2nd S&S ISA, Fidelity and SMT

whatstheplan

Hi

I have one S&S ISA with Vanguard opened tax year 20/21 with £20k invested.  I want to invest another £20k during 21/22 and need to decide whether to put this into Vanguard or open a second S&S ISA elsewhere to open up my investment options.

I've been looking at Fidelity and the Scottish Mortgage Investment Trust (SMT.)  I was originally interested in SMT before I discovered Vanguard and their LS products.  I have some questions that I'd be keen to receive your feedback on.

1. Your opinion on Fidelity?  They seem to receive favourable reviews.  Regardless of whether or not I invest in SMT, is Fidelity a reasonable choice away from Vanguard to open my second S&S ISA?

2. Your opinion on SMT?  There is a degree of crossover with my Vanguard LS100 portfolio however not significantly so.

3. SMT is 28% emerging markets.  LS100 is 9% emerging markets.  If I was to invest my £40k equally across both SMT and LS100, does this mean my total exposure to emerging markets is 18.5% (average across both)?

4. Given I'm only investing £40k total, am I over complicating things for myself in terms of future returns?  What I'm driving at is, would I be just as well putting all £40k into the Vanguard LS100, or can you see some logic in me having 50% of my pot invested in a different fund?  Whilst appreciating any investment can rise/fall, part of my rationale is to split my total investment pot across LS100 and SMT so I'm not 'all in' on a single fund/product.  However I also appreciate some say Investment Trusts aren't always a good investment overall when you factor in management fees and other charges?

5. If I was to invest £20k into SMT via Fidelity, is my calculation correct re: charges?  Anything missed?

£10: One off dealing fee charge
£70: Annual S&S ISA service fee, 0.35%
£72: Annual ongoing charge with performance fee, 0.36%
£16: Annual transaction cost fee, 0.08%

6.  As I always ask, in summary is my proposed plan in your view sensible or not?

Thanks.

csgohan4

Why fidelity, why not iweb for example with no annual charges?

Why SMT and not another IT? Are you picking them because of previous performance? does it fit in your portfolio? SMT is not strictly  an EM IT or an index tracker for that sense.

They are an active managed trust with a variety of companies, it is a higher risk IMO, but key is does it fit your risk appetite?

ColdIron

whatstheplan said:

£70: Annual S&S ISA service fee, 0.35%

I think Fidelity cap the cost of shares, investment trusts and ETFs at £45

I also think putting 50% of my investment in SMT would be, as Sir Humphrey used to say, courageous

csgohan4

ColdIron said:

whatstheplan said:

£70: Annual S&S ISA service fee, 0.35%

I think Fidelity cap the cost of shares, investment trusts and ETFs at £45

I also think putting 50% of my investment in SMT would be, as Sir Humphrey used to say, courageous

indeed

Although my fun fund makes up 5% in high risk shares above my usual risk appetite. But 50% in SMT is brave, but one person's meat is another man's poison. 

AlanP_2

1) We use Fidelity for a SIPP and a small ISA. Works fine for us, queries promptly dealt with and reasonable price. I'm sure web interface may be bettered on some platforms but how often will you be using that in reality?

2) May be a limited crossover as you say but it won't be that much as SMT is focused on a small number of conviction choices and has a far wider remit than VLS100 to look for opportunities. They were in Tesla well before it floated for example.

Likely to be more volatile than VLS100 and you need to keep an eye on the discount / premium. SMT have had a great run over last 2 years as have many of the BG offerings but take a look at pre-2020, their performance was OK but nothing like it has been recently. Will they find the next Tesla and get in early enough to repeat that sort of performance in the future who knows.

3) Yes, but remember SMT couldn't give a monkeys about geographies, they are 100% pick the right companies and that allocation will vary as their investments change.

4) Depends on what you want to achieve, timescale and attitude to risk. SMT will be a roller-coaster I would expect and whilst any 100% equity fund will be volatile they will be supercharged. If you are hapy to let it run for 10+ years and take a bet on them continuing to pick winners then it makes sense. If you would be worried at a 20-60% drop and sell up then probably not.

5) Fees look about right but you have forgotten the one-off 0.5% duty imposed by HMRC on exchange traded assets and remember you only pay the Fidelity charges directly, SMTs are "built in". 



No idea whether it is sensible for you as don't know what you want to achieve. For me it would be very high risk but I am about to start drawdown so having 50% in one "big win / loss" fund wouldn't suit.


