Fund thoughts

BananaRepublic

I checked the performance of several of the funds on the You Invest site, and over 5-10 years they are very good indeed. Your friend needs to do some research, namely find out the % change per year for each fund over at least 5 years, preferably 10, and make sure the performance is good, and consistent i.e. not one very lucky year and lots of mediocre ones. He then needs to check the annual management charge for each fund, and the Standard Life management fee for each fund. The latter will differ, I seem to recall they charge more for an external fund. And then there may be a fixed yearly charge for all funds, maybe a fixed percentage.

I moved my frozen SL funds to You Invest, because the charges were poor, and the fund selection was limited. But that might not be the best choice for your friend depending on his research.

If the charges are high, then your friend could simply open a SIPP and then transfer his funds in. However, he might not be able to do that with the Aberdeen fund as it is presumably in-house. And he might not be able to do that with the Standard Life funds i.e. those containing "Standard Life" in the name, even though the funds might also be available outside of a SL pension. But, what he can do is transfer those funds as cash, and then simply buy back the same funds within the SIPP, if desired. He will lose some time out of the market, and there may be a loss in terms of transfer value from SL. In my case the gain from moving pensions from Aegon and Standard Life was worthwhile.

BananaRepublic

AnotherJoe wrote: »

It's not just the Aberdeen one. I looked at that as it was the biggest percent of his savings. All the others will be similar but I wasn't going to look each one up !!

Standard Life do have a comparison tool, if he's stuck with SL he could spend a few hours going through each fund looking for an alternative amongst the low cost options. So for example he could search for "smaller" in the funds available, add them to compare and see what their charges are. Not difficult just time consuming but a better investment than watching an hours tv per fund, let's say.

There's a SL website called "how are my funds doing" that's probably the best place to do this.

This by the way is outside the bigger picture of why he has chosen those fund areas. That is outside my scope . Though the Liontrust one looks a bit odd compared to the rest, its income, all the rest are accumulation. If he has 20 years to go, an income fund seems a strange choice.

At the risk of stating the obvious, in the views of somehere the figure to look at is not the overall managment cost, but the overall historical performance taking into account the management cost. In other words, minimizing management costs is not the goal, although in some markets such as the US it may well be the best approach.

AnotherJoe

BananaRepublic wrote: »

At the risk of stating the obvious, in the views of somehere the figure to look at is not the overall management cost, but the overall historical performance taking into account the management cost. In other words, minimizing management costs is not the goal, although in some markets such as the US it may well be the best approach.

"overall historical performance is no indicator of future performance". Seriously, it isn't.

Also, if you are buying funds that track a particular type of investment, then the only distinguishing feature is management costs. But really this is an argument about active vs passive.

To have no passive funds at all is likely not a good strategy and much of the OPs friends portfolio could be replaced with lower cost funds with most likely equal or better performance (and FWIW better historical performance as well ) The Aberdeen Multi asset is pretty dismal for example. Replace it with Vanguard (or similar approach managers) UK and Euro and Japan in the same (somewhat strange) ratio as Aberdeen has if thats what the OP wants.

roundabouthere

There seems to be a Vanguard global equity fund with a charge listed as just over 1%. Would this be an equivalent swap?

AnotherJoe

roundabouthere wrote: »

There seems to be a Vanguard global equity fund with a charge listed as just over 1%. Would this be an equivalent swap?

An equivalent swap for what? Have a look at its constituents vs whatever fund you are looking at. 1% sounds high for Vanguard, one i was looking at this morning that was Europe and so would roughly replace the Aberdeen (but it had a lower UK%) was 0.22% and that was at the high end of their charges.

What your friend can do is get the funds in totality he has analysed to see the underlying constituents, eg it might say 27% UK, 15% USA whatever. (I think its morningstar that does this)

Then he can look at what low cost funds he could replace his overall portfolio with assuming he likes this particular allocation of funds. Or did he arrive at this accidentally? Two smaller companies funds making up 20% is higher than many people would have for example.

And there's also the question of risk when looking at funds (some will be judged higher than others) , but he is most likely on the high scale for that judging by these anyway so perhasp not too much of a consideration.

Have your friend have a peruse of the Moneyvator blog/website which has some example low cost portfolios in there somewhere.