S & S ISA 2020-21 Legal and General - ideas?

VXman

Last April I took out two (me and the wife) S & S ISA's with L & G mainly for the cashback. We were in Hong Kong at the time so wasn't really to concerned about tax allowances.
Now we are back and retired I'm thinking a little more carefully about tax implications of my money. To get the cashback you have to invest £2400 over 2 years.I will have done that but now am thinking about the end of this tax year. This will leave £17600 each spare space in our L & G ISA's. I feel I should take advantage of using this before April. 

Any ideas on what to invest in at L & G? 
I am already in the Multi Assest 3 fund which has mediocre performance and seems lower than Vanguard equivalents. Whatever I put in there needs to stay there until April 2023 and I suppose then I could transfer it elsewhere.

So I suppose I'm looking at something short term (2 years) or more medium (5 years)
Anyone have any knowledge of L & G funds?

dunstonh

We were in Hong Kong at the time so wasn't really to concerned about tax allowances.

Were you on holiday or were you an expat (non resident) at the time?

I am already in the Multi Assest 3 fund which has mediocre performance and seems lower than Vanguard equivalents.

L&GMI3 is one of the lowest risk multi-asset funds.  Performance would be lower than higher-risk funds in a growth period.

grumiofoundation

If you want to take advantage of this years tax allowances but don't want to invest in L and G funds you could open a cash ISA this year and contribute the remaining allowance to this ISA. Then next tax year transfer this money to vanguard or a different stocks and shares ISA (maybe a fixed fee platform e.g. iWeb might be better for the amounts you are looking at).

Depends how concerned you are about being out the market for the next couple months. 

Albermarle

Last April I took out two (me and the wife) S & S ISA's with L & G mainly for the cashback

In October 2020, L& G sold their retail investments arm to Fidelity , including legacy ISA's, which had the choice of about 30 or 40 funds , not just multi index funds.

However somewhat confusingly L&G still offer new ISA's but they only offer the choice of 5 L&G multi index funds ( same with their SIPP) I presume this is what you have even though you started them last April? 

Alexland

Given these are ISAs then I assume you were still UK residents for tax purposes.

In april we also opened topcashback L&G ISAs for this tax year's contributions and have been investing in the L&G International Index Trust at 0.51% which is a developed world (ex UK) equities tracker and the return has been healthy because the initial contributions were during the crash recovery. We have also exceeded the minimum contribution so will cancel the regular DD after this month's payment then go back to investing via iWeb from next tax year. After another year the inactive accounts will be transferred into iWeb where we will continue investing via a different fund/IT for a very long time so am not bothered by equities volatility.

The devil in me is tempted to transfer out one of the accounts earlier than 24 months just to see if they bother deducting the cashback as we will be contributing more than I expected when opening the accounts and the charges for next year are higher than we would otherwise pay on iWeb but then if they move us to Fidelity then we would get the lower Wealth platform rate of 0.20% and could pick a cheaper fund. Hmm..

p.s. surely you mean April 2022 not April 2023?

grumiofoundation

I am already in the Multi Assest 3 fund which has mediocre performance and seems lower than Vanguard equivalents. 

Comparing the  performance of L and G multi-assest 3 (~20% equities, in orange) vs what seems to be the most equivalent vanguard fund (VLS 20 in blue). L and G performed better over last 6-9 months.

 

Are you comparing like for like?

bowlhead99

If you are trying to be tax efficient with your retirement monies and have about £35k to invest, the idea of putting it into investments (rather than cash) should be with a view to the long term. Doing the investments in an ISA to avoid tax on the profits makes sense, but throwing £35k into investments for only 2-5 years does not make a lot of sense because the outcome (especially after only two years) could be negative, giving you a worse result than simply taking 1% from a cash deposit.

So presumably the 'short term (2 years)' or more medium (5) is not your entire timescale for how long you want to be using investments generally, which ought to be medium to long term.

