Royal London high fees - switch every year?

[Deleted User]

Underperforming benchmarks because a fund is more defensive than the benchmark makes no sense. There is a reason it’s called a “benchmark”. Fund managers and financial industry in generalhave zero interest in picking wrong benchmarks that are too conservative and are going to underperform.

Anyway, makes a great excuse for any fund manager or an IFA who recommended the fund

Yparchedig

I tend to agree Mordko but I think the counter argument would be that if the index has been rising steadily then a more defensive portfolio would inevitably underperform due to risk and return being directly linked. One would expect, however, the opposite to be true were the market to enter a correction an attractive feature for those closer to their retirement age.

But in short I agree - it's absurd and why I wish to invest in a collection of index funds with Vanguard.

ffacoffipawb

Yparchedig wrote: »

Hi all thanks for the replies,

Sorry if I was unclear in my original post but here's to clearing some things up.

I have gone back and double check the fees for the default managed portfolios and all are 1-2% as I noted but as mentioned by SonOf it's possible that this is because I am reading the factsheets and it's probable that there is a discount that brings the fees in line with the 0.75% default. Regardless, I wasn't impressed with the mix of funds selected by default.

In regards to SonOf's comment on benchmarks, fair enough if the benchmarks are not true reflections given the more defensive nature of RL's funds. I am 27 years old so am keen that I take on more risk at this stage and don't wish to be invested in defensive funds.

I think Cloud_dog is on the track of what I want to do. Essentially, I want to invest in the cheapest tracker available with RL for a period of say, one year, and then transfer everything invested at that point into Vanguards SIPP product (due to be launched). Where I can then invest the money in a series of diversified funds selected by me (I think this addresses your query Thurgelmir). The charges for these funds are far lower than what I could ever imagine RL's are even with discounts.

After this transfer, I would then invest via RL for another year in order to get my employer's contribution and make use of the benefits of salary sacrifice rather than the tax relief only available from opening a traditional SIPP (lower tax and Student Loan contributions). After a year I would then move this money once again to Vanguard, rinse and repeat.

In relation to your comment FfaCoffiPawb, my username is due to my 'preechy' nature and a nickname as opposed to a reference to me being an actual church minister.

Does anyone know whether making transfers like this is possible or does anyone have any experience of doing this?

Thanks,
Lewys

I managed to do several partial transfers from my old work scheme to Hargreaves Lansdown before I actually retired.

I think I did it 4 times, every 3 or 4 months. I know Hargreaves Lansdown aren't the cheapest but they were OK for what I wanted. My works scheme was Aviva and there were only about 40 funds to choose from.

EDIT: Each transfer, DC to DC, takes about 2 weeks.

[Deleted User]

Yparchedig wrote: »

I tend to agree Mordko but I think the counter argument would be that if the index has been rising steadily then a more defensive portfolio would inevitably underperform due to risk and return being directly linked. One would expect, however, the opposite to be true were the market to enter a correction an attractive feature for those closer to their retirement age.

But in short I agree - it's absurd and why I wish to invest in a collection of index funds with Vanguard.

The whole point of a benchmark is that it has similar asset allocation and isnt “more defensive”.

In my opinion RL funds are aggressive with almost all their funds allocated to equity or assets which are correlated to equity but less liquid. Very high potential for major drawdowns.

cloud_dog

Yparchedig wrote: »

Does anyone know whether making transfers like this is possible or does anyone have any experience of doing this?

Thanks,
Lewys

Hi

I am a similar but different boat. I am in a DB scheme but I make AVC payments to benefit from Salary Sacrifice. These go in to a Prudential (DC) AVC account, which I transfer every couple of years (have transferred once so far).

I had an additional reason for undertaking the partial transfer, that was to ensure I could and that I wouldn't suffer any DB transfer specialist requirements on the AVC pot. I also transfer out because I am limited to a fund choice of approx 20 with higher charges than I can get elsewhere (not significant but every little helps).

The transfer (in cash) took over 3 months to complete. I think this was partly due to the fact that mine was an AVC type account and I would like to believe that a straightforward DC to DC transfer would take far less time (assuming the trustees allow it).

Thrugelmir

Some markets are better suited to tracker funds than others. Marketing a concept too broadly dilutes the value of the brand.

[Deleted User]

One can argue that emerging markets have inefficiencies. For example Chinese banks make up a lot of capitalization and are messed up by the government, which effectively steals from the investors. Outside EM the markets are efficient and tracking works.

SonOf

Underperforming benchmarks because a fund is more defensive than the benchmark makes no sense.

I havent read an RL factsheet in some time but I wonder if its using sector average. Many pension funds do. Sector average is a poor benchmark but it is frequently used as the closest match.

[Deleted User]

For RL governed portfolios the benchmark is made up of indices corresponding to the asset classes. https://www.royallondon.com/strategyfactsheets/strategyfactsheet.asp?InvestmentType=G&strategyid=SCT