Transferring JISA when market low

damianmsmith

Hi

I hope someone can give me a bit of advice please.

My daughter has a low-medium risk stocks and shares junior ISA with Shepherds Friendly (SF) - fees 1.5%.  There's about £10k in it.

I have some savings with wealthsimple (WS), and i see they offer a JISA also - and theirs seems to be more flexible, and fees are lower at 0.7%.

I have looked into transferring the fund, but apparently that would mean SF selling the stocks and holdings then transferring the cash to WS to re-invest.  I cannot see that there are any exit fees charged by SF.

So the questions are;

1 - Is it a "bad time" to do this (ie selling when the market is low due to COVID) Or does that not make much difference as WS will be buying whilst the market is low?

2 - Any opinions regarding Shephers Friendly vs wealthsimple?  Should i just go with the provider with lowest fees?  I can't see any info about wealthsimple past performace with JISA.

3 - Am I missing some other aspect to do with changing fund?

Thanks in advance.  I appreciate we are talking about investments, and there are no guarantees regarding returns, but just wanted to make sure i am not missing something which might be obvious to others.

bowlhead99

Wealthsimple's fee of 0.7% doesn't include the fees of the underlying index funds that they actually put your money into. That's why it says 'additional fees averaging 0.2%' - that would be the average cost of the index funds (which would differ a bit depending on whether you are using growth, balanced, conservative portfolios).  So it would be close to 0.9% overall.

Still, the SF fund offerings are quite a bit more expensive without being famed for being particularly well performing, so you would expect a simple portfolio based on cheap index funds to have potential to do better.

1) You are right it doesn't really matter. If you sell cheap and then buy cheap, there is no real problem. You will be out of the market for a bit in between, but would not expect the market to race ahead without you over the relatively short space of time when you are only on a low-medium risk profile. It is almost just as likely that the price would go down before you re-bought the investments, instead.

2) Wealthsimple do show monthly updates commenting on the markets, but you can get a feel for what the returns might be by looking at what underlying investments they use.  The performance won't be any different between JISA and normal ISA. It would be different between conservative / balanced / growth but not between the types of account. 

Personally I would steer clear of SF due to high fees, while WS does not seem terrible.  But for the all-in cost of 0.9% at WS you could easily go to a mainstream fund platform such as AJ Bell or Hargreaves Lansdown (who offer thousands of fund choices and have tens of billions under administration) and buy a mixed asset fund at a suitable risk level for less than 0.9% including the platform fee (0.25% or 0.45% with those two example firms) and ongoing charges figure of the fund (0.2-0.5%).  With some fund choices, that would give you the potential to get the overall cost down to almost half of what WS are offering, or to have a similar cost but much-increased choice of mixed asset funds, knowing that all the mixed-asset funds were mainstream packaged products with their own relatively easily-researchable track records. 

However, if you are not confident in researching and picking funds from an overwhelmingly large choice, something like wealthsimple is probably not toooo bad, even if it is not particularly cheap. It at least comes with the comfort and convenience that you are already using the platform for some of your own investing, even though at 0.9% for a mixed portfolio based on cheap trackers from Blackrock / iShares, Vanguard, L&G and Pimco it isn't a choice of the true "money saving expert".

damianmsmith

bowlhead99 said:

Wealthsimple's fee of 0.7% doesn't include the fees of the underlying index funds that they actually put your money into. That's why it says 'additional fees averaging 0.2%' - that would be the average cost of the index funds (which would differ a bit depending on whether you are using growth, balanced, conservative portfolios).  So it would be close to 0.9% overall.

Still, the SF fund offerings are quite a bit more expensive without being famed for being particularly well performing, so you would expect a simple portfolio based on cheap index funds to have potential to do better.

1) You are right it doesn't really matter. If you sell cheap and then buy cheap, there is no real problem. You will be out of the market for a bit in between, but would not expect the market to race ahead without you over the relatively short space of time when you are only on a low-medium risk profile. It is almost just as likely that the price would go down before you re-bought the investments, instead.

2) Wealthsimple do show monthly updates commenting on the markets, but you can get a feel for what the returns might be by looking at what underlying investments they use.  The performance won't be any different between JISA and normal ISA. It would be different between conservative / balanced / growth but not between the types of account. 

Personally I would steer clear of SF due to high fees, while WS does not seem terrible.  But for the all-in cost of 0.9% at WS you could easily go to a mainstream fund platform such as AJ Bell or Hargreaves Lansdown (who offer thousands of fund choices and have tens of billions under administration) and buy a mixed asset fund at a suitable risk level for less than 0.9% including the platform fee (0.25% or 0.45% with those two example firms) and ongoing charges figure of the fund (0.2-0.5%).  With some fund choices, that would give you the potential to get the overall cost down to almost half of what WS are offering, or to have a similar cost but much-increased choice of mixed asset funds, knowing that all the mixed-asset funds were mainstream packaged products with their own relatively easily-researchable track records. 

However, if you are not confident in researching and picking funds from an overwhelmingly large choice, something like wealthsimple is probably not toooo bad, even if it is not particularly cheap. It at least comes with the comfort and convenience that you are already using the platform for some of your own investing, even though at 0.9% for a mixed portfolio based on cheap trackers from Blackrock / iShares, Vanguard, L&G and Pimco it isn't a choice of the true "money saving expert".

Wow! Thanks for such a comprehensive clear and well informed answer!

I appreciate your comments about researching funds and building my own portfolio but, as you suspected, I am looking for simplicity.  I will switch to wealthsimple for the lower rates at present.

Best Wishes

xylophone

Had you considered Fidelity?

https://www.fidelity.co.uk/junior-isa/fees-and-charges/#tab-link

or Vanguard?
https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa
https://monevator.com/low-cost-index-trackers/
https://monevator.com/using-vanguard-lifestrategy-funds-life/

damianmsmith

xylophone said:

Had you considered Fidelity?

Thanks - I will have a look at those too

damianmsmith

I have decided to go with Vanguard.  Lifestrategy funds - mix of stocks / bonds and some in global growth.  Thanks for the advice.

damianmsmith

So - a quick update - received an email from Shepherds Friendly stating my daughter's fund was nominally sitting at just under £11k, but if i wished to proceed they would apply a market value reduction (MVR) of 10%, and release about £9900.  Does this seem fair?  It seems like a lot, but i guess the market has fallen.  Would i be best to wait until they remove the MVR?