Could anyone comment on taking a CETV who has done it??

Albermarle

There's no need to stop drawing, just take the money from the cash and bond parts of the mixture when equities are down.

I kind of assumed that most people keep their cash savings outside the pension , earning some interest, rather than inside. Will vary of course on personal circumstances.
Also there have been a number of comments on other threads that the next time equity markets go down , then the supposedly overheated bond market will follow the equity markets down . In this case would be better maybe to fund expenditure from outside the pension until both markets recover ?

[Deleted User]

Albermarle wrote: »

I kind of assumed that most people keep their cash savings outside the pension , earning some interest, rather than inside. Will vary of course on personal circumstances.
Also there have been a number of comments on other threads that the next time equity markets go down , then the supposedly overheated bond market will follow the equity markets down . In this case would be better maybe to fund expenditure from outside the pension until both markets recover ?

Cash and bonds are both part of the overall fixed income allocation. Different risks, if materialize, can impact these tools in a different manner. Bonds vary a lot; from junk to AAA, from 30 year to short term inflation protected. They have different advantages and disadvantages and will all be impacted differently depending on the nature of the next crisis. Cash isn’t risk free either and isn’t at all different from some of the tools you can have inside the pension wrapper.

Personally, in a drawdown I would hold a year’s worth of expenses in an easily accessible cash account for convenience. The rest of my FI is diversified. And wouldn’t try to time the market like you are suggesting.

bostonerimus

jamesd wrote: »

There's no front end load in practice in the UK fund market for at least the last 10-15 years.

If you want to pay one nowadays you'd have to hunt for the rare broker that hasn't negotiated it away.

There are occasional exceptions, like Vanguard's global growth fund charging me around 0.3% quite a few years ago. But that's memorable because it was unusual. I did pay around 50% of the advertised load on one fund back in 2006.

You should just ignore advertised loads as not charged in practice.

So why keep them and publish them? Is it vanity...ie the funds see some cache in having a published front end load, even if they rebate this, or is there something more sophisticated going on. Having a virtual fee that you rebate reminds me of sales tactics I'd usually connect with dubious outdoor markets, year end sales and dodgy life insurance salespeople. Anyway even without the 5% load there's the 1% annual fee...or is that discounted too?

ffacoffipawb

bostonerimus wrote: »

So why keep them and publish them? Is it vanity...ie the funds see some cache in having a published front end load, even if they rebate this, or is there something more sophisticated going on. Anyway even without the 5% load there's the 1% annual fee...or is that discounted too?

Funds with lower annual fees are available.

jamesd

Albermarle wrote: »

I kind of assumed that most people keep their cash savings outside the pension , earning some interest, rather than inside. ... there have been a number of comments on other threads that the next time equity markets go down , then the supposedly overheated bond market will follow the equity markets down . In this case would be better maybe to fund expenditure from outside the pension until both markets recover ?

Aside from optimising tax benefits and costs I tend to ignore whether most of the money is in a pension, ISA or somewhere else. Just one big portfolio.

jamesd

bostonerimus wrote: »

So why keep them and publish them? Is it vanity...ie the funds see some cache in having a published front end load, even if they rebate this, or is there something more sophisticated going on. Having a virtual fee that you rebate reminds me of sales tactics I'd usually connect with dubious outdoor markets, year end sales and dodgy life insurance salespeople. Anyway even without the 5% load there's the 1% annual fee...or is that discounted too?

Well, it is possible to pay them even if you don't at normal places. Just "we got you a discount [like every other popular broker]" marketing mostly.

Much of the UK market has switched to OEICs. Unlike a unit trust those quote only a single price at which both buy and sell trades happen and there's no ordinary times provision for a load at all. In non-normal times a dilution levy could be imposed to protect other investors but the fund house doesn't get that money.

Annual fees are often discounted but it's not as ubiquitous or as deep as initial loads. Based on size a broker might negotiate use of a fund class with 0.250% or 0.125% lower annual on maybe 10% of funds. There has been market pressure on annual charges and the old standard of 1.5% including fund and platform charges is no more, partly due to regulatory change.