BTW - Whilst it is 50% of investments this year will that change in the future as you add more? Having it as say 10% in a diversified portfolio might be a more comfortable ride.

Albermarle

I think Fidelity cap the cost of shares, investment trusts and ETFs at £45

Correct, you could say this is the main advantage of using Fidelilty , as it applies to all accounts , ISA, SIPP etc across the board .

Alexland

Fidelity are best for large capped SIPPs in exchange traded assets, free junior accounts in funds or small ISA/GIAs if you want to invest in a wide range of funds.

For medium to large ISA/GIAs then there are better options in particular iWeb (£100 setup) for good choice, Jarvis-XO (£50+vat closure) for exchange traded assets or Lloyds for frequent fund trades.

For this requirement of holding SMT then I would consider iWeb (you could perhaps save money by transfering in your Vanguard ISA) or Jarvis X-O but then I wouldn't want to hold SMT right now as after the 100% increase last year it seems likely to underperform over the next few years.

https://citywire.co.uk/new-model-adviser/news/when-funds-rise-over-100-in-a-year-what-happens-next/a1453835?sectorID=2563

whatstheplan

Thanks for the replies all.

I considered SMT when I first started looking at investments, however then settled on Vanguard's LS100 for my first foray.  I'm not completely wedded to SMT, however I liked what I read including the portfolio mix.  I take on board the comment about the last 12 months performance being unusual and where will SMT go over the coming years.  I also understand the changing characteristics of the proverbial 'top 10' funds/trusts and not to base my investment decision on that.

I'll definitely look at iWeb.  I actually looked at my bank's S&S ISA offering (BOS) and admit I should have explored that earlier, they charge £36 a year management fee plus £9.50 a trade, so unless I'm missing something they're slightly more competitive than Fidelity.

I have quite a high risk tolerance, hence me being comfortable going 100% equity.  However, I don't want to be foolhardy or to go against well proven theories thinking I know better.  I'm picking up that some (all?) of you think a 50% portfolio stake in SMT is on the high side, so I'll reconsider this.  If I end up going with SMT, I might consider dropping to £10k i.e. 25% of my overall £40k investment.

Whilst I intend to invest beyond the £40k, I won't be in a position to put £20k per year in due to other commitments.  After this initial 20/21 and 21/22 £40k injection, 22/23 might be circa £10k and thereafter I might be limited to circa £6k annually.

Albermarle

I actually looked at my bank's S&S ISA offering (BOS) a

Banks S&S ISA's are often not mentioned on this forum. I think it is because traditionally they were more expensive but are now more competitive .

The issue to watch with BOS ISA is a £9.50 charge for buying and selling funds . 

whatstheplan

Albermarle said:

I actually looked at my bank's S&S ISA offering (BOS) a

Banks S&S ISA's are often not mentioned on this forum. I think it is because traditionally they were more expensive but are now more competitive .

The issue to watch with BOS ISA is a £9.50 charge for buying and selling funds . 

Can I ask my stupid question of the day ...

I've just checked my Vanguard account.  Because I made 2 separate investments into LS100, they've sent me 2 separate documents detailing the fees to be applied.  Am I right to assume I've not penalised myself financially (fees wise) by doing the 2 separate investments?  i.e. I'm not paying double across any of the fee categories, am I?

underground99

whatstheplan said:

Albermarle said:

I actually looked at my bank's S&S ISA offering (BOS) a

Banks S&S ISA's are often not mentioned on this forum. I think it is because traditionally they were more expensive but are now more competitive .

The issue to watch with BOS ISA is a £9.50 charge for buying and selling funds . 

Can I ask my stupid question of the day ...

I've just checked my Vanguard account.  Because I made 2 separate investments into LS100, they've sent me 2 separate documents detailing the fees to be applied.  Am I right to assume I've not penalised myself financially (fees wise) by doing the 2 separate investments?  i.e. I'm not paying double across any of the fee categories, am I?

No, Vanguard's account platform doesn't make a charge for dealing, you just pay the annual 0.15%.   If you ask them to buy £3000 and then separately £2000 they will tell you of the fees relating to the £3000 and the £2000. But as it's all percentage-based on the value of the investment, your fees on the £3000 and the fees on the £2000 will add up to what they would have told you for fees on a single investment of £5000.   Whereas IWeb or BOS would have charged you two fixed dealing fees for doing two transactions rather than one for doing one.