Changing Funds with an L&G SIPP

jones830

Three days ago, I decided to secure my pension pot by swapping out of my tracker investment to cash while I see what the market does over the next few weeks. Today, having been surprised to see nothing had happened to my account other than losing £4500 since the request was made, I called L&G. They told me that 'swapping funds on your particular SIPP' is on a T+2 basis. 'Day one you tell us and two days later, we make the change'.
I asked why it takes so long, especially as the L&G slogan is 'Every Day Matters' - and it certainly has mattered to me. 'It's because it's in your contract'
'I get that', I said 'but WHY'?
'Ah, it's in case you are trying to play the market'.
'Well, I am, says I. 'It's sort of what the idea is in a capitalist society - make money and further, it's what you promise your investors.'
'Sorry, it's your contract'.
Any one else with similar funds who has done something about it or am I being unreasonable in trying to maximise my my money?

greenglide

Well the £ seems to be bouncing around a new low today and has been for a couple of days now increasing the value of global investments hugely.

Of course if you are invested with a significant exposure in UK property that could be "unfortunate".

A plan like this isnt meant for playing the market so, yes, you are being unreasonable - of course it is easy saying that when it isnt your investment.

What, exactly, were you trying to avoid and why?

dunstonh

Three days ago, I decided to secure my pension pot by swapping out of my tracker investment to cash while I see what the market does over the next few weeks.

So, you dont really believe in the philosophy of trackers with you making management decisions.

Today, having been surprised to see nothing had happened to my account other than losing £4500 since the request was made, I called L&G. They told me that 'swapping funds on your particular SIPP' is on a T+2 basis. 'Day one you tell us and two days later, we make the change'.
I asked why it takes so long, especially as the L&G slogan is 'Every Day Matters' - and it certainly has mattered to me. 'It's because it's in your contract'

T+2 is normal. However, that doesnt mean that the unit price is got 2 days later. That is the settlement period.

Any one else with similar funds who has done something about it or am I being unreasonable in trying to maximise my my money?

You cant do anything about it if you use funds with a 2 day settlement period. Some funds have 3. However, the settlement period doesnt really matter. That does not influence the trade price.

Drp8713

If you have a SIPP and want to trade in and out of positions (not recommending this as a sensible thing to do), why are you holding open ended funds and not investment trusts and shares which can be sold in seconds?

As mentioned above you may want to revisit your allocations and how diversified you are as im 100% equities (30% UK 70% Overseas), overweight in smaller companies and emerging markets, which puts me very high on the risk scale and my potfolio is an at all time high since brexit.

jones830

Thank you for your feedback - I appreciate it.

1. I am not directly in UK property

2. I was simply try to take advantage of a drop in the FTSE and then re-invest. As I have had no experience of managing a SIPP until recently, naively, I thought the investment would operate like others I have which have almost instant reaction to instruction.

3. I am very happy with a tracker but unlike normal investments this one ow has no 'drip feed' - I'm only drawing down from it so to increase, it's long term strategy and (I thought) the opportunity to take advantage of short term drops by converting to cash and then re-investing.

4. I am holding 'open ended funds', because that is what was delivered to me by the IFA organisation which was managing the fund until I took control and changed to a tracker which has been far more successful over two years than any of the managed funds ever have been.

5. Thank you for the advice on allocation - I will certainly review it.

dunstonh

As I have had no experience of managing a SIPP until recently, naively, I thought the investment would operate like others I have which have almost instant reaction to instruction.

The settlement time has nothing to do with it being a SIPP. The asset you are investing has the settlement period and that is the same whether it is SIPP, ISA, Inv Bond or unwrapped.

4. I am holding 'open ended funds', because that is what was delivered to me by the IFA organisation which was managing the fund until I took control and changed to a tracker which has been far more successful over two years than any of the managed funds ever have been.

You cant compare them like that. Different risk profiles (I doubt the IFA would have done 100% UK equity as that is awful investing) and different time periods.

jones830

(I doubt the IFA would have done 100% UK equity as that is awful investing)

Thank you for your reply.

You may well be right in theory, in practice however the investment profile in place by my ISA (as used by my company) cost a lot in commissions and showed miserable growth. Once I took control and invested in a cheap stock market tracker, the growth has been enough to extract drawdown of 25k per annum for three years while retaining a capital sum which has not depleted massively. I accept that I have been fortunate with the market during that time. I would like to have more control over the funds I have invested and paid significant management charges on but it would appear that is not possible. I understand now the restrictions placed on me with trying to maximise the 'pot' short term - I don't like it but will have to accept it. While a FTSE Tracker may not be the industry advice, over a long term it does show growth and with the other investments available to me I have been comfortable with it.

dunstonh

You may well be right in theory, in practice however the investment profile in place by my ISA (as used by my company) cost a lot in commissions and showed miserable growth.

Commission was banned at the end of 2012. So, that should be a non-issue.

While a FTSE Tracker may not be the industry advice, over a long term it does show growth and with the other investments available to me I have been comfortable with it.

Hope you feel the same way when a near 50% drop occurs.

It is really poor quality investing. Its nothing about industry advice. Going 100% in one sector, regardless of sector, is never a good idea. Hopefully, its not a FTSE100 tracker as that would just be compounding it.

jones830

It is really poor quality investing. Its nothing about industry advice. Going 100% in one sector, regardless of sector, is never a good idea. Hopefully, its not a FTSE100 tracker as that would just be compounding it.

I'm not allowed to include a link but Mr Buffett stated in the Telegraph:
“My advice to the trustee could not be more simple: put 10pc of the cash in short-term government bonds and 90pc in a very low-cost S&P 500 index fund.”
I've followed that advice and so far, it's been OK when a little common sense is applied.

edinburgher

jones830 wrote: »

I'm not allowed to include a link but Mr Buffett stated in the Telegraph:
“My advice to the trustee could not be more simple: put 10pc of the cash in short-term government bonds and 90pc in a very low-cost S&P 500 index fund.”
I've followed that advice and so far, it's been OK when a little common sense is applied.

Can you clarify? Are you actually holding a FTSE tracker as the main component of your pension? That strikes me as a very bad idea.

Buffett's advice is less bad because the US stock market is equal to 50%+ of global market capitalisation, whereas the UK is a fairly miserly 6-7% (from memory). In addition, concentration on the US will reduce currency risk for someone going into retirement. Also from memory, his comments related to how he would provide for his wife, or an individual with no knowledge of (or time to manage) a portfolio.

He's an incredibly sagacious guy, but always DYOR before jumping in.

jones830

No, I'm not in a FTSE tracker - at the moment. I think if you have commonsense, they can, self evidently, provide growth over the longer term. As I say, I am not allowed to show the Telegraph link but it goes on to say:

The funds to buy for a ‘Buffett drawdown plan’
Taking the “index fund” first, the British equivalent of an S&P 500 tracker is a fund that tracks the FTSE 100 index. These are widely available – there is even one from the company that Mr Buffett mentioned, Vanguard. As long as they are efficiently run their performance will very closely mirror that of the index itself; the only drag will be operating costs.
A FTSE 100 tracker gives investors the instant diversification of holding shares in 100 or so of Britain’s largest companies. The composition of the fund will change gradually as new firms are promoted to the blue chip index and others are relegated. But history suggests the value of these shares, and the income they pay, will rise over time, albeit with plenty of ups and downs.