Sipp into a UCIS fund

tomstone7000

I would be classified as a "sophisticated Investor" and wish to move my SIPP into a fund that is catagorised as an UCIS. I'm finding this very difficult to achieve and would appreciate any advice or pointers as I am determined to do this.

The fund is new but has a track record of several years in another guise. Same strategies. Due diligence done and its run by guys who are FCA registered and approved. It unfortunately comes into the great basket category of UCIS which was designed to cover the bad schemes and cowboys but does catch legitimate and good products in its wake. I am told that I should find an Execution Only SIPP provider. How do I find one that will do this for me? Do I need an IFA for this? IFA's cannot advise on an UCIS investment because they do not have insurance cover for unregulated products. This means that I cannot get an IFA to ok it. Crazy. I need to find a SIPP provider who will act and facilitate my investment into this fund.

Any pointers would be greatly appreciated.

dunstonh

and wish to move my SIPP into a fund that is catagorised as an UCIS. I'm finding this very difficult to achieve and would appreciate any advice or pointers as I am determined to do this.

UCIS in SIPPS is a hot potato. There has been a surge of complaints to the FOS about SIPPs and its nearly always to do with UCIS.

This has resulted in SIPP providers taking more care before accepting them and some SIPP providers have pulled out of offering UCIS.

Due diligence done and its run by guys who are FCA registered and approved.

The FCA does not approve firms. It authorises firms. There are different levels of permissions and some can be very basic and not in the areas that the product is issued.

I am told that I should find an Execution Only SIPP provider. How do I find one that will do this for me?

This would suggest your current SIPP provider works with intermediaries and is not a direct to consumer SIPP. If you want to DIY then it is best to use a DIY provider.

Do I need an IFA for this? IFA's cannot advise on an UCIS investment because they do not have insurance cover for unregulated products. This means that I cannot get an IFA to ok it. Crazy.

That is not correct. IFAs are required to consider UCIS otherwise they are not allowed to refer to themselves as IFAs. it was a change back at the end of 2012. It was one of the reasons why many IFAs stopped being IFAs and went restricted (restriction only being on unregulated products for example).

However, given the high risk nature of UCIS and the limited suitability IFAs can, within the rules, consider UCIS to be unsuitable for someone with less than £500k of liquid assets (cash and investments)

I need to find a SIPP provider who will act and facilitate my investment into this fund.

Have you spoken to any of the direct to consumer providers who offer full investment options on their SIPP? (i.e. not those that only deal with intermediaries and not those who are mainly fund supermarkets)

ex-pat_scot

You'll struggle to find any SIPP provider who is not execution-only.
You will need to look through a list of them to see whether they will allow / facilitate investment in the UCIS.


However I struggle a little to reconcile your statement
"sophisticated investor" against your lack of basic awareness over the basic features of a SIPP and what an IFA can do.


You also note that the "guys are FCA registered and approved".
WRONG.
They may well be on the FCA register (and I do hope you have checked), but that does not imply any endorsement by the FCA.


Even if you are a sophisticated investor, frankly you'd have to have an off-the-scale spectacularly humungous risk appetite to even consider moving your retirement funds wholly (I presume) into one unregulated product.


Frankly I would be asking a whole lot more questions about the basics, including such gems as:
- how did you find out about these guys and their new fund?
- what due diligence have YOU done?
- have you checked why the fund was previously in another guise?
- what exit strategy exists?


just for starters.


For me, there's a huge bunch of red flags all over your question, I'm afraid. I know I haven't answered your question (or rather I have, but asked a whole lot more), but i would encourage you in the strongest possible terms to consider your decision very carefully, as I believe there to be an overwhelming risk of loss here.

bowlhead99

Ultimately with a SIPP, your investments do not belong to you.They belong to a pension plan, which has a trustee, and therefore the scheme trustee has to be comfortable that due diligence has been done on the investment or they won't buy it.

