6 Year Investment Review - Good or Bad?

Hendel

Hi,

I invested £36k in an ISA wrap containing 5 or 6 funds selected by my IFA in 2012 and I’m about to review them 6 years on.


During the period of the investment, the IFA has recommended fund swaps on 3 occasions, which I’ve duly authorised.


Today’s value is £45k and charges have totalled nearly £3700, comprising £633 for the wrap platform, £2775 IFA fees, and £260 trading fees.


I’m about to review the investment with the IFA and would like to ask forum members what they think about performance so far.


Do you think it has done Ok? Has it proved to be expensive? etc.


Any thoughts you have will be gratefully received. Thanks in advance.

Zola.

Do you know what funds are you in?

BeerMoney

And what's your risk profile ?

dunstonh

What is the target timescale?
what is the risk profile (or volatility target range)?,
what is your capacity for loss?
What is your investment knowledge and understanding and behaviour?

Investment recommendations are all influenced by these. Without knowing them, it is impossible to say anything of note about the performance.

Prism

Its all down to your allocation between equities, bonds, property and cash. On the face of it this looks like a very low risk set of investments, or a poorly performing medium or high risk one

Zola.

You're paying through the nose in fees. Getting eaten alive actually.

Would you not be better putting it all in an index fund and looking at it in 6 years time?

If you fired your IFA, put that £45,000 into vanguard direct and paid 0.15% for the platform fee, and 0.22% for LifeStrategy, and got a return of 7%, you would have a fund worth £66,604, and you would have only paid £928 in fees, total.

Sobraon

I have given up with funds and just buy the passive 'dartboard' now. So I just used the FT portfolio page to look at the performance you have against two of the ‘passives’ I have.

So buying Vanguard FTSE Dev World ex UK Equity Index Acc six years ago the FT says the price was 150p its now 357p. So your £36k would be about £86k on my reckoning.

On my platform HSBC MSCI World UCITS ETF is the cheapest global passive tracker ETF (income so yield currently 2.09%). On the same basis as above this was 803p on 18/9/12 and is now 1652p. So 36k would be 74k plus the dividends.

Please, please do check my figures and DYOR as this was a 5 minute exercise! But if I was going to a meeting with an IFA I would expect a very detailed explanation about the performance with your figures.

There is a movement amongst IFAs to recast themselves as 'behavioural advisers' not 'investment advisers’ - replication of your experience might be part of the explanation for this.

Hendel

Thanks to all for replies. Funds are:

40% SEI Core Fund Sterling Wealth A Dist
11% SEI Global Multi Assets Income
24% LF Canlife Portfolio IV C Acc
14% Vanguard Life Strategy 40% Equity A Acc
11% Invesco Perpetual Global Targeted


Timescale is a further 15-20 years from now.


I’m not sure of the exact terms to describe my risk profile but low to moderate is a fair summary of what it was back in 2012.


Today, I’m prepared to keep maybe 50% in same risk profile but split the remainder into higher risk/potential growth funds. Perhaps 20% moderate, 20% high, 10% very high. (Forgive me if my terminology is poor, but I hope you get the idea).


I’ve broached this with IFA. His response was: “Balancing growth potential with wealth preservation is very important. Many studies have proven that it is more important to minimise losses than maximising returns for longer term growth.”


I have a One Account mortgage at 4% with around £35k balance. On several occasions I’ve discussed with IFA whether it would be better to use the money to pay it off. Each time he has assured me that my ISA portfolio was doing better than 4% so I should not pay off the mortgage. I’m not so sure he was correct...


Thanks again for replies.

eskbanker

Hendel wrote: »

I have a One Account mortgage at 4% with around £35k balance. On several occasions I’ve discussed with IFA whether it would be better to use the money to pay it off. Each time he has assured me that my ISA portfolio was doing better than 4% so I should not pay off the mortgage. I’m not so sure he was correct...

You can do the maths yourself - if your portfolio has only grown from £36K to £45K over six years then that's a compound annual growth rate of 3.79%, which is obviously less than the 4% you're paying on your One account. The comparison would be affected by any dividends that weren't reinvested but it does sound like you could do with better guidance....

ColdIron

As others have said, without knowing what you asked your IFA to achieve it's difficult to comment on performance. However the fees have taken a significant proportion of your potential returns. £36K is small potatoes to many IFAs and the higher costs are inevitable due to the nature of the work they are required to do (much of which is fixed). I am surprised that he/she chose a multi fund solution rather than a simple multi asset fund that would be quite suitable for this level of investment. With a little effort on your part you could easily manage this yourself

Hendel

Thanks eskbanker,

You are correct, of course. I think I might have been seduced by the suggestion that although my risk profile was low/moderate, “we can expect that these funds will probably do much better than that. After all, it’s the fund picking expertise that justifies the fees.”