SIPP - My Current Portfolio - Variety of Investments - Opinions/Comments ?

Alexland

BigBlueSky wrote: »

I'm wondering if there is any benefit in going with the Vanguard now over the HSBC one (if I stick with 100% equities).

For circa £300k even small percentage costs are important - not just the published fund manager OCF fees but also the declared underlying transaction costs which are calculated using a complex method but suggest that VLS is incuring more internal cost of dealing etc. I have over £200k in the HSBC fund but also hold bonds as unconvinced this is a good time to be 100% equities.

With that sort of money a fixed-fee platform such as II, Halifax Share Dealing, iWeb, etc would be cheaper than a percentage fee platform. As you are on II it's probably not worth changing platform but be aware the FSCS protection limit is still only going up from £50k to £85k from next tax year.

Alex

BigBlueSky

Thanks again to everyone.

As I mentioned I am considering the HSBC FTSE All World (0.16%) for the bulk of my porfolio (as a lower cost version of the Vanguard Lifestrategy 100).

Looking at my existing investments, two of my existing funds are the following:

Legal & General US Index Trust (I) Acc (0.10%)
FIL Investment Services Index UK P Acc (0.06%)

Wouldn't it work out lower cost to go along the lines of moving other investments into the above two rather than an 'All World' fund ? - Or am I missing something ? I could then add another Asia/Europe (exc UK) or other markets fund to cover areas outside of the UK and US.

Thanks in advance

jamesrobins

BigBlueSky wrote: »

Thank you - Will take a look and do some more research. I was actually looking at the Vanguard Lifestyle products only a few days ago.

I started out doing what I suspect you have done, picking finds that sound interesting and a few odd shares. Now I'm shifting everything to a handful of trackers with low expense ratios. In the main Vanguard lifestrategy.

I bet if you worked out your annual fees for all that then compared it to fees if you had you entire pot in one cheap, whole market tracker you'd have a shock.

jamesrobins

BigBlueSky wrote: »

Thanks again to everyone.

As I mentioned I am considering the HSBC FTSE All World (0.16%) for the bulk of my porfolio (as a lower cost version of the Vanguard Lifestrategy 100).

Looking at my existing investments, two of my existing funds are the following:

Legal & General US Index Trust (I) Acc (0.10%)
FIL Investment Services Index UK P Acc (0.06%)

Wouldn't it work out lower cost to go along the lines of moving other investments into the above two rather than an 'All World' fund ? - Or am I missing something ? I could then add another Asia/Europe (exc UK) or other markets fund to cover areas outside of the UK and US.

Thanks in advance

It would be cheaper but you'd have less diversification with those two funds.

jamesrobins

BigBlueSky wrote: »

Thanks again for the suggestions. I would be holding them in my current Interactive Investor account (at least initially), but would look into if it works out cheaper to do it directly in a Vanguard account.

Edit - Just checked. Vanguard don't offer a SIPP as part of their online account.

I think Vanguard are launching a SIPP, think you can sign up for updates on their website.

BigBlueSky

jamesrobins wrote: »

It would be cheaper but you'd have less diversification with those two funds.

But adding one or two other funds to diversify.

I like the idea of the HSBC FTSE All World (0.16%) or Vanguard Lifestrategy but if I can reduce the charges even further, I should ??

Yes, looking at my current funds the annual fees range from 0.06% all the way to 1.54% - Most of which are probably around the 0.8% mark. If I use that as an average that is around £2,400 a year (if I've worked that out correctly). Even with the Vanguard as the main/only fund that would drop to around £690. :T

It is a big saving but it is difficult to say whether my current funds (specialist) although more expensive would of offered any greater returns.

BigBlueSky

jamesrobins wrote: »

I started out doing what I suspect you have done, picking finds that sound interesting and a few odd shares. Now I'm shifting everything to a handful of trackers with low expense ratios. In the main Vanguard lifestrategy.

I bet if you worked out your annual fees for all that then compared it to fees if you had you entire pot in one cheap, whole market tracker you'd have a shock.

Out of interest which trackers are you moving over to ? - Apart from the Vanguard Lifestrategy fund ?

jamesd

Lifestrategy 100% or HSBC World are OK as starting points but:

1. They probably have lower risk tolerance than you so adding global small cap is likely to be sensible long term. I use the Standard Life actively managed one. We're quite late in the economic cycle and small cap tend to under-perform large around end/start - read 60-80% drop instead of 40% - so now isn't a great time to be very overweight in them.

2. Many equity markets are at high cyclically adjusted price-earnings ratios and this implies lower expected ten year returns for those markets. For the US it's high enough to imply a 25%+ chance a year of a major drop in the 40% range. A global equity tracker is around 60% US. Adding bonds or some non-US equity to shift the allocation to less US equities may be wise.

You can expect a difference in HSBC vs Lifestrategy performance because the HSBC tracker is tracking a global index by FTSE while what Lifestrategy doing is not usefully described, see page 64 and see if you think you can tell from that other than mostly equities almost all of the time and not a tracker except of itself. If you want transparency go with HSBC. At present Lifestrategy is way overweight UK at 22% vs global tracker weighting of 5.4% in the HSBC fund. Some would take the view that a long term relatively high UK weighting is appropriate in a fund trying to be a one stop shop for UK investors and around 20% isn't unreasonable if you want that.

BigBlueSky

jamesd wrote: »

You can expect a difference in HSBC vs Lifestrategy performance because the HSBC tracker is tracking a global index by FTSE while what Lifestrategy doing is not usefully described, see page 64 and see if you think you can tell from that other than mostly equities almost all of the time and not a tracker except of itself. If you want transparency go with HSBC. At present Lifestrategy is way overweight UK at 22% vs global tracker weighting of 5.4% in the HSBC fund. Some would take the view that a long term relatively high UK weighting is appropriate in a fund trying to be a one stop shop for UK investors and around 20% isn't unreasonable if you want that.

Thanks jamesd - Really appreciate it and all the comments/suggestions made by others too.

Alexland

jamesrobins wrote: »

I think Vanguard are launching a SIPP, think you can sign up for updates on their website.

What's the point? Vanguard's pension is unlikely to be cheaper than their ISA which is already unattractive for large amounts. The OP is going to be better with a fixed price or low capped price platform. Vanguard do have a price cap but it is uncompetitively high.

BigBlueSky wrote: »

I like the idea of the HSBC FTSE All World (0.16%) or Vanguard Lifestrategy but if I can reduce the charges even further, I should ??

Although you could reduce the fees further by investing in less markets you will start compromising the quality of the investment and making a bet that those markets will do at least as well as a more diversified investment.

I agree with jamesd's comments about high US exposure (another advantage of All World over just World), the pros and cons of smaller cap weighings at different points in the cycle and holding a proportion of bonds at times when the market is not cheap.

Alex