Could my pension be working harder?

SpeedSouth

At present I have circa £150K in a work based Scottish Widows pension.  It's in the Pens One Portfolio.  Still 15+ years to retirement.  They charge 0.75% so the fees are around £1125 a year, so the fees are starting to rack up now, as the pot grows.
I have an ISA with Halifax that is invested VLS60.  My belief is for £500 I can transfer out, so in theory if I put it all in VLS100 on Vanguard Sipp, after one year factoring in the £500 transfer I'll be £400 better off, and the next years would be better once the £500 has been paid.
However the research I have done, has led me to believe that whilst VLS is a fire and forget, once the pot increases to £100K+, most people say it does require more input/funds adding to it.

Question I guess, would most accept the 0.6%, or look for other options are take ownership of the pot completely?  At present, whilst I understand the  mechanics behind investing, and am putting a fair amount into the pension each year, my knowledge of funds/sectors. is very minimal.
Thanks

dunstonh

t, so in theory if I put it all in VLS100 on Vanguard Sipp, after one year factoring in the £500 transfer I'll be £400 better off, and the next years would be better once the £500 has been paid.

VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?   SW probably have a global tracker in their fund list.  How does that stack up? (depending on your pension version, it could be good value, it could be expensive)

However the research I have done, has led me to believe that whilst VLS is a fire and forget, once the pot increases to £100K+, most people say it does require more input/funds adding to it.

At £100k plus you could get better with a bit of knowledgeable input and using single sector funds but if you dont have that then sticking with multi-asset funds would be better.  Or in the case of 100% equity, sticking with global equity inc UK funds.

Question I guess, would most accept the 0.6%, or look for other options are take ownership of the pot completely?  

If you are going with 100% equity and sticking with a global tracker the you shouldn't be looking at more than 0.3x% all in.

[Deleted User]

“VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?”

Wow. A little surprised an IFA is permitted to say things like this. 

VLS100 is a fund of trackers. You buy the whole world in a very simple, low cost sweep.  Extremely well diversified.  It’s a little overweight in domestic equities which is based on sound research. 

Although I personally use ETFs and my costs are a little lower, I pay for it with extra complexity. Not aware of a passive and cheap one-fund alternative to VLS in the UK market. Perhaps there is one. Name it. Don’t just poo poo a solid investment option.

IFA built portfolios we’ve seen here tend to be unnecessarily complex and expensive, in some cases with dodgy and illiquid investments. I understand why they do it and don’t blame them.  I am still surprised they would be permitted to rubbish cost efficient and simple passive approach. The kind of approach which is recommended by people who know what they are doing. https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjho57YhoftAhVlEFkFHRbrDJcQFjAGegQIBhAC&url=https%3A%2F%2Fwww.cnbc.com%2F2019%2F01%2F16%2Fwarren-buffett-says-jack-bogle-did-more-for-the-individual-investor-than-anyone-hes-ever-known.html&usg=AOvVaw3RXZpY9n_0SVN-kT4h49A5

[Deleted User]

“At £100k plus you could get better with a bit of knowledgeable input and using single sector fund”.

Yeah, that’s a mug’s game.  Concentrating investments in certain sectors at the expense of others works only if you know the future. People don’t.  And it costs more.  This is bad financial advice. 

dunstonh

“VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?”
Wow. A little surprised an IFA is permitted to say things like this. 
VLS100 is a fund of trackers. You buy the whole world in a very simple, low cost sweep.  Extremely well diversified.  It’s a little overweight in domestic equities which is based on sound research. 

Why would I not be allowed an opinion when investing is all about opinion?

Not aware of a passive and cheap one-fund alternative to VLS in the UK market. Perhaps there is one. Name it. Don’t just poo poo a solid investment option.

VLS100 is double the cost of a global tracker.  Why would you pick VLS100 over a global tracker?  The case for multi-asset funds makes sense until you get to 100% equity.

