DIY or IFA?

Sally57

I have a combined portfolio (S&S Isa's and pension) of approx £220K and have been investing on a DIY basis. I am continuing to pay £240 per month net £300 gross into my pension fund and have approx £80K in cash accounts. I own a house here in the UK and have a flat abroad with no mortgage on either property.

This year I will be 60 so I want to have a lower level of risk to my portfolio so don't know whether I should seek advice from an IFA? . Currently I hold 70% in the HSBC FTSE All World Index Fund and 10% in each of the following Artemis Strategic Bond, Henderson Strategic Bond & Blackrock Global Property Securities.

I have been recommended an IFA by a close friend and she has given me her list of funds which is a balanced portfolio with a risk profile of 6. I would welcome any comments/views on these funds as to whether this seems a good/sensible mix, because if so, she will introduce me to her IFA.

Current Holding/Change

9% - Fundsmith 8.95 -0.95
7% - Invesco Perpetual Global Targeted Returns 5.68 -1.68
7% - L&G UK Property Feeder 6.93 +1.07
6% - Architas Diversified Real Assets(Strategic Bond 5.72 -5.72 SOLD
6% - HSBC FTSE All Share 5.99 -0.99
6% - CF LIndsell Train UK Equity 5.18 +0.82
6% - Old Mutual Global Equity Absolute Return 6.28 -0.28
6% - Vanguard US Equity Index 5.11 -0.11
6% - CF Woodford Equity Income 4.48 -4.48 SOLD
5% - Artemis Strategic Bond 4.94 +1.06
5% - Jupiter Strategic Bond 5.86 +0.14
5% - Fidelity Strategic Bond 5.86 -0.86
6% -Stewart Asia Pacific Leaders 6.04 -1.04
4% - Fidelity Emerging Markets 4.48 -0.48
4% - Jupiter European 3.26 +2.74
4% - GLG Japan Core Alpha 4.15 +0.85
3% - First State Global Listed Infrastucture 3.98 -3.98 SOLD
3% - Stewart Worldwide Sustainability 4.02 -4.02 SOLD
3% - Vanguard FTSE Developed Europe ex UK 3.10 +0.90

4 NEW FUNDS TO REPLACE CF WOODFORD, STEWART INVESTORS WORLDWIDE, FIRST STATE GLOBAL INFRASTRUCTURE & ARCHITAS DIVERSIFIED REAL ASSETS

SVS Church House Tenax Absolute Return - 4%
Unicorn UK Income Fund - 6%
Pyrford Global Total Return - 4%
Newton Global Dynamic Bond - 3%

My dilemma is should I stick to DIY and just scale down the my tracker to 50/60% and then add more bonds/property or should I pay the IFA fees and go for a similar portfolio to the above list (I know quite a few of these funds but some I know nothing about)?

Any views/comments would be really appreciated.

StellaN

Sally57 wrote: »

I have a combined portfolio (S&S Isa's and pension) of approx £220K and have been investing on a DIY basis. I am continuing to pay £240 per month net £300 gross into my pension fund and have approx £80K in cash accounts. I own a house here in the UK and have a flat abroad with no mortgage on either property.

This year I will be 60 so I want to have a lower level of risk to my portfolio so don't know whether I should seek advice from an IFA? . Currently I hold 70% in the HSBC FTSE All World Index Fund and 10% in each of the following Artemis Strategic Bond, Henderson Strategic Bond & Blackrock Global Property Securities.

I have been recommended an IFA by a close friend and she has given me her list of funds which is a balanced portfolio with a risk profile of 6. I would welcome any comments/views on these funds as to whether this seems a good/sensible mix, because if so, she will introduce me to her IFA.

9% - Fundsmith
7% - Invesco Perpetual Global Targeted Returns
7% - L&G UK Property Feeder
6% - Architas Diversified Real Assets (Strategic Bond)
6% - HSBC FTSE All Share
6% - CF LIndsell Train UK Equity
6% - Old Mutual Global Investors (Global Equity Absolute Return)
6% - Vanguard US Equity Index
6% - CF Woodford Equity Income
5% - Artemis Strategic Bond
5% - Jupiter Strategic Bond
5% - Fidelity Strategic Bond
5% - Stewart Asia Pacific Leaders
4% - Fidelity Emerging Markets
4% - Jupiter European
4% - GLG Japan Core Alpha
3% - First State Global Listed Infrastucture
3% - Stewart Worldwide Sustainability
3% - Vanguard FTSE Developed Europe ex UK

My dilemma is should I stick to DIY and just scale down the my tracker to 50/60% and then add more bonds/property or should I pay the IFA fees and go for a similar portfolio to the above list (I know quite a few of these funds but some I know nothing about)?

Any views/comments would be really appreciated.

I can't really comment on the IFA suggested funds but why would you not continue with DIY unless it has not worked out for you? If you want less risk just change your asset class accordingly and make it more low risk?

dunstonh

Its difficult for anyone to answer as either choice is valid. The IFA will bring structure and time saving but if you can do that yourself and are willing to give it the time then DIY.

