Risks of Time out of the Market when Transferring a S&S ISA to Vanguard

I have 56K in Aviva ISA Multi Asset plus II costing 0.58% platform and 0.5% IFA costs total 1.08%. I'm thinking of transferring to Vanguard Lifestrategy 60/40 Funds with lower Platform costs of 0.15% and LS funds 0.22. Total 0.37% (No IFA costs). My question is what risks will i face given it could take 30 days to transfer from Aviva to new Vanguard funds. I assume they will transfer as cash from Aviva funds to the Vanguard Platform to be reinvested in their LS fund? I plan to contribute monthly to VG going forward.

Comments

  • eskbanker
    eskbanker Posts: 29,932
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    The risk you face is that the value of the VLS units increases while your money is in transit, but that seems so obvious that it makes me wonder if you mean something else?
  • Not transferred an ISA before just wanted to see if there was anything I had't considered before pushing the button. I guess if the cash generated from the Sale of Aviva Funds sits for 30 days in-transit to Vanguard I have a 50% chance of VLS shares going up or down on todays prices. 
  • fred246
    fred246 Posts: 3,620
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    You risk upsetting an IFA.
  • eskbanker
    eskbanker Posts: 29,932
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    Bydie257 said:
    Not transferred an ISA before just wanted to see if there was anything I had't considered before pushing the button. I guess if the cash generated from the Sale of Aviva Funds sits for 30 days in-transit to Vanguard I have a 50% chance of VLS shares going up or down on todays prices. 
    It's not necessarily 30 days - this is meant to be the maximum time to transfer but many end up taking longer, and many less too to be fair.

    It's unlikely to be literally 50/50 chance as there are more up days than down days, otherwise why invest?!  However, in your situation of wanting to change both provider and investment (without having the option of changing fund within the same provider), you don't have any choice about having some time out of the market, so it just needs to be accepted....
  • May be worth the 0.5% savings over 10 years on 56k.
  • underground99
    underground99 Posts: 404
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    Bydie257 said:
    May be worth the 0.5% savings over 10 years on 56k.
    Yes, if you assume that in a good year, the mixed-asset fund might go up in value by 6% - a twelfth of that would be half a percent (on average) during a whole month 'out of the market'.  Markets don't move in straight lines of course.  But if the net investment returns over the next x years will hopefully be cumulatively worth more than that one-off half a percent, then statistically it seems like it's worth biting the bullet and doing it. 
  • Albermarle
    Albermarle Posts: 21,200
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    Bydie257 said:
    Not transferred an ISA before just wanted to see if there was anything I had't considered before pushing the button. I guess if the cash generated from the Sale of Aviva Funds sits for 30 days in-transit to Vanguard I have a 50% chance of VLS shares going up or down on todays prices. 
    Even if the whole transfer takes 30 days , it does not mean you will be in cash for 30 days. Probably for the first 15 days it might still be sat in the Aviva funds .
    Although also worth noting that Aviva have a reputation for being one of the quickest to transfer out of , so the whole process may be quicker than you think ( note the word ' maybe' )
  • jimjames
    jimjames Posts: 17,498
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    Could you drop the IFA percentage completely? That would get you closer to Vanguard and avoid being out of the market.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • dunstonh
    dunstonh Posts: 115,722
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    edited 11 May 2021 at 12:51PM
    jimjames said:
    Could you drop the IFA percentage completely? That would get you closer to Vanguard and avoid being out of the market.
    Yes.   IFAs cannot insist on ongoing service.
    However, the fund used is typically used on robo-services rather than full advice services. it is available otherwise but the fact that its bundled rather than unbundled charging including platform suggests this may be a robo offering.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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