Invest in just one fund!!

leahcim17

Hi,

I'm about to move my S&S ISA from HL to iWeb and an old company DC pension from Aviva to an iWeb SIPP. The ISA has around 120k in it and the pension 470k. Both are invested in 9 funds roughly 75% equities and 25% global bonds. Now for many years my wife's pension has been invested in Baillie Gifford Managed fund only which has performed very similar to my 9 funds over 10 years.

To keep the switching fees to a minimum I'm thinking of moving all funds over to Baillie Gifford Managed while all the transfers take place. Now aside from don't put your 'eggs in one basket' are there any other downsides I'm missing by having 590k invested in one fund for 2 to 3 months. Can an Investment Company such as Baillie Gifford go under?

One other question which is slightly morbid. My other half has no interest in managing our pension and savings whatsoever, and wouldn't have a clue if something happened to me. Fund research and occasional re-balancing would never happen again. What do others who are in a similar situation do? Do you set up a simpler investment strategy that may be sub optimal but will work forever such as Vanguard LS?

Thanks in advance

Alexland

Seriously you want £590k on a single platform /fund manager when the FSCS compensation limit will be £50k?

I don't understand why you are concerned that the fund manager could have problems during the 2-3 months but are relaxed about the long term platform risk. Personally I would split the SIPP across 2-3 platforms /fund managers and the ISA with another unrelated platform /fund manager. Sure it might cost a bit more in fees but at least the potential loss would be manageable.

I prefer one fund per account where possible as it makes things simpler in my lifetime (and hopefully afterwards).

Alex.

Audaxer

I think it is risky to have the whole £590k invested with the one platform, never mind the one fund. If the worse happens to either the platform or fund like a major fraud, although the risk is minimal, you would only be covered up to £50k under the FSCS.

I think the Baillie Gifford Managed fund is a very good active multi asset fund with a good history of returns, but it seems a bit extreme to transfer your 9 funds there for a few months just for the sake of saving on transfer fees. With the amount you have invested I would be prepared to accept the 9 transfer fees, assuming they are around £25 each to transfer.

leahcim17

Audaxer wrote: »

I think it is risky to have the whole £590k invested with the one platform, never mind the one fund. If the worse happens to either the platform or fund like a major fraud, although the risk is minimal, you would only be covered up to £50k under the FSCS.

Thanks for you're reply on the single fund.

With regards to SIPP's, I wonder how many people split large sums between different platforms to give additional protection. It's not unreasonable to assume that a lot of people have SIPP's over £50k and don't do this.

Alexland

leahcim17 wrote: »

With regards to SIPP's, I wonder how many people split large sums between different platforms to give additional protection. It's not unreasonable to assume that a lot of people have SIPP's over £50k and don't do this.

I agree many people are probably carrying this risk without even considering it. On these forums we regularly hear of people with large amounts of money invested with a single platform and/or fund manager and make them aware of the low probability / high impact risk they are taking for what is probably a marginal fee saving relative to the value invested.

For a few hundred quid a year extra I run two similarly sized pensions (they are both very low cost anyway) and once I get to your valuation level I would have a third pension going. It would be impractical to stick strictly to the £50k compensation limit. We also keep my wife's two pensions elsewhere and our ISAs elsewhere. Collectively it gives us quite a spread across the investment industry.

Alex.

OldMusicGuy

My wife is similar. If I go first, I would most likely recommend that she takes any remaining tax free cash and buys an annuity with the rest.

Alexland wrote: »

Seriously you want £590k on a single platform /fund manager when the FSCS compensation limit will be £50k?

I have more than that on one platform across three funds. If HL and the three funds I am invested in go under with major losses, we will be at the fighting each other with sticks stage. The risk is so small it's not worth worrying about IMO.

Alexland

OldMusicGuy wrote: »

The risk is so small it's not worth worrying about IMO.

I'm of the view the cost is so small it's not worth taking the risk - even if we disagree at least we have both considered the risk / impact and made a decision,

Alex.

ColdIron

leahcim17 wrote: »

With regards to SIPP's, I wonder how many people split large sums between different platforms to give additional protection. It's not unreasonable to assume that a lot of people have SIPP's over £50k and don't do this.

To put the case for the other side I have a little more than you and do not chop it into £50K chunks. The risks and the the nature of what the compensation applies to for investments are not the same as for cash. If you have £50K to £150k and spreading it across multiple platforms makes you sleep sounder then that's what you should do. It helps if your pots have different goals and you can take advantage of different charging structures. But 12 platforms? 12 logins, 12 income streams if you are in drawdown, rebalancing across 12 accounts? It's just not remotely practical. Addressing your morbid question, how would your other half deal with this?

Like most things in life it's a balance and you should strike one that you can live with

aroominyork

But surely your money (unless in cash) is not held by the platform or even by the fund manager (eg Baillie Gifford) but in the underlying shares. If the platform goes under it's a nuisance but wouldn't cost you.

leahcim17

ColdIron wrote: »

12 platforms? 12 logins, 12 income streams if you are in drawdown, rebalancing across 12 accounts? It's just not remotely practical.

I certainly agree with the above..
That said it does show how easy it is to be outside the protection limits and how someone like myself doesn't give it a moments thought.... Until tonight that is!

Perhaps the investment platform is less important (in this case iWeb) as money is held separately at a custodian. I do understand that £50k max per fund may make sense though. That said in my case my current £590k could well increase to £1,000k in the next years as I pay more in. So that's 20 funds minimum from 20 different investment firms. Still quite complicated!

stphnstevey

aroominyork wrote: »

But surely your money (unless in cash) is not held by the platform or even by the fund manager (eg Baillie Gifford) but in the underlying shares. If the platform goes under it's a nuisance but wouldn't cost you.

Beaufort has shown there is no ring fencing of client funds