IFA built portfolios we’ve seen here tend to be unnecessarily complex and expensive, in some cases with dodgy and illiquid investments

As there are thousands of IFAs out there, you cannot realistically comment on the quality or structure of what IFA portfolios will be.  Some will be expensive. Some will have more holdings (remember that IFAs generally deal with larger investors).  A tiny number will have illiquid and dodgy investments.    You are talking about under 1% of investors.   And most of those were done with dodgy firms who have since dumped their liabilities onto the FSCS and its the good firms that end up paying for it.    Most will be structured and use processes that are sound and correct.

Yeah, that’s a mug’s game.  Concentrating investments in certain sectors at the expense of others works only if you know the future. People don’t.  And it costs more.  This is bad financial advice. You are entitled to your opinion but you are wrong.   It is ridiculous to call the use of single sector funds bad financial advice.    You are also effectively criticising the portfolios of most of the experienced DIY investors here who will also use single sector funds.    
Who has said you should include certain sectors at the expense of others?  Why do you think portfolios made up of single sector funds would do that?

Linton

Deleted_User said:

“VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?”

Wow. A little surprised an IFA is permitted to say things like this. 

VLS100 is a fund of trackers. You buy the whole world in a very simple, low cost sweep.  Extremely well diversified.  It’s a little overweight in domestic equities which is based on sound research. 

Although I personally use ETFs and my costs are a little lower, I pay for it with extra complexity. Not aware of a passive and cheap one-fund alternative to VLS in the UK market. Perhaps there is one. Name it. Don’t just poo poo a solid investment option.

IFA built portfolios we’ve seen here tend to be unnecessarily complex and expensive, in some cases with dodgy and illiquid investments. I understand why they do it and don’t blame them.  I am still surprised they would be permitted to rubbish cost efficient and simple passive approach. The kind of approach which is recommended by people who know what they are doing. https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjho57YhoftAhVlEFkFHRbrDJcQFjAGegQIBhAC&url=https%3A%2F%2Fwww.cnbc.com%2F2019%2F01%2F16%2Fwarren-buffett-says-jack-bogle-did-more-for-the-individual-investor-than-anyone-hes-ever-known.html&usg=AOvVaw3RXZpY9n_0SVN-kT4h49A5

Morningstar tells me that VLS100 has underperformed its category index by an average of 2% annually for the past 5 years.   That would suggest that the "not a great fund" description is appropriate especially for an extremely well diversified fund based on trackers..  Being a fund of trackers does not make something a great fund.

[Deleted User]

adam81 said:

At present I have circa £150K in a work based Scottish Widows pension.  It's in the Pens One Portfolio.  Still 15+ years to retirement.  They charge 0.75% so the fees are around £1125 a year, so the fees are starting to rack up now, as the pot grows.
I have an ISA with Halifax that is invested VLS60.  My belief is for £500 I can transfer out, so in theory if I put it all in VLS100 on Vanguard Sipp, after one year factoring in the £500 transfer I'll be £400 better off, and the next years would be better once the £500 has been paid.
However the research I have done, has led me to believe that whilst VLS is a fire and forget, once the pot increases to £100K+, most people say it does require more input/funds adding to it.

Question I guess, would most accept the 0.6%, or look for other options are take ownership of the pot completely?  At present, whilst I understand the  mechanics behind investing, and am putting a fair amount into the pension each year, my knowledge of funds/sectors. is very minimal.
Thanks

You can find an overview of simple passive investment vehicles here: https://monevator.com/passive-fund-of-funds-the-rivals/

An overview of brokers and their charges can be found here: https://monevator.com/compare-uk-cheapest-online-brokers/

[Deleted User]

Linton said:

Deleted_User said:

“VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?”

Wow. A little surprised an IFA is permitted to say things like this. 

VLS100 is a fund of trackers. You buy the whole world in a very simple, low cost sweep.  Extremely well diversified.  It’s a little overweight in domestic equities which is based on sound research. 

