How risk averse are you?

BananaRepublic

AnotherJoe wrote: »

Quite a few companies are in this area,

I think you did not read my post. I said "I've wondered why companies such as Virgin do not get into this area. There are companies such as Money on Toast who do something similar,"

Nutmeg operate a similar model to Money on Toast. As far as I know this is at present niche and not pursued by the big names, that's not to say that small names won't become big names of course. I looked at Nutmeg, and the estimated returns seemed rather poor given the charges.

AnotherJoe wrote: »

Google "robo advice". Whether it's more expensive than an IFA depends, many IFAs will charge a percentage to actively manage and rebalance. That should be included in an automated system like Nutmeg and others. I know I've read advice here that Nutmeg is expensive, I haven't investigated enough to know, and it's also a question of "compared to what". Making such things easily accessible and useable may be better than people doing nothing at all.

BananaRepublic

masonic wrote: »

But there are more viable robo-advice options out there, although the ones I'm aware of are quite small operations.

That of course is the problem, as small means high fees in order to cover costs. A larger operation could spread management overheads over a wider client base. An automated advice system probably costs a lot to create, and maintain, but that is a fixed cost and is independent of the number of clients. So in principle automated advice could be cheap, 0.2% let's say, were it provided by the likes of Fidelity, Vanguard, and Virgin.

And then there is the competition from diversified trackers with low fees.

BananaRepublic

Glen_Clark wrote: »

My biggest investment is SWDA, a world tracker invested in over 3,000 of the worlds biggest companies with an annual charge of 0.2%. Those companies combined look more solvent to me than the British Government.[ /QUOTE]

You are mostly betting on the US economy, which many consider to be overvalued at the moment. So you could win the bet, and have many years of strong growth, or lose and suffer a strong correction.

talexuser

I regard myself as low risk, but not being fully diversified I'm probably (and posters here would say definitely) higher risk than I think I am. I've never invested in a low cost tracker, preferring good performing active funds based on proven alpha managers, keeping an eye on their performance to justify the fees compared with a comparable index or tracker, and giving them a chance to move out of relative under-performance that might just be a result of being contrarian for a period. Naturally I've done some swapping around over the years of peps, single company peps, and isas, but not a lot compared to some, e.g. been in Perpetual High Income for 30 years without the need to completely jump ship (halved it to fund Woodford but since increased both). Having been through some major corrections I'm happy enough to sit it out now and watch the dividends come in.

Glen_Clark

BananaRepublic wrote: »

Glen_Clark wrote: »

My biggest investment is SWDA, a world tracker invested in over 3,000 of the worlds biggest companies with an annual charge of 0.2%. Those companies combined look more solvent to me than the British Government.[ /QUOTE]

You are mostly betting on the US economy, which many consider to be overvalued at the moment. So you could win the bet, and have many years of strong growth, or lose and suffer a strong correction.

Well the US is the biggest economy. But they tend to be worldwide companies based in the US, so its not as US biased as it may appear.
I don't have everything in SWDA - but I would rather have everything in there than everything in Sterling cash.

Thrugelmir

BananaRepublic wrote: »

You are mostly betting on the US economy, which many consider to be overvalued at the moment. So you could win the bet, and have many years of strong growth, or lose and suffer a strong correction.

With 20% of activity deemed to be Companies purchasing their own shares. The true performance of the US markets is to a degree questionable.

Glen_Clark

Thrugelmir wrote: »

With 20% of activity deemed to be Companies purchasing their own shares. The true performance of the US markets is to a degree questionable.

Companies must have healthy earnings to do that. But you are getting capital gain instead of dividends - which is probably better with Osborne's new dividend tax..

BananaRepublic

Glen_Clark wrote: »

BananaRepublic wrote: »

Well the US is the biggest economy. But they tend to be worldwide companies based in the US, so its not as US biased as it may appear.
I don't have everything in SWDA - but I would rather have everything in there than everything in Sterling cash.

Whether or not they are worldwide is irrelevant, it is whether or not the index is overpriced that is the issue. I agree with your last comment, I have most of my savings in equities, with some cash for emergencies.

AnotherJoe

BananaRepublic wrote: »

I think you did not read my post. I said "I've wondered why companies such as Virgin do not get into this area. There are companies such as Money on Toast who do something similar,"

Nutmeg operate a similar model to Money on Toast. As far as I know this is at present niche and not pursued by the big names, that's not to say that small names won't become big names of course. I looked at Nutmeg, and the estimated returns seemed rather poor given the charges.

I defintely read it. perhaps I misunderstood what you mean by "a company like Virgin Money"? Seriously, I"m not sure what the definition of such a company is.

Hargreaves Lansdown have 6 "ready made portfolios" do they count?

According to an article in the FT, "The UK’s biggest banks are planning to launch “robo-advisers” in a bold move to provide investment advice with a digital twist to thousands of consumers, only a few years after they were forced out of the market for mis-selling."

http://www.ft.com/cms/s/0/afb03182-c107-11e5-9fdb-87b8d15baec2.html#axzz46g2zSIr4

masonic

AnotherJoe wrote: »

Hargreaves Lansdown have 6 "ready made portfolios" do they count?

I would say no, because it is still left to the customer to choose between them. In that respect, they don't really offer anything different from Vanguard Lifestrategy or L&G Multi Income, except for being more expensive and actively managed (both in terms of underlying holdings and asset allocation). Robo advice could be completely separate from an investment product. Essentially it is a mechanism from determining someone's risk profile and hence a suggested portfolio that doesn't involve dialogue with an expensive human advisor. But it needs to go considerably further than the classic "what is your risk tolerance on a scale of 1-10?"

According to an article in the FT, "The UK’s biggest banks are planning to launch “robo-advisers” in a bold move to provide investment advice with a digital twist to thousands of consumers, only a few years after they were forced out of the market for mis-selling."

http://www.ft.com/cms/s/0/afb03182-c107-11e5-9fdb-87b8d15baec2.html#axzz46g2zSIr4

Hmm, I think I'll pass on whatever the big banks are offering