So pure "execution only" may arguably not really be the trustee being totally blindfolded and saying literally all they will do is execute by signing their name on the dotted line for anything under the sun. What's meant by execution only, is really just a transaction done "without advice"

Cheap execution-only sipps have restrictions on what you can invest in to keep things nice and simple for the operator/trustee (e.g. just listed shares on a recognised exchange or authorised unit trusts/oeics on a fund platform). If you want to go off piste, e.g using a SIPP or SSAS to buy into a portfolio of P2P loans or invest in a structured product or buy shares in your employer or a commercial property for your business, you usually have to use a premium priced service.

For example AJBell's "Youinvest" product is the one I use for boring retail investments with basic DIY: click this to buy a share in London or New York, click that to buy a fund, pick up the phone to buy a gilt. But if you want to buy more exotic stuff like covered warrants or certain exchange traded commodities you have to fill out ahead of time a separate application to invest in "complex instruments" which summarises your experience. Along the same lines if you want to subscribe to a "structured product" that has its own application form you have to pay them an extra £100 or so, to get someone to sign it off.

But still, you can't buy commercial property or take out a mortgage for one. For that next level of service from AJBell you need their "Platinum SIPP" product which is more of a full service, but you have to pay an initial setup fee and a higher ongoing monthly fee and certain special transaction fees as you go along.

I'm not sure whether Bell's basic cheap Youinvest product would allow investing in what you describe (e.g. a typical private equity or hedge fund partnership) by filling out the "complex product" form and then also the paper application form for your fund in which you would be self certifying your sophisticated investor status. It might be that you would need the top level of service instead which is less targeted at "retail" investors.

Maybe approach them about the Platinum product first (where they're likely to at least know what you're talking about) and then ask whether you can get the same investment holding via their cheaper offering - if you go the other way around to the cheap product first you might get some basic helpdesk person who only has the script for newbie questions about listed stocks and shares because that's the bread and butter customer for that DIY platform. They do have a separate product for those who come through advisors and need a platform.

If someone like AJBell can't help there are various wealth manager groups who offer both full discretionary managed service or advised-only SIPPs - for example someone like Killik & Co in Mayfair would do both types. With an "advised" one the advisor can advise you on your wealth or your life generally but you still have proper control of what you buy. That is just a name pulled out of a hat rather than a recommendation but I have seen their name in the context of fund managers investing into their own (non-uk-regulated) fund vehicle and using their SIPP to do it.

There are other dedicated Sipp providers as Dunstonh alludes to that were in the game within the last few years but have now got out of it.

xylophone

https://www.fca.org.uk/consumers/unregulated-collective-investment-schemes

may be worth a look.

tomstone7000

Thank you so far for the responses.
For clarification.

I would not be considered a "Retail Investor" therefore would be considered a "Sophisticated Investor" due to other investment activities. I am not seasoned in pensions obviously but can understand fully the provenance of the fund and those involved.

No management fees - performance related only.
90 day exit period.
I stand corrected. Guys running the fund are FCA registered and under an FCA Registered Investment Manager firm.
Fund has been trading previously as an LLP for several years with audited performance.
Consistent profitable months, no wild swings (drawdowns) and delivering above average returns for previous and current investors.
S&P 500 orientated.

dunstonh

No management fees - performance related only.

yuk - likely to be more expensive in the long run. If it has a long run.

90 day exit period.

suggesting they have liquidity concerns already.

I stand corrected. Guys running the fund are FCA registered and under an FCA Registered Investment Manager firm.

As said already, there are multiple levels of FCA authorisation. From as little as consumer credit licence (which is all some investment firms have on the unregulated side). It doesnt mean they have sufficient permissions to be competent to FCA standards.

Fund has been trading previously as an LLP for several years with audited performance.

But not to regulated standards.

Consistent profitable months, no wild swings (drawdowns) and delivering above average returns for previous and current investors.
S&P 500 orientated.

That is a concern. Equity based investment without notable volatility. That is not possible. You cant be in a volatile investment area and not get volatility unless you are masking it or using illiquid investments which are not valued on a regular basis or have a very manual valuation which is little more than opinion (or best guess). Maybe that is why it has low liquidity.

If its only above average performance, then why use such a high risk option?