Best Pension for low cost investing

Jaguar_Skills

Hi all,
I currently have a Fidelity (through Cavendish pension).   I only have a monthly drip fed pension investment of £800 PCM into Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc.   I also salary sacrifice a significant portion of my bonus into my pension. 
When I originally set this up Cavendish was the cheapest platform but now the total portfolio is about £160k, does it make sense to change provider? 
I only really want to keep my pension simple, and I wouldn't be adverse to just switching to vanguard funds.   In that situation would the new vanguard pension be a good option as the fees seem cheap?

AlanP_2

Given the size of your pot, your 2 fund choices and "keep it simple" philosophy I would think a fixed fee provider is liley to be better value than even Vanguard with its %'age charge.

Put your details into one of the online platform comparison tools, or search for Snowman's excellent spreadsheet on here and see what the costs come out at at.

If the fixed fee provider charges per transaction as they are likely to do then transfer youir £160k and make your 2 fund purchases (or do an in-specie transfer possibly) and continue to drip feed into one of the %'age fee platforms each month and then transfer to fixed fee every 12/24 months as pot builds up again.

Albermarle

Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc. 

Are you aware that both of these have a significant UK bias and therefore have underperformed recently compared to similar funds with no UK bias ? Might be better to change one of them at least to get more balance.

https://monevator.com/passive-fund-of-funds-the-rivals/

Joey_Soap

The answer is yes. Interactive Investor will charge you just £10 per month flat fee to host your SIPP on their platform. You need to confirm, but I think you are paying something like £400 to £500 annually on your pot of money at Cavendish/Fidelity.  Versus £120 at II. Hope that helps.

Jaguar_Skills

Albermarle said:

Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc. 

Are you aware that both of these have a significant UK bias and therefore have underperformed recently compared to similar funds with no UK bias ? Might be better to change one of them at least to get more balance.

https://monevator.com/passive-fund-of-funds-the-rivals/

I wasn't so thanks for that.   Any suggestions of funds with less UK bias? I have £28k just sitting in cash in my pension at the moment as I didn't invest it because I was worried about Covid at the time of my bonuses so didn't bother investing it but wanted the tax relief.  

Jaguar_Skills

Joey_Soap said:

The answer is yes. Interactive Investor will charge you just £10 per month flat fee to host your SIPP on their platform. You need to confirm, but I think you are paying something like £400 to £500 annually on your pot of money at Cavendish/Fidelity.  Versus £120 at II. Hope that helps.

Joey_Soap said:

The answer is yes. Interactive Investor will charge you just £10 per month flat fee to host your SIPP on their platform. You need to confirm, but I think you are paying something like £400 to £500 annually on your pot of money at Cavendish/Fidelity.  Versus £120 at II. Hope that helps.

Thanks that is useful.   I will look at swithcing. 

[Deleted User]

1. Some home bias is justified.
2. Any allocation will have periods of under- and over-performance.
3. Changing allocation because a fund has recently underperformed is a bad strategy called “chasing performance “.  Leads to long term losses vs staying put. 

Albermarle

Jaguar_Skills said:

Albermarle said:

Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc. 

Are you aware that both of these have a significant UK bias and therefore have underperformed recently compared to similar funds with no UK bias ? Might be better to change one of them at least to get more balance.

https://monevator.com/passive-fund-of-funds-the-rivals/

I wasn't so thanks for that.   Any suggestions of funds with less UK bias? I have £28k just sitting in cash in my pension at the moment as I didn't invest it because I was worried about Covid at the time of my bonuses so didn't bother investing it but wanted the tax relief.  

The alternative funds are detailed in the link I sent .
As Mordko mentioned , not everybody thinks home bias is a bad thing but always good to be aware of the issue . Personally I have one multi asset fund with home bias and one without , to cover both angles hopefully .
You are probably aware that by not investing the cash due to Covid , you will have missed the market rally. The mantra on this forum is 'don't try and time the market'  as you can't .

[Deleted User]

Albermarle said:

Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc. 

Are you aware that both of these have a significant UK bias and therefore have underperformed recently compared to similar funds with no UK bias ? Might be better to change one of them at least to get more balance.

https://monevator.com/passive-fund-of-funds-the-rivals/

Interesting link. Surprising how little choice UK has for passive investors. 

On a side note, the Moneyvator is dead wrong when he claims that VLS has no property. S&P 500 has about 3%. Many other indeces within VLS have a higher share of real estate.   

He also claims that being overweight in property is a good thing, which is questionable. I have never seen any evidence supporting that claim. 

On the other hand, some home bias is a good thing when you look at risk/return curve. As long as its not too much. 

https://www.vanguard.com/pdf/ISGGEB.pdf

NottinghamKnight

Deleted_User said:

Albermarle said:

Vanguard Life Strategy 80% Acc and Blackrock Consensus 100% Acc. 

Are you aware that both of these have a significant UK bias and therefore have underperformed recently compared to similar funds with no UK bias ? Might be better to change one of them at least to get more balance.

https://monevator.com/passive-fund-of-funds-the-rivals/

Interesting link. Surprising how little choice UK has for passive investors. 

On a side note, the Moneyvator is dead wrong when he claims that VLS has no property. S&P 500 has about 3%. Many other indeces within VLS have a higher share of real estate.   

He also claims that being overweight in property is a good thing, which is questionable. I have never seen any evidence supporting that claim. 

On the other hand, some home bias is a good thing when you look at risk/return curve. As long as its not too much. 

https://www.vanguard.com/pdf/ISGGEB.pdf

I presume they mean no directly held physical property they will include companies involved in real estate; by extension any company that owns rather than leases its offices, shops, warehouses etc could be determined to have an element of property.
I would agree that its not necessarily a good thing to hold or be overweight in property, an argument for diversification but the outlook isn't good for property for retail, commercial etc; also a small amount of home bias is natural and may well be favourable, especially of not too much as you say.

Albermarle

On the other hand, some home bias is a good thing when you look at risk/return curve. As long as its not too much

One issue in UK ( maybe elsewhere ) is that the traditional pension providers ( Standard Life, Scottish Widows) seem to  have a large home bias in their standard pension portfolio/lifestyle/default funds ( which are multi asset funds really) . This can be as high as 50% ( not just for bonds but equities as well ) and has resulted in some real underperformance in recent times. The oft quoted home bias of Vanguard LS funds of 25% is relatively modest in comparison.