What to hold during in specie transfer?

dunroving

I've been thinking of transferring a S&S ISA and SIPP with Hargreaves Lansdown to Fidelity, mainly for simplicity. The S&S ISA has about £21k and the SIPP has about £12k.
It's currently invested half in AXA Biotech and the other half in a mix of VLS 20% and 40%.
Apparently, during the 6-12 weeks between requesting the transfer and it going through, I won't be able to deal, which is a bit worrying considering the volatility that has occurred over the past several weeks (I've already rebalanced my Fidelity holdings because of this).
I'm thinking of shifting the AXA biotech (in HL) into the VLS, which is more stable, and then in Fidelity, switching a similar amount from VLS into AXA biotech (so that my holdings overall are unaffected, but the HL account has fairly stable investments). Can anybody see a flaw in this? Or think of a better strategy?

george4064

The only ‘flaws’ are that;

1. You will have to pay any applicable dealing costs with your method (in specie incurs no dealing cost, but perhaps transfer out costs come into play depending on what they are and if receiving platform wil cover them).

2. You will be out of market for a period of time as you’ll need to sell, process ISA/SIPP transfer as cash and then make your purchase within your new platform. Potentially only a few days but who knows?

dunroving

george4064 said:

The only ‘flaws’ are that;

1. You will have to pay any applicable dealing costs with your method (in specie incurs no dealing cost, but perhaps transfer out costs come into play depending on what they are and if receiving platform wil cover them).

2. You will be out of market for a period of time as you’ll need to sell, process ISA/SIPP transfer as cash and then make your purchase within your new platform. Potentially only a few days but who knows?

I'm a bit confused by your second point. I thought the whole point of an in specie transfer was to not convert to cash?

bigadaj

I assume George's point should be that you'll be wholly in the bond heavy vls funds so would miss out on any growth in the biotech fund, so your target portfolio return will be skewed for that time.
Seems an odd combination of funds at the extreme ends of the risk spectrum, any reason for this choice of funds?

dunroving

bigadaj said:

I assume George's point should be that you'll be wholly in the bond heavy vls funds so would miss out on any growth in the biotech fund, so your target portfolio return will be skewed for that time.
Seems an odd combination of funds at the extreme ends of the risk spectrum, any reason for this choice of funds?

Across HL and Fidelity, I am a lot more diversified. HL being the smaller pot (originally began as a small-pot pension, to avoid MPAA, but then became unnecessary), I didn't want it spread across a lot of different funds.

(Part 1; need to switch to the laptop for Part 2).

dunroving

bigadaj said:

I assume George's point should be that you'll be wholly in the bond heavy vls funds so would miss out on any growth in the biotech fund, so your target portfolio return will be skewed for that time.
Seems an odd combination of funds at the extreme ends of the risk spectrum, any reason for this choice of funds?

(Part 2; sorry, I'm no good at texting on the mobile)
I may have explained my plan poorly. I'm concerned about having around £18k in HL tied into a more volatile fund like AXA Biotech for several weeks as the in specie transfer was being processed. I have over £18k in VLS in Fidelity, so my thinking was (a) switch £18k in Fidelity from VLS to AXA Biotech; (b) switch the £18k in HL that's currently in AXA Biotech to VLS (a more stable fund); then (c) begin the process for the in specie transfer. That way, all of my funds in HL would be in VLS over the 6-12 weeks that my HL account will be frozen, and VLS is less likely (than AXA Biotech) to experience a disastrous slump while I'm waiting for the in specie transfer to happen. 

So, at no point would any of these funds be in cash, other than the 24-hr period I'm switching between funds. I understand George's point about the fees involved in switching funds, but at least I'd be buying peace of mind knowing that for potentially up to 12 weeks of the transfer period, all of my HL account would be invested in a less volatile fund (and none of it would be invested in AXA Biotech, a more volatile fund).

I'm hoping to wait for Fidelity's next "switch offer" periods, when they will reimburse switching fees charged by the outgoing platform (in this case HL). I haven't looked into the switching fees yet.

(Bit of background: I retired 2 years ago and am just trying to simplify things by having all of my SIPP and ISA investents with one company - Fidelity)

MarkCarnage

If a shortish period of volatility in the specialist fund concerns you that much you probably shouldn't be holding it at all. Presumably you didn't buy it as a short term speculation? 

dunroving

MarkCarnage said:

If a shortish period of volatility in the specialist fund concerns you that much you probably shouldn't be holding it at all. Presumably you didn't buy it as a short term speculation? 

Apparently the transfer could take as long as 12 weeks, which I don't think is a short term, especially considering recent market volatility.

Albermarle

I'm hoping to wait for Fidelity's next "switch offer" periods, when they will reimburse switching fees charged by the outgoing platform (in this case HL). I haven't looked into the switching fees yet.

Fidelity will always reimburse fees incurred by switching to them , there is no fixed offer period.

You are maybe confusing it with the cashback offers they sometimes have for transfers , which are restricted to certain periods. For the amounts you are talking about , the cashback would not be very large . £50 max , maybe even only £20 ?

dunroving

Albermarle said:

I'm hoping to wait for Fidelity's next "switch offer" periods, when they will reimburse switching fees charged by the outgoing platform (in this case HL). I haven't looked into the switching fees yet.

Fidelity will always reimburse fees incurred by switching to them , there is no fixed offer period.

You are maybe confusing it with the cashback offers they sometimes have for transfers , which are restricted to certain periods. For the amounts you are talking about , the cashback would not be very large . £50 max , maybe even only £20 ?

Thanks, I was planning to look into how much the cashback would be. I also hadn't twigged that Fidelity always reimburses transfer fees (not sure whether HL charges transfer fees).

Albermarle

The cash back is usually something like £500 for £150K, £250 for £100K , £100 for £50K. Nor sure about smaller amounts .
At one time they had one cashback offer after another but not seen one for a while .