Nothing wrong with either option. it's your choice.

StellaN

dunstonh wrote: »

Its difficult for anyone to answer as either choice is valid. The IFA will bring structure and time saving but if you can do that yourself and are willing to give it the time then DIY.

Nothing wrong with either option. it's your choice.

Dunston - what do you think of the IFA's range of funds?

Ray_Singh-Blue

I like your DIY selection much better than that rather noisy list

dunstonh

StellaN wrote: »

Dunston - what do you think of the IFA's range of funds?

Lots of funds in there that I use and consider perfectly fine. There is a structure in there. More funds than I would use for that amount but that is personal preference.

I would not call it noisy as there is a structure.

AnotherJoe

Goodness at first glance i thought that long list was what the OP had accumulated and was wondering whether to slim down on advice of an IFA, not vice-versa !!

You'll pay an immediate hit of an extra % or more for all those active funds. Whether thats worth it, is a matter of luck and opinion however, given you have the list, why would you need to see an IFA and pay their % on top, you could just buy those yourself if you wanted? Though with £220k I'd suggest you'd only want half as many.

And with around a 2% loading on top (active fee plus IFA fee) , if you are long term making say 8%, means you'd need to get 25% better performance to break even, a pretty high risk in itself. If you want to derisk just buy something a bit more staid than the world index with some of it, or start building that up.

bowlhead99

AnotherJoe wrote: »

given you have the list, why would you need to see an IFA and pay their % on top, you could just buy those yourself if you wanted?

Seems like a recipe for disaster if you don't know what those funds bring to the table - why are they being used and what proportion would be suitable for you? I know my own portfolio is not the same as my neighbour's.

And with around a 2% loading on top (active fee plus IFA fee)

Whenever we hear about typical ongoing advice fees on £200k portfolios, half a percent seems to be the going rate (although there are extremes of value and expense depending on location and all sorts of other factors).

Half a percent also seems to be a rough differential between passive and active (if you assume 0.1% for a single country UK or US tracker, 0.3% for a global fund, 0.4-0.5% for an income fund or smallcap fund, while 0.6-1.0% for active equivalents)?

So if there is half a percent extra for the advice and half a percent for the assets, how do you get to 2% loading?

if you are long term making say 8%, means you'd need to get 25% better performance to break even, a pretty high risk in itself.

Well if we have easily debunked the myth of the premium being 2% because it's only 1%, we can consider that the 'better performance' doesn't need to be 25%, could be 12.5% instead.

Then flip it around and say rather than always being 12.5% better you just need to avoid screwing it up by 12.5%.

There's no doubt that some people have the time and inclination and mental capacity to learn to construct their own portfolios and not screw it up 12.5% of the time. Frankly I doubt that is the case for everyone, even though I assume you are competent.

AnotherJoe

bowlhead99 wrote: »

Whenever we hear about typical ongoing advice fees on £200k portfolios, half a percent seems to be the going rate (although there are extremes of value and expense depending on location and all sorts of other factors).

Half a percent also seems to be a rough differential between passive and active (if you assume 0.1% for a single country UK or US tracker, 0.3% for a global fund, 0.4-0.5% for an income fund or smallcap fund, while 0.6-1.0% for active equivalents)?

So if there is half a percent extra for the advice and half a percent for the assets, how do you get to 2% loading?

Some of those funds have 1.5% and higher. Some lower. I guesstimated at 1%. Same for IFAs I think of most of the numbers I've seen here 0.5% would be as low as you'd find and 0.75% to 1% is more typical. . I have colleagues paying .75%. (Over whom I despair as they could all work this out for themselves easily) .
So 2% seemed a simple round number. Maybe if you wanted to get closer toa real number it would be 1.5%.

That's a heavy loading. Especially as, when you have a lot of managed funds you are almost by definition approaching the performance of average or worse , which is what an index would give you without the 1.5% loading.

Linton

AnotherJoe wrote: »

......when you have a lot of managed funds you are almost by definition approaching the performance of average or worse , which is what an index would give you without the 1.5% loading.

An index wouldnt give you anything like the asset allocation in the IFA portfolio. Presumably this is deliberate and the asset allocation was chosen to match the OPs friend's needs. So talking about averages doesnt mean very much - averages of what? All possible portfolios? All possible portfolios that provide the same asset allocation? All possible portfolios with the added extra that Terry Smith & Co bring?

BLB53

Yeah, I would definitely stick with your DIY approach and especially the low cost index funds.

I would imagine that if you compared the net returns after fees of the IFA, you would be well ahead. Do you really want to be paying an extra £1,100 + vat every year for a fancy portfolio of higher charging funds?

To reduce risk, reduce your equity level and increase bonds/property. Have a look at the Vanguard Lifestrategy funds with their mix of equities/bonds - maybe the VLS 40. Charges are 0.22%.