avoid this altogether by picking VLS80(Acc) - accumulation units, which never pay out income in cash, but reinvest it automatically, so each unit of the fund becomes worth more. however, using accumulation units makes it a bit harder to keep track of where you stand with capital gains tax; so you might prefer to use VLS80(Inc) - income units, which pay income once a year. iii could mess that up, but there's a lot less to check on with 1 payment of income per year. (some ppl with iii have many payments every month.)

- late or incorrect annual tax certificate: this could happen, but again, it's a lot easier to check whether a certificate is correct when you only have 1 fund.

so there is at least a bit less to worry about using iii.

dunstonh

yes, but idea was to chuck the lot in VLS80, and that is not all in 1 area - it is a "portfolio fund", which may be suitable for all of somebody's investments.

VLS is not a tracker. it is a fettered fund of funds. The funds it uses are trackers. However, the OP has said about using a tracker to start with.

Glen_Clark

grey_gym_sock wrote: »

i do think a portfolio fund is a reasonable interim solution. there is no need to over-complicate it (e.g. using ETFs)

Buying or selling an ETF on x-o is just like buying or selling a share, except there is no stamp duty and spreads tend to be lower
As far as I can see, putting the lot in one world tracker ETF is about as safe as you can get with equity investing, at the lowest charges.
Whats not to like?
Why do you think thats more complicated than a portfolio fund?

TheTracker

dunstonh wrote: »

VLS is not a tracker. it is a fettered fund of funds. The funds it uses are trackers. However, the OP has said about using a tracker to start with.

The OP was specific about VLS-80 in the very first post. And "fettered" is a very strange way to describe it.

Perdu wrote: »

I've decided to dump it finally and opt for a cheap tracker - probably VLS-80 or similar.

grey_gym_sock

Glen_Clark wrote: »

Buying or selling an ETF on x-o is just like buying or selling a share, except there is no stamp duty and spreads tend to be lower

yes, but the OP has presumably never bought an individual share. how simple is it if you haven't heard of stamp duty and spreads? with ETFs, you should really be checking that the spread isn't too big when you're buying, or that you're not paying a premium to the net asset value. with a regular fund, you don't have to worry about that - purchases are automatically made at the net asset value.

it's also somewhat harder to understand, at a high level, how an ETF works, compared to a regular fund. it's not rocket science, but you don't need to run your metaphors before you can walk

As far as I can see, putting the lot in one world tracker ETF is about as safe as you can get with equity investing, at the lowest charges.
Whats not to like?
Why do you think thats more complicated than a portfolio fund?

well, if you go for a world equity tracker, you've left out bonds, which makes it significantly less safe.

you also have no "home bias" to the UK, which i think is unfortunate, not so much because you should have a lot in the UK, as because then you end up with rather a lot in the USA.

so your world equity tracker will have over 50% in US shares, almost 10% in UK shares, and the rest in shares from other countries.

VLS80 will have about 30% or so in US shares, 20% in UK shares, nearly 30% in other shares, and 20% in bonds. which seems like more of a spread to me.

now if you are holding a world equity tracker together with some individual UK shares and a good chunk of cash, that may give you a decent spread. but i wouldn't start with the world equity tracker by itself.

Glen_Clark

grey_gym_sock wrote: »

or that you're not paying a premium to the net asset value. with a regular fund, you don't have to worry about that - purchases are automatically made at the net asset value.

With small specialised ETFs certainly and there may be liquidity issues in a crisis. But the ones I suggested are gigantic trackers, so spreads and premiums are not going to vary much. But I still look at the price beforehand and check its not jumped to something silly before I click the buy button, as with any share.

grey_gym_sock wrote: »

it's also somewhat harder to understand, at a high level, how an ETF works, compared to a regular fund. it's not rocket science, but you don't need to run your metaphors before you can walk

I don't understand much about how a rocket works, but still hold shares in BAE

grey_gym_sock wrote: »

well, if you go for a world equity tracker, you've left out bonds

I said it seems 'about as safe as you can get with equity investing' bonds aren't equities.

grey_gym_sock wrote: »

......... now if you are holding a world equity tracker together with some individual UK shares and a good chunk of cash, that may give you a decent spread.