Although I personally use ETFs and my costs are a little lower, I pay for it with extra complexity. Not aware of a passive and cheap one-fund alternative to VLS in the UK market. Perhaps there is one. Name it. Don’t just poo poo a solid investment option.

IFA built portfolios we’ve seen here tend to be unnecessarily complex and expensive, in some cases with dodgy and illiquid investments. I understand why they do it and don’t blame them.  I am still surprised they would be permitted to rubbish cost efficient and simple passive approach. The kind of approach which is recommended by people who know what they are doing. https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjho57YhoftAhVlEFkFHRbrDJcQFjAGegQIBhAC&url=https%3A%2F%2Fwww.cnbc.com%2F2019%2F01%2F16%2Fwarren-buffett-says-jack-bogle-did-more-for-the-individual-investor-than-anyone-hes-ever-known.html&usg=AOvVaw3RXZpY9n_0SVN-kT4h49A5

Morningstar tells me that VLS100 has underperformed its category index by an average of 2% annually for the past 5 years.   That would suggest that the "not a great fund" description is appropriate especially for an extremely well diversified fund based on trackers..  Being a fund of trackers does not make something a great fund.

When talking about a fund of trackers, you should be comparing with the indices its tracking. The average underperformance = costs. Morningstar isn’t comparing with the right benchmark. 

If you look at the last few years and compare against the world index, VLS loses out because its overweight UK and because its not an appropriate benchmark. Countries out/underperform, but long term it all evens out and the last year tells us nothing about the next. 

[Deleted User]

Tinkering with narrow, sector-specific ETFs is likely to be a major distraction over the long term. Good advisors recommend simply using total-market vehicles and avoiding trying to guess the next hot sector.

Linton

Deleted_User said:

Linton said:

Deleted_User said:

“VLS100 is not a great fund. Better alternatives exist.  So, why would you want to use that?”

Wow. A little surprised an IFA is permitted to say things like this. 

VLS100 is a fund of trackers. You buy the whole world in a very simple, low cost sweep.  Extremely well diversified.  It’s a little overweight in domestic equities which is based on sound research. 

Although I personally use ETFs and my costs are a little lower, I pay for it with extra complexity. Not aware of a passive and cheap one-fund alternative to VLS in the UK market. Perhaps there is one. Name it. Don’t just poo poo a solid investment option.

IFA built portfolios we’ve seen here tend to be unnecessarily complex and expensive, in some cases with dodgy and illiquid investments. I understand why they do it and don’t blame them.  I am still surprised they would be permitted to rubbish cost efficient and simple passive approach. The kind of approach which is recommended by people who know what they are doing. https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjho57YhoftAhVlEFkFHRbrDJcQFjAGegQIBhAC&url=https%3A%2F%2Fwww.cnbc.com%2F2019%2F01%2F16%2Fwarren-buffett-says-jack-bogle-did-more-for-the-individual-investor-than-anyone-hes-ever-known.html&usg=AOvVaw3RXZpY9n_0SVN-kT4h49A5

Morningstar tells me that VLS100 has underperformed its category index by an average of 2% annually for the past 5 years.   That would suggest that the "not a great fund" description is appropriate especially for an extremely well diversified fund based on trackers..  Being a fund of trackers does not make something a great fund.

When talking about a fund of trackers, you should be comparing with the indices its tracking. The average underperformance = costs. Morningstar isn’t comparing with the right benchmark. 

So you can only compare funds with an identical asset allocation? Which rather makes any assessment of any funds impossible. Under other circumstances people are happy to compare managed global funds with a global index, why should not fettered funds of funds be treated in the same way?

[Deleted User]

“Who has said you should include certain sectors at the expense of others?  Why do you think portfolios made up of single sector funds would do that?”

If you are using sector funds and then keep rebalancing to ensure sectors are cap weighted to their overall contribution to economy, then you are adding costs and complexity for no benefit whatsoever.