In other words, you don't need to focus on getting a good 'short term' result from L&G because if markets are down and you lose money due to the stock and bond markets being low in 2023, you will just be transferring it over to a preferred provider with a wider range of investments (at the low market prices of 2023) where it will continue to be invested and go back up again over the rest of your long investment timeframe.  2023 is simply the point at which you might move to a different provider; whatever you invest in, it's part of a longer term journey for the £35k which might happen to be only worth £30k in 2023 (and then be able to be reinvested at cheap share prices elsewhere) or up to £40k in 2023 (and then reinvested at more expensive share prices elsewhere).

You mention the Multi Index 3 has 'mediocre' performance.  It's designed for someone wanting low volatility (it only dropped about 10-12% from peak to trough in the covid crash last March, where global equities fell 30-40%) and is up 5% over the  last year, 15% over three, 33% over five. It seems to have done exactly what it said on the tin. Are you disappointed that it only gave an 'as expected' performance rather than something better than expected?

If it hasn't grown much in the last 9 months since you bought it, that's simply a function of the fact that it hadn't fallen very far from February to March last year and so could not have been expected to deliver a stunning, high growth rebound when you bought it in April.  If you want high growth investments you would need to be investing at somewhat higher risk than three or four out of ten.  

If you want higher risk (presumably without going fully into equities if your timescale is only 5 years) there are obviously some higher risk options within the mixed asset funds they offer (e.g. Multi-Index 4,5,6,7) including some more ESG-focused ones (e.g. Future World 5).   There are also some crazy volatile specialist funds, such as the Global Technology Index Trust which has almost quadrupled over the last five years but lost about 75% of its value between early 2000 and late 2002.

My parents use Multi Index 5 within their ISAs (although they do have other things too), and it's my mum's only holding in her very small SIPP that she adds to and withdraws from each year. It seems a reasonable medium risk 'core' or filler investment in a portfolio - not very exciting, but isn't supposed to be.

VXman

Alexland said:

Given these are ISAs then I assume you were still UK residents for tax purposes.

p.s. surely you mean April 2022 not April 2023?

Yes 2022 of course  
Well, at the time I was not a UK resident (although I still had a UK address which I used for some financial purposes) However I am UK resident and tax payer now - which is the same tax year in which the ISA was taken out. Surely though it's just important to have the funds in an ISA wrapper to simplify tax matters for when I do withdraw which could be in 2,3,4 years...whenever.

VXman

grumiofoundation said:

If you want to take advantage of this years tax allowances but don't want to invest in L and G funds you could open a cash ISA this year and contribute the remaining allowance to this ISA. Then next tax year transfer this money to vanguard or a different stocks and shares ISA (maybe a fixed fee platform e.g. iWeb might be better for the amounts you are looking at).
Depends how concerned you are about being out the market for the next couple months. 

Ah...that's a thought!

Alexland

After logging into L&G today there was a new splash screen message confirming they were transferring their Personal Investing business to Fidelity later this year although it was not specific which of our accounts are affected. "We will be writing to you shortly to tell you about the proposed transfer to Fidelity and the options available to you."

threlkeld53

Alexland said:

We also opened topcashback L&G ISAs for this tax year's contributions and have been investing in the L&G International Index Trust at 0.51% which is a developed world (ex UK) equities tracker and the return has been healthy because the initial contributions were during the crash recovery. We have also exceeded the minimum contribution so will cancel the regular DD after this month's payment then go back to investing via iWeb from next tax year. After another year the inactive accounts will be transferred into iWeb where we will continue investing via a different fund/IT for a very long time so am not bothered by equities volatility.

I've been following L&G International Index Trust with the 2021-2022 tax year in mind. There seems to be 2 funds, one is 'I' and the other 'R'. The former's cost is 0.13% p. a. whereas the 'R', which is the one you mention, is 0.51% p.a. The breakdown for both is very similar, weightings for sectors and countries also same. Wondered why the cost disparity. The 'I' one has performed fractionally better over recent years.