For the workplace pension market where platform and fund fees can be combined the discounts can be greater. Most of my fund money is in a Standard Life pension with 0.75% discount on the combination and that's seriously cheap for what I hold there. Was weighted 0.83% for platform and mostly active funds combined back in May 2019:

1.446% SL Fidelity Asia Pension Fund
1.106% SL Merian UK Mid Cap Pension Fund
0.746% SL SLI UK Smaller Companies Pension Fund
1.081% SL JP Morgan Emerging Markets Pension Fund
1.066% SL SLI Global Smaller Companies Pension Fund
0.278% SL Vanguard FTSE Developed World Hedged Pension Fund

bostonerimus

jamesd wrote: »

Well, it is possible to pay them even if you don't at normal places. Just "we got you a discount [like every other popular broker]" marketing mostly.

Annual fees are often discounted but it's not as ubiquitous or as deep as initial loads. Based on size a broker might negotiate use of a fund class with 0.250% or 0.125% loser annual on maybe 10% of funds. There has been market pressure on annual charges and the old standard of 1.5% including fund and platform charges is no more, partly due to regulatory change.

For the workplace pension market where platform and fund fees can be combined the discounts can be greater. Most off my fund money is in a Standard Life pension with 0.75% discount on the combination and that's seriously cheap for what I hold there. Was weighted 0.83% for platform and mostly active funds combined back in May 2019:

1.446% SL Fidelity Asia Pension Fund
1.106% SL Merian UK Mid Cap Pension Fund
0.746% SL SLI UK Smaller Companies Pension Fund
1.081% SL JP Morgan Emerging Markets Pension Fund
1.066% SL SLI Global Smaller Companies Pension Fund
0.278% SL Vanguard FTSE Developed World Hedged Pension Fund

This sounds a bit like energy pricing in the UK; complicated so that often the consumer has no idea what they are spending. Why not just cut out all the rebates and give a simple clear fee? Of course that would be too easy and probably bad for the bottom line. Coming from a US Vanguard environment all this seems very expensive and unnecessarily complicated.

[Deleted User]

1.446% SL Fidelity Asia Pension Fund
1.106% SL Merian UK Mid Cap Pension Fund
0.746% SL SLI UK Smaller Companies Pension Fund
1.081% SL JP Morgan Emerging Markets Pension Fund
1.066% SL SLI Global Smaller Companies Pension Fund
0.278% SL Vanguard FTSE Developed World Hedged Pension Fund

Should make for one hell of a ride, unless >80% is in the last fund

Linton

bostonerimus wrote: »

So why keep them and publish them? Is it vanity...ie the funds see some cache in having a published front end load, even if they rebate this, or is there something more sophisticated going on. Having a virtual fee that you rebate reminds me of sales tactics I'd usually connect with dubious outdoor markets, year end sales and dodgy life insurance salespeople. Anyway even without the 5% load there's the 1% annual fee...or is that discounted too?

The published charges only apply if you buy direct from the fund manager. Same as cars, washing machines, packaged holidays, tins of baked beans etc. Specialist Intermediaries who are set up to deal directly with the general public can negotiate bulk purchase deals with the suppliers.
Everyone is happy, the suppliers don’t want the expensive hassle of handling small purchases, the intermediaries can attract customers, and the general public get what they want more cheaply with the convenience of a one-stop shop.
Don’t US supermarkets compete on price?

[Deleted User]

In the US companies which sell the funds love it when you buy it from them. They compete on price big time. Charge a heck of a lot less than in the UK (for the most part).

In Canada we can buy US ETFs but not their mutual funds. That, and having Vanguard ETFs here for some time has pushed ETF prices much lower, even for the active ones. We can’t buy US mutual funds (nor does Vanguard operate in the Canadian MF space) and the local ones can be even more expensive than in Britain. These we can buy at a “discount” from discount brokers. Basically the discount broker gives you most of his commission while the banks don’t but the fund advertises the higher cost.

Buying cars from the manufacturer is illegal - in most places.