Investment cost

thegentleway

Thank you, that's very helpful

dunstonh said:

Remember that charges are a secondary concern.   Not the primary concern. 

What's the primary concern then? Surely it's all about fund performance - minus cost?

dunstonh said:

You are not mistaking yield for total return?

Yes I did indeed mistake them - thank for noticing that!

thegentleway

PS: what's the 0.04%?

AlanP_2

thegentleway said:

Thank you, that's very helpful

dunstonh said:

Remember that charges are a secondary concern.   Not the primary concern. 

What's the primary concern then? 

I'd say it was achieving your objective.

dunstonh

What's the primary concern then? Surely it's all about fund performance - minus cost?

The primary concern is the investments themselves.   You choose how you want to invest first and the the most cost effective way of doing that.   Not the other way arouns.

PS: what's the 0.04%?

Transaction charges.  All funds have three ongoing charges disclosure since 2018.

OCF,  Transaction charges (TC) and incidental charges (sometimes called other charges).   VLS has 0.22% OCF, 0.04% TC and 0.00% IC.

AMC is obsolete in respect of UT/OEICs and should be ignored.  However, TER is still used with some funds in place of OCF.

OldMusicGuy

If you are going with Parmenion, make sure you are happy with the choice. My son had his workplace pension with them at his previous job and they performed abysmally, the choice of funds was very limited and the fees were very high. He ended up with less than he put in after fees (this during the tail end of a great bull market). These were not ethical funds btw but I was very uhnappy with Parmenion overall. Just be really sure they are the best choice for what you want to do.

thegentleway

dunstonh said:

The primary concern is the investments themselves.   You choose how you want to invest first and the the most cost effective way of doing that.   Not the other way arouns.

Thank you for explain the charges; that's very helpful. What do you mean by choosing how to invest? As in choosing between individual shares or tracker funds?

thegentleway

OldMusicGuy said:

If you are going with Parmenion, make sure you are happy with the choice. My son had his workplace pension with them at his previous job and they performed abysmally, the choice of funds was very limited and the fees were very high. He ended up with less than he put in after fees (this during the tail end of a great bull market). These were not ethical funds btw but I was very uhnappy with Parmenion overall. Just be really sure they are the best choice for what you want to do.

Sorry to hear your son was unhappy with Parmenion. Did he deal with them directly or through an IFA?

dunstonh

thegentleway said:

dunstonh said:

The primary concern is the investments themselves.   You choose how you want to invest first and the the most cost effective way of doing that.   Not the other way arouns.

Thank you for explain the charges; that's very helpful. What do you mean by choosing how to invest? As in choosing between individual shares or tracker funds?

How to invest is the investment strategy you are going to follow.    You shouldn't be picking funds randomly and placing random allocations in each. e.g. not picking 10 funds with 10% in each or two funds with 50% in each or variations like that.   Lack of structure and cheap can be more damaging than a structure but more expensive.

The use of managed, tracker or hybrid using both is how you build the portfolio.     If you feel that there is a managed fund that offers better potential and value for money than a tracker then you pick that. If you don't feel there is a managed fund available in that area that offers sufficient potential to justify its higher cost, then you pick tracker.  Do not be biased to tracker or managed exclusively. Both have merits in selected areas.

thegentleway

dunstonh said:

How to invest is the investment strategy you are going to follow.    You shouldn't be picking funds randomly and placing random allocations in each. e.g. not picking 10 funds with 10% in each or two funds with 50% in each or variations like that.   Lack of structure and cheap can be more damaging than a structure but more expensive.

The use of managed, tracker or hybrid using both is how you build the portfolio.     If you feel that there is a managed fund that offers better potential and value for money than a tracker then you pick that. If you don't feel there is a managed fund available in that area that offers sufficient potential to justify its higher cost, then you pick tracker.  Do not be biased to tracker or managed exclusively. Both have merits in selected areas.

Thank you dunstonh; that makes a lot of sense. I agree strategy is the most important for investing (and probably most things!). In terms of structure, it's seems relatively straightforward to do the asset allocation but I must admit I'm massively biased towards trackers as don't really have the expertise to evaluate a managed fund. I would also have to learn how to make sure it's well diversified and rebalance in tax efficient mannor going forward. I guess these are all areas where an IFA can add a fair bit of value. Is 1.5% reasonable to implement £300k portfolio?

dunstonh

Is 1.5% reasonable to implement £300k portfolio?

It is in the ballpark. Some will be cheaper. A lot will be more expensive.   (assuming this is a one off transaction with you then doing the future).