Vanguard Life Strategy 60% - Vanguard SIPP or II?

lucyandthomas

Hi

Thanks in advance for any help.

I'm 48, self-employed and hoping to retire in 10 years using drawdown.

I've got 240K in a Standard Life stakeholder pension with charges at 0.8% and I want to move this as is costs me around 2K in charges each year.

I want to invest all the money in Vanguard Life Strategy 60% - I don't intend to do any trades, just a regular monthly contribution into the same VLS60 fund for the next 10 years. I already have a small Vanguard SIPP (10K) so I could transfer the SL pension into this, but I'm wondering if it would be better to transfer the SL pension into II instead due to the flat fee (and then move the small Vanguard SIPP to II in due course). 

Am I right in thinking this would cost me 0.15 (capped at £375) + 0.22% with Vanguard (so, £375 + £528) = £888 (including 10K that is with Vanguard already)

versus

Flat fee with II £19.99 per month = £240 (with discount for first 6 months, but not really counting that here)

Am I missing something? If I'm invested in exactly the same VLS fund in either SIPP, is it a no-brainer to go with II? 

Many thanks

lucyandthomas

Edit: £903 with Vanguard

SomeMadeUpName

Do you not still have to pay the 0.22% Vanguard fund fee even when you access it through II?

FYI, this is a question not an answer!

AlanP_2

SomeMadeUpName said:

Do you not still have to pay the 0.22% Vanguard fund fee even when you access it through II?

FYI, this is a question not an answer!

Yes. Fund / ETF / IT charges are over and above the platform fee whether that is %'age or £ based.

lucyandthomas

Further scrolling through the II website, and I found this:

Quick Start Funds | Ready-made Investment Portfolios - interactive investor (ii.co.uk)

So, it looks like it would be 0.27% fee on top of the £240 flat fee (£648 + £240 = £888) with II.

Is that right? 

If so, as the costs are much the same, and  I don't want to invest in any of the numerous other funds offered by II, are there any other reasons why an II SIPP might be better than the Vanguard SIPP I have already?

SomeMadeUpName

lucyandthomas said:

Further scrolling through the II website, and I found this:

Quick Start Funds | Ready-made Investment Portfolios - interactive investor (ii.co.uk)

So, it looks like it would be 0.27% fee on top of the £240 flat fee (£648 + £240 = £888) with II.

Is that right? 

If so, as the costs are much the same, and  I don't want to invest in any of the numerous other funds offered by II, are there any other reasons why an II SIPP might be better than the Vanguard SIPP I have already?

I don't get it, where does the extra 0.06/0.05% come from on the Vanguard within II (ie how does VLS60 go from 2.2% to 2.7%?

SomeMadeUpName

lucyandthomas said:

Further scrolling through the II website, and I found this:

Quick Start Funds | Ready-made Investment Portfolios - interactive investor (ii.co.uk)

So, it looks like it would be 0.27% fee on top of the £240 flat fee (£648 + £240 = £888) with II.

Is that right? 

If so, as the costs are much the same, and  I don't want to invest in any of the numerous other funds offered by II, are there any other reasons why an II SIPP might be better than the Vanguard SIPP I have already?

I guess the answer to II advantage would be:

There is a small cost advantage on moving everything to II already on a fund your size (even with that 0.05% whatever that is).
That cost advantage will grow as the fund grows over 10 years.
II offer a wider choice if you ever do decide to diversify.

I think?

lucyandthomas

Did you see this bit at the bottom of the link I attached?

What will it cost to invest in the Quick-start Funds?

To buy and sell any funds with ii, our normal charges apply.

Vanguard LifeStrategy® funds have an ongoing charges figure (what it costs to run the fund) of just 0.22%. That means for every £1,000 you invest, £2.20 goes on management costs. Funds often have other fees, such as transaction charges incurred by the fund manager, which increases the overall costs. This means the total product cost of investing in each Vanguard LifeStrategy® fund is:

• 0.28% for the LifeStrategy® 20% equity fund
• 0.27% for the LifeStrategy® 60% equity fund
• 0.27% for the LifeStrategy® 80% equity fund

Quite what you get for the extra 0.05% with II  I don't know.

SomeMadeUpName

@lucyandthomas, yes, I saw that and that's my question, what is this extra 0.05%?

SomeMadeUpName

Regardless, I think your own sums show you are a little better off consolidating in II.

My understanding though is still quite limited, as I only engaged in this retirement planning about 3 months ago.  So I'd wait until you are sure yourself or others have agreed.

You are well ahead of us (SIPP wise) at present, meaning our SIPP is better in Vanguard as the lower fund sizes make the % charging structure better (plus like you we currently have no interest in wide ranges of possible investments, too scary atm).

eskbanker

As per an earlier post, it's best to separate out platform charges from fund charges, i.e. you should just focus on Vanguard's 0.15% versus II's fixed £19.99 monthly.

The fund charges will be the same for VLS60 wherever you buy it, even though some of the above aspects are presented in a confusing way - the primary comparator is the ongoing charge figure (OCF) of 0.22% but there are other internal costs such as transaction charges (for managing the investments within the fund), which are usually up to about 0.05% for funds like this.  The fact that some platforms will highlight these more openly than others is a concern, but the key message is that such fund costs are the same wherever you go, so it's a waste of time trying to use them as part of a decision about which platform to use.

They're also internal costs within the management of the fund, so you don't actually see them listed as charges on an invoice or fee statement, unlike the platform charges, i.e. they should form part of your evaluation of which fund you wish to invest in, but aren't relevant to deciding the platform once you've picked the fund....