[deleted.]

[Deleted User]

So, on a £300k portfolio, the OP's Financial Adviser proposes to take 0.5% pa, ongoing.

£30 a week

For what?

bostonerimus

SonOf wrote: »

I suggest you read up on transaction charges and MIFID II. It's something that does not get disclosed in the US. It has some merits in principle but is highly flawed. Do you really think that profit and loss should be shown as a fee? And if you are in a fund that is going to have a high level of indirect ancillary costs, is it fair to compare those with those that do not? e.g. property funds where they have to pay cleaners, surveyors, decorators etc. The cost of those is shown in the TC.

TCs are the same whether the person is a DIY investor or an advised investor.

If the costs are internal to the fund then they are indeed "baked in"...I thought that the OP was estimating costs to rebalance and generally buy and sell within the portfolio.

If you build a portfolio of single sector funds then you will need around 10-15 funds to cover all the major sectors. So, you will have areas less than 10%.

The UK is about 4% of the global economy. So, if you follow the method of matching weightings by country, how do get around the UK being single digit?

Don't buy single sector funds. Buy an all Europe or Global fund to get the UK allocation.

Thrugelmir

xpc wrote: »

Maybe I haven't explained this very well, I am happy with an aggressive, volatile, high risk portfolio. It is more that I am wondering if I can do as well by reducing the fees and DIYing the portfolio. I suppose it's related the constant argument regarding active vs passive.

Passive can be aggressive , much depends on the markets choosen and % allocation of funds to each. Ultimately there's a decision to be made.

bostonerimus

Thrugelmir wrote: »

Passive can be aggressive ,

That's what my ex-wife said to me.....

SonOf

If the costs are internal to the fund then they are indeed "baked in"...I thought that the OP was estimating costs to rebalance and generally buy and sell within the portfolio.

I had a suspicion that was the case. With MiFIDII you have two new classifications on top of the OCF. So, every fund has OCF + Transaction charge + other/incidental. Most investors are still using the OCF and ignoring the TC. And in most cases, other/incidental charges are zero on mainstream funds.

There are actually some funds reporting negative transaction funds as they made a profit as a result of a trading decision (where the price moves between decision and settlement). I am sure you would agree that profit/loss should never be classed as a fee. Either to increase it or reduce it and having a negative charge is just farcical.

Sector funds are for active investors taking bets.

No they are not. They are for experienced investors wanting more choice.

[Deleted User]

Awesome little book:

https://www.goodreads.com/book/show/40242274-a-random-walk-down-wall-street

Sums up the experience of “experienced investors” very nicely.

And don’t get me wrong... Sector bets are very good money makers. For the financial industry.

bigadaj

ZingPowZing wrote: »

FE do not provide advice. They provide data and analysis. The adviser is the one that uses that data and analysis and gives advice. Son Of .

Uh huh. Like Hargreaves Lansdown didn't provide advice to a quarter of a million investors who found they were stuck with Woodford funds?

My suspicion is that FE promote a fund like Google promote a website - according to their interest.

Is the diversion by FE not simply a "workaround" the regulation that an IFA must not profit from a recommendation?

I'm as wary of the financial industry as the next man but your comments need to come with some knowledge and experience.

Trustnet is the free version of FE, do a Google search and have a look around, it's simply a website of financial data.

It's very useful to determine sector weighting where you have multiple funds, geographical coverage as well as performance over longer time periods.

They charge for the full version, the free version is funded by advertising through banner ads but the data itself is not biased.

[Deleted User]

1. Is my portfolio good?
Overall, the funds have beat their fund weighted average benchmark. This allocation has achieved a return of 78.80% over 5 years (pre charges outside of advice and platform charges).
In terms of fund selected, past performance indicates that these funds are good. However past performance doesn't necessarily mean this will carry on.

A bit worse than “not necessarily”. You take any active fund that outperformed over 5 years, chances are it will underperform. Lots of reasons for this. Good managers move on. Funds get too large. Momentum based strategies and value based strategies outperform and underperform in turns. Luck changes. Whatever the reason, we see mean reversion again and again and again (see “Random Walk”).

Won’t stop punters and IFAs chasing returns but it’s a really bad way to save for retirement.

On top of that, 5 years is not that long; like there haven’t been any bear markets.

bostonerimus

Parajimmy wrote: »

3. Could I do it myself?
You could do it yourself but it is in the IFAs incentive to not lose you money or screw you over. If you complained at any point in future they would probably have to just pay up because they are so strictly regulated. I'd only say go it alone if you have a good knowledge of funds, tax, IT, cashflow modeling and you have al ot of time and a lot of cash in reserve in case it goes wrong.

To go it alone you need some common sense, to be able to follow a few simple rules and you don't need much time for "management" at all. It does help if you give your investments a couple of decades. I DIY and I'm up 73 % in the last 5 years including all fees and I have done pretty much nothing other than reinvesting dividends. Now comparing one DIY portfolio to one IFA portfolio doesn't really tell us much other than you statement is not true in all cases. I believe that it is not generally true either. I do agree that it's sometimes nice to have a lot of cash.

[Deleted User]

it is in the IFAs incentive to not lose you money or screw you over.

IFAs primary incentive is to charge you year in, year out. Doesn’t actually care all that much if you are getting below market returns because it’s not how he is incentivised. I am sure he is not deliberately trying to screw you over, but unnecessarily complex and downright weird portfolios and unhelpful periodic changes help them to justify their supposed usefulness.