Is a dropped market bad time to move funds?

ANGLICANPAT

Having procrastinated for far too long , I really have to move on getting my funds to a platform and benefitting from swapping to clean funds . Is now a good a time as any, or is there a downside to doing it whilst the market has dropped, please?

Malthusian

Depends how you do it. If the platform can accept the existing funds in-specie, i.e. the units are transferred directly to them without any buying or selling, it makes little or no difference, there is no time out of the market.

If the platform cannot accept the funds in-specie and you need to sell your holdings, send them the cash and then buy your funds back, then you could potentially lose out if the markets rise while your funds are sitting in cash. In theory this is neutral - they might go up, they might go down, over a few days it is essentially random - but it is a risk.

Whether they can accept them in-specie or not will depend on your platform and the funds you hold. The more obscure the funds, the less likely the platform will be able to do an in-specie transfer. You will need to check with them.

Chickereeeee

If they are transferred in specie (the investments are not converted to cash before transfer) then there should be no disadvantage. Maybe an advantage as you cannot panic and sell during the transfer process!


If you have to convert to cash, you may miss out on any market rises (or falls) during the process.


Make sure your receiving platform has exactly the same investments AND fund class as the one you are leaving.


Note that some platforms (including, but not limited to, HL) have special discounted fund classes that the receiving platform may not support. So you would have to go through cash for those holdings at some stage....


C

kidmugsy

It's a particularly good opportunity to move equities into an S&S ISA.

ANGLICANPAT

Thanks all , for your help. I better get on with it then , its been put off partly because Im so unsure of how to do it .

"Make sure your receiving platform has exactly the same investments AND fund class as the one you are leaving."

Ive only got a couple of Fidelity funds already with Fidelity FN ,plus one or two via an IFA and the rest have just been bought direct by me and OH through broker Torquil Clarke. All common ones so probably can be done without cashing in first

I think Ill probably put everything onto the Fidelity platform , rather than move everything elsewhere, but I thought it was just a matter of ringing up and asking them to take these funds off me and put them into the equivalent clean fund . In the light of what you said Kid Mugsy, am I supposed to tell them what new funds I want them put in rather than them tell me which are the clean equivalents I need?

I think I understand the new way of ongoing charging, but does that start after Fidelity gets the new funds, or do they charge to accept them and then start charging for holding them?

As regards moving equities into S&S isas , Ive only got a handful of TSB shares , is there much advantage to moving them in ,instead of using the allowance for cash?

kidmugsy

Assume you own a thousand shares in Megacorp, valued at £20 each. If you wanted to transfer them into an ISA you'd be limited to (about) 75% of them. Then they fall to £15 each. Now you can transfer the lot. I doubt, however, that a handful of TSB shares are worth fussing with.


The world of funds is a closed book to me: whether Fidelity will identify what you want for you, I don't know.

Glen_Clark

You are allowed £11,100 Capital gains in this tax year before paying tax. There may be an advantage in selling and repurchasing now, to reduce the possibility of being liable to pay Capital Gains tax when you sell in the future.

chucknorris

I've recently switched quite a lot of funds into very similar funds, so I could lock in a capital loss in this tax year. I can carry forward that loss to offset against future capital gains tax bills (which I will have when in later years when I dispose of investment property).

I was thinking about switching back again after the 30 day rule had lapsed (as the markets are down further), but I am unsure if the inland revenue might challenge me or not, by saying that because I am moving into similar (but slightly different) funds (i.e. ftse 100 trackers by different providers) that I am creating losses to 'avoid' tax. Has anyone got any opinions (facts would be even better) on this? I am wondering if the lines of tax 'evasion' and 'avoidance' would be unclear or not?

Chickereeeee

I would have thought your post worthy of another thread, Chuck?

C

grey_gym_sock

i don't see any problem with that. they are genuine losses - you have not artificially created them - you've just chosen to realize them. the way CGT works is that you're taxed on realized gains, after offsetting with realized losses where applicable, and unrealized gains and losses are ignored. that's not something you've made up - just how it works.

the same-day and 30-day rules explicitly only apply to shares of the same class in the same company - see http://www.hmrc.gov.uk/manuals/cgmanual/CG51560.htm ... presumably or the same class in the same fund.

Chickereeeee

Not 'official' but Barclays seem to think it is OK:

"For example, if you sold an ETF tracking the FTSE 100, you could purchase a different ETF that tracked the same index immediately and the trades would not be matched for CGT purposes."

https://wealth.barclays.com/en_gb/smartinvestor/better-investor/dont-get-caught-by-capital-gains-tax.html

C