S&S LISA - fund/tracker options

Reg_Smeeton

Alexland said:

HL would be expensive at 0.45% on funds (£67.50 pa) or capped £45 pa for exchange traded assets but they have limitations on how you can use their regular exchange trading (only being used for new contributions not the cash balance) which means it would be an £11.95 trade to invest the bonus. 

Hi, sorry to hijack the thread, but could you expand on this further? My HL LISA is now approaching a value where it would make more sense to hold an ETF rather than funds. Could I wait for the bonus to be credited and then place in one trade, therefore capping my costs at £56.95 per year? Obviously would have to assess the impact of the initial deposit having 6-8 weeks out of the market....

Alexland

Reg_Smeeton said:
My HL LISA is now approaching a value where it would make more sense to hold an ETF rather than funds. Could I wait for the bonus to be credited and then place in one trade, therefore capping my costs at £56.95 per year? Obviously would have to assess the impact of the initial deposit having 6-8 weeks out of the market....

If sticking with HL you could switch into an ETF (to cap the platform cost on historic contributions and bonuses) and then put next tax year's contributions and bonuses into a fund (paying the extra percentage fee on just those units) until such time you feel it is worth incurring another trade cost to switch them into more ETF units, etc.

noclaf

Alexland said:

noclaf said:

Valid point and those trading costs will add up over time...I was looking at it from a 'eggs in one basket' perspective but would that be overthinking it when considering global trackers from the likes of HSBC, BlackRock,Lyxor, L&G etc?

Those index tracker funds and ETFs tend to have a few thousand underlying holdings so plenty of eggs and in terms of the basket if you are worried about putting it all with one fund manager then stick to a traditional OEIC fund where you get FSCS protection up to £85k if they fail to protect your assets from internal fraud etc. Something like the HSBC FTSE All World fund I mentioned earlier on EQi perhaps? Over 3,000 eggs for 0.20% platform (capped at £40 pa) + 0.13% fund mangement. That's even cheaper than the 0.15% + 0.22% you are paying to have VLS100 in your Vanguard S&S ISA. Others might chip in and comment on the service they have received from EQi as some other forum members use them.

Do you have a limit on how much you would invest in a ETF Vs an OEIC fund due to FSCS protection or is not really a concern? Also what's the benefit of using ETF's aside from the lower costs?
Edit: The HSBC fund is starting to look a bit more tempting overall, maybe I will consider ETF's bit further down the line. Either way thanks for the useful info Alexland, v helpful

Thrugelmir

eskbanker said:

Thrugelmir said:

VLS 100 has a high exposure to the mega cap US stocks.

But by virtue of its UK bias this must be less pronounced than the unadjusted cap-weighted global equity trackers it's largely competing with?

Quick review from the latest data available. Which surprised even me.  Out of every £100 invested in VLS100. The allocations to the 3 major US cap stocks are:-

Apple        2.80%

Microsoft   2.39%

Amazon    2.02%  In laymans terms while you may believe that investing in 10 sub funds give you broad market exposure, £7.22p in every £100 is going into just 3 stocks.

Alexland

noclaf said:

Do you have a limit on how much you would invest in a ETF Vs an OEIC fund due to FSCS protection or is not really a concern? Also what's the benefit of using ETF's aside from the lower costs?

Not really some of our biggest investments are in ETFs to cap fees on certain platforms but where it makes no difference we use OEICs. After a while it becomes impractical to limit yourself at just £85k per platform or fund manager and the risk of loss is very low when sticking with respectable large providers. Still it's a risk to be aware of and make a decision about. The other main advantage of ETFs is that they can be usually be traded near instantly on the market like shares at a known price rather than wait a day or two for the fund manager to issue or cancel units at a future price. However to the long term investor is the ability to quickly trade that important?

eskbanker

Thrugelmir said:

eskbanker said:

Thrugelmir said:

VLS 100 has a high exposure to the mega cap US stocks.

But by virtue of its UK bias this must be less pronounced than the unadjusted cap-weighted global equity trackers it's largely competing with?

Quick review from the latest data available. Which surprised even me.  Out of every £100 invested in VLS100. The allocations to the 3 major US cap stocks are:-

Apple        2.80%

Microsoft   2.39%

Amazon    2.02%  In laymans terms while you may believe that investing in 10 sub funds give you broad market exposure, £7.22p in every £100 is going into just 3 stocks.

Yes, but my point was that VLS100 has less exposure to those US heavy hitters than their competitors that don't have the UK bias, such as Vanguard's FTSE Global All Cap or HSBC FTSE All World, both of which have between 8 and 9% in those three stocks.

noclaf

Thanks for the input all, have applied for the AJ Bell LISA. I read some negative comments online about the eqi website usability and whilst I am sure their website is fine, if it was difficult to use or navigate that is one of my pet hates that will eventually become annoying hence swayed me towards AJ Bell.

Alexland

noclaf said:

Thanks for the input all, have applied for the AJ Bell LISA. I read some negative comments online about the eqi website usability and whilst I am sure their website is fine, if it was difficult to use or navigate that is one of my pet hates that will eventually become annoying hence swayed me towards AJ Bell.

Cool so now you just need to request the transfer and have a good think about the investment choice.

noclaf

Alexland said:

noclaf said:

Thanks for the input all, have applied for the AJ Bell LISA. I read some negative comments online about the eqi website usability and whilst I am sure their website is fine, if it was difficult to use or navigate that is one of my pet hates that will eventually become annoying hence swayed me towards AJ Bell.

Cool so now you just need to request the transfer and have a good think about the investment choice.

The HSBC fund you suggested seems (to me at least) a good complement to my VLS due to the different regional weightings and reasonably priced. I looked at some of the L&G funds but they were much pricier.

Alexland

noclaf said:

The HSBC fund you suggested seems (to me at least) a good complement to my VLS due to the different regional weightings and reasonably priced. I looked at some of the L&G funds but they were much pricier.

Just be aware that AJ Bell don't cap their 0.25% fee on funds only exchange traded assets such as ETFs, ITs or Shares. Still if you are happy with that, and many people are, then maybe I should buy some AJ Bell shares....