Thats about what I have got, but with the wisdom of hindsight I wish it had been less UK and more US over the last few years because thats done better

dunstonh

The OP was specific about VLS-80 in the very first post. And "fettered" is a very strange way to describe it.

It is a fettered fund of funds. Nothing strange about it. How would you describe it?

The OP was specific about VLS-80 in the very first post.

But like many threads, the conversation had moved on.

Perdu

grey_gym_sock wrote: »

i do think a portfolio fund is a reasonable interim solution. there is no need to over-complicate it (e.g. using ETFs), at least until you're more confident what you're doing.

^^^^ Yes, this is what I'm after.

Sorry if I wasn't clear - when I said "chuck the lot" I didn't mean all my worldly goods - I meant just £200k of the investments I currently have in various offshore bonds. There is a further £55k, plus about £45k in bond funds that have done nothing for ages but cost a lot in fees and charges. I am in process of opening NS&I account to hold this additional £100k until I can learn how best to proceed.

My priority now is to cash this all in now, while I have this window of opportunity, and find some means of getting a good chunk of it back into the market asap.

My priority now is to find a suitable platform and apply to open an account PDQ. I have a few more calls to make in the morning and then quick decision time.

Thanks again for your continuing interest & enlightening comments.

MrBeans

Perdu wrote: »

AllianceTrust I have tried to reach 6 times over 2 days and a total of 35mins holding. I hate giving in so even tried their main number who just said " Cust Services very busy probably due to Christmas :huh: and just keep trying..." Hmm..

I have found four so far who said they will open an account for non-UK residents - I think I have their charges right but will have to check:-

Hargreaves Lansdown - at .45% is v pricey on large lump sum.
TD Direct - slightly better but .3% still more than the VLS itself.
III - dirt cheap at £ 80 pa (?), but I've noticed the threads!
Trustnet Direct - seems to be .25% capped at £200pa plus £10 per trade.

AllianceTrust - Their customer service is not the best in my experience.

I know you're looking at tracker funds, but if in the future some of your money will be in investment trusts (which are shares rather than funds) you might find you can hold them at zero cost on some platforms. I believe this is true of Hargreaves outside an ISA or SIPP and most probably others too. I don't know, but do ETFs count as funds or as shares (in which case they could be free to hold). EDIT: Ah, found it, ETFs eg capped at £45 in an ISA - see this.

As well as looking at the platform charges, also look at what discount off the fund charges (initial and annual) each platform offers and whether there's a charge for dealing funds. Excellent customer service is also worth paying a few quid a year for.

Perdu

MrBeans wrote: »

AllianceTrust - Their customer service is not the best in my experience.

Hahaha! After so much time holding on for a reply last week, I tried again this morning. Finally answered after 22 minutes, making a total of nearly an hour. I took a perverse delight in finding out that they wouldn't actually deal with me..

MrBeans wrote: »

I know you're looking at tracker funds, but if in the future some of your money will be in investment trusts (which are shares rather than funds) you might find you can hold them at zero cost on some platforms. I believe this is true of Hargreaves outside an ISA or SIPP and most probably others too. I don't know, but do ETFs count as funds or as shares (in which case they could be free to hold). EDIT: Ah, found it, ETFs eg capped at £45 in an ISA - see this.

As well as looking at the platform charges, also look at what discount off the fund charges (initial and annual) each platform offers and whether there's a charge for dealing funds. Excellent customer service is also worth paying a few quid a year for.

Thanks, but I am finding so few platforms will even deal with a non-UK resident that beggars can't be choosers and I'm having to take what I'm offered right now. As far as I can gather ETFs do not count as funds for charging purposes, and I cannot open or add to ISAs until back in the UK.