SIPP Advice

evertony

Hi, first post...was after some advice on investing funds in a SIPP.
I've just transferred one of my DB pensions into a Fidelity SIPP and they (Fidelity) have suggested I place all the funds in one of their Multi-asset income funds. They have provided other suggestions from other fund houses when I expressed concern about placing all of the money in one fund, even though this fund is already well diversified (albeit mostly in other Fidelity funds !!).

I intend to take 25% of the money as cash (approx £110K) to use as a buffer for the lean years, some of which I will place in ISAs (2017 & 2018)
I am 58 and intend to work for a few more years (61 ?) so was thinking of placing the funds in a number of multi-asset or equity income funds, the income from which I could re-invest for some growth while I'm still working.
So question is ; Should I diversify the money even more across a number of income paying funds or fund houses or do people reckon its ok to leave it all in the Fidelity multi-asset fund ?.

I was thinking of putting some in the seemingly popular VLS funds but I was reading something from HL about investors should reconsider how well some of Vanguard’s “clever” passive strategies would do in tough periods.

Thanks

Audaxer

I'm sure Fidelity's funds are very good, but I definitely wouldn't put such a large sum in one fund, no matter how diversified it is. One reason is that the Financial Services Compensation Scheme covers you up to £50k for each fund house in the unlikely event of losing your money through a major fraud. Unlikely to happen in a large well-known fund house but I wouldn't personally risk all my eggs in the one basket.

I have VLS and I don't think there is anything wrong with passive strategies. Although VLS hasn't been around during a major crash, people have used their own passive strategies for years through crashes and they have done fine in the long term. Taking costs into account may people argue better than active funds. However VLS funds do not have high yields for dividends, although you could still have these or other growth funds and sell a bit of capital each year for income, especially if you have a good cash buffer for lean years.

However nothing wrong with choosing an income portfolio of equity income and bond funds and/or multi asset income funds. I am retired and have an income portfolio as well as some funds in VLS.

Linton

When you transferred the DB pension did the IFA propose suitable portfolios? I assume you have about £400K in your Sipp if £110K is 25%. For that amount of money and your lack of experience of investing I would strongly suggest you talk to an IFA. You shouldnt base your choice on what is popular and what random unknown people on the internet think. You need a set of funds that work together to create a portfolio honed for your specific needs and acceptance of risk. This is what an IFA can provide.

For other readers - dont transfer a DB pension until you are very clear what you are going to do with the money and why.

dunstonh

I've just transferred one of my DB pensions into a Fidelity SIPP and they (Fidelity) have suggested I place all the funds in one of their Multi-asset income funds.

Fidelity is not a great platform. A bit long in the tooth. However, they would want you to use their funds in preference to others. Although I am surprised they are making any suggestions as that is sailing close to the wind in terms of their permissions.

when I expressed concern about placing all of the money in one fund,

If that is a concern, then why did you not use a personal pension instead of a SIPP? (PPPs having 100% FSCS protection with no upper limit).

I was thinking of putting some in the seemingly popular VLS funds but I was reading something from HL about investors should reconsider how well some of Vanguard’s “clever” passive strategies would do in tough periods.

If you get your info from providers, you always have to keep in mind potential bias. HL are a bit sore about Vanguard coming out with a new platform that undercuts them. Vanguard have the potential to damage HL. So, what better way than to start poo pooing them.

That said, VLS was doing well for a period because of its asset mix that happened to be heavily weighted to the area that was doing well. Had it been around 5-10 years before its launch it would have underperfromed on that asset mix. So, there is some truth in that.

evertony

Thanks for the replies....I am certainly not basing my decisions on the opinions of random unknown people...I've done a lot of research...this is just one avenue to see what other people in similar positions have done
I am aware of the 50K limit issue and thus am leaning towards a number of different funds...and I may well seek professional advice