Switching from Vanguard LS to ETFs on Fidelity

Alexland

Herbalus said:

What’s the benefit of concentrating the pension contributions to half or part of the year? I haven’t come across that before.

NI is calculated on your weekly earnings so if you are managing your contributions to keep below the boundary of paying higher rate tax and have sal sac you can cause your income to fall so low in some weeks that you save 12% NI and then so high in other weeks that you only pay 2% NI causing a 10% NI saving on the shifted contribution. You would still always make enough contribution to get employer matching in every month.

MDMD

Thanks for the above, and particularly the detail from @Alexland

As part of the “DYOR” process while I wait 5 days for the proceeds of the VLS sale to clear, I’ve narrowed it down to the below four. I’m going to look into transferring the workplace pension into the main SIPP account but probably after I have made the tax year end large payments.

ishares SWDA ETF

Pro - accumulating, very large fund, very liquid

Con - Majority of workplace pension is already in blackrock funds (see below), more expensive than all the below (but cheaper than the workplace fees)

HSBC - HMWO ETF

Pro - cheaper than blackrock, large fund

Con - I was planning on using HSBC FTSE All-World Index Fund Accumulation C for my ISA so too much concentrated in HSBC (with iWeb before they put their fees up), No EM and non accumulating so need to reinvest the dividend

Vanguard VEVE ETF

Pro - cheaper still

Con - seems quite a small fund (assets under $1bn, does this make a difference?), no EM, non accumulating 

Vanguard VWRL

Pro - all world

Con - more expensive than all of the above, non accumulating 

It’s all much of a muchness but gut feeling is for VEVE, then if I can transfer in from the WP scheme, put that in SWDA with a separate EM fund that is cheaper than the one below. For context, the workplace pension funds are:

BlackRock Global Equity (50/50) Fd Cl 11 (KGEM) - this was the default for the first month before I was able to change the investment proportions (1%) 

Fid BlackRock Emerging Markets Fund Cl 5 (KBMV) (8%)

Fid BlackRock UK Equity Index Fund Cl 5 (KBUV) (19% - this is a bit high, I know)

Fid BlackRock World (ex-UK) Equity Fd C5 (KBWV) (72%)

Alexland

There is no EM in SWDA either but you are right it's very liquid with a tight spread usually around 0.04%. I didn't have any problems getting a fair price on buying a large quantity of VEVE other than having to split it into multiple transactions because of Fidelity's £200k per trade limit. Still I haven't tried selling it yet and won't for a very long time. I figured that by holding VEVE long enough the reduced OCF would quickly pay for the increased market spread and more than cover the 4 x £1.50 pa to automatically reinvest dividends. I checked with Fidelity and they confirmed that the currency conversion on VEVE dividends was done by Euroclear so not at the Fidelity 1% currency conversion charge.

DireEmblem

I'm in a remarkably similar situation to you OP.

Pension:  I let it manage itself.
S&S ISA:  I use Fidelity, and get a 0.25% platform fee, but that expires next year and no longer available.
ETFs & Shares: Trading212.  These are really just small satellite positions, and I switch ETFs to utilise my annual CGT allowance.

If you prefer accumulation funds, then look at VWRP rather than VWRL.  I would also reiterate to maximise your pension contributions, but you're probably well aware of that.

The only other advice I would recommend, is don't just look at costs.  Look for the product you want, and then find what wrappers it can be bought in - Mutual Fund, ETF, Investment Trust, and then look at platforms/costs.

MDMD

Alexland said:

There is no EM in SWDA either but you are right it's very liquid with a tight spread usually around 0.04%. I didn't have any problems getting a fair price on buying a large quantity of VEVE other than having to split it into multiple transactions because of Fidelity's £200k per trade limit. Still I haven't tried selling it yet and won't for a very long time. I figured that by holding VEVE long enough the reduced OCF would quickly pay for the increased market spread and more than cover the 4 x £1.50 pa to automatically reinvest dividends. I checked with Fidelity and they confirmed that the currency conversion on VEVE dividends was done by Euroclear so not at the Fidelity 1% currency conversion charge.

yes, that makes sense and thanks for the point about the conversion. I’m looking at around £100k so the £200k limit won’t come in, and the lower fee will indeed pay for the DRIP. No plans to sell whatever I buy for a while so when I do it hopefully will have paid for the spread or it will have narrowed (looks like 0.16%).

Without wanting to let the fees tail wag the dog, I might put SWDA in the ISA, the lower balance will reduce the impact of the higher fee and and use HMWO for the pension. But then I lose all the EM exposure, although I could get that by upping the proportional amount I pay into the work EM fund.

HiZ

MDMD said:

I’m currently using Fidelity to hold my SIPP, which is mainly in Vanguard LS 100 (with a few ETFs such as Scottish Mortgage and Smithson on the side)

However, the fund is now around £100k which means I am paying around £350 pa just in account fees so I was looking at switching into a low cost world ETF to benefit from the Fidelity £45 fee cap on ETFs. Even accounting for the £10 dealing cost I should end up coming out on top.

I was considering the HSBC All world ETF rather than spreading over a number of funds which would cost more and just duplicate things. Looks like around 19% is in tech stocks which might duplicate with the SMT holding?

https://www.etf.hsbc.com/etf/attachments/uk/factsheet_world_retail.pdf

I am HR taxpayer with at least 30 years to
go, so should I be doing something more adventurous? I’m willing to take some bigger risks with part of the portfolio.

I also have a workplace pension with another £100k in (again with Fidelity) but this is quite cheap and I can pay in through SS, so any costs are easily outweighed by the tax benefits. The funds are restricted to a particular set so I’m going to leave this for now.

How about looking at interactive investor as they have a flat fee which may be worthwhile at 9.99/month. Plus you get free trading credit with this.  There’s a recommend a friend deal on too where you’ll get a year fee free  https://www.ii.co.uk/ii-for-friends/customer

Alexland

MDMD said:
No plans to sell whatever I buy for a while so when I do it hopefully will have paid for the spread or it will have narrowed (looks like 0.16%).

Although spreads can be noticeable costs on larger trades if you clicked the trade button 15 mins later in the day the price could have moved up or down by the same value so as a one off cost it's worth keeping in perspective.

MDMD said:
Without wanting to let the fees tail wag the dog, I might put SWDA in the ISA, the lower balance will reduce the impact of the higher fee and and use HMWO for the pension. 

Depends what you want from your ISA. We were using ours in simple total return mode to build up some money to help the kids through university but now we are thinking they could also have broader benefit in providing some income protection and the opportunity to retire before we can access pensions.

MDMD said:
But then I lose all the EM exposure, although I could get that by upping the proportional amount I pay into the work EM fund.

Yup if anyone ever looked at the asset allocation inside my workplace pension they would think I am completely mad as it doesn't make sense without knowing there is a chunk of developed world equities elsewhere. Although you should consider how this might limit your ability to rebalance.

Alexland

HiZ said:

How about looking at interactive investor as they have a flat fee which may be worthwhile at 9.99/month. Plus you get free trading credit with this.  There’s a recommend a friend deal on too where you’ll get a year fee free  https://www.ii.co.uk/ii-for-friends/customer

II's SIPP is £10 pm in addition to the £9.99 pm service plan fee so almost £240 pa.