Seeking advice on my HL ISA

StarryEyes

Several years ago, I opened an ISA with Hargreaves Lansdown and started a regular monthly investment.  Initially, £250 a month into a FTSE 100 fund.  Over time, I was able to slowly increase the amount of my regular monthly savings and in recent years I switched to Vanguard Lifestrategy 80 instead.  I am currently investing £1200 a month into this.

About 5 years ago, I also transferred in a cash ISA and split the money into 5 other funds, aiming for some diversification.  The total value of my ISA is now about £117k.

There are 2 issues I am looking for advice and thoughts on.

Firstly, HL is proving to be an expensive platform now, the monthly management fee is nearly £45 a month and will only increase.  Thoughts on transferring please?  I looked on a platform fee comparison site and it suggested Interactive Investor as the cheapest platform, £9.99 a month, as opposed to the £45 I'm currently paying (seems too good to be true, am I missing something?)  The only problem I can see, is that 3 of the funds I hold are not available on ii.  All 3 are Legal & General funds (US Index, European Index, All Stocks Gilt Index).  What would be the best way forward?  Sell these funds and just put the proceeds into VLS80, then transfer?  Will that count towards my £20k ISA allowance?  Apologies for being a bit thick.

The other 2 funds I hold are iShares Japan and iShares Pacific ex Japan.  Ultimately though, the 2 biggest funds I hold are the FTSE 100 and Vanguard LS80, the latter being the only one receiving further investment.  So the second issue is about errors in my portfolio and lack of diversification.  Can anyone suggest a better strategy for me?

To add a bit of background, I'm mid 40s, work full time and intend to continue monthly investing for at least the next 10 years.

Thank you for taking the time to read this and I appreciate any thoughts or comments about the best way forward to make my hard earned money work better at building a steady pot for the future.

george4064

I think there’s 2 issues here. (1) You think your (platform) charges are too high and are considering switching and (2) you’re unsure if your portfolio is suitably diversified enough.

1. HL is probably one of the most expensive investment platforms out there, so there’s definitely savings to be had here. Different platforms have different charging structures, including some levying fees for dealing whilst others won’t charge dealing fees so you need to compare both the platform charge and dealing fees combined (obviously depends on how often you deal). Also, many platforms have different fee structures for unit trusts/OEICs vs listed securities such as ETFs and Investment Trusts, a few platforms (including HL) have a capped fee for listed funds so you should be able to make big savings just by switching your entire portfolio into listed securities, if you feel comfortable doing that. Otherwise if you want to stick with funds you’ll have to transfer to a new provider to save on fees.

2. Portfolio diversification is really down to personal preference, risk tolerance and how hands on you want to be. It would be helpful to post your portfolio in full here so people can make suitable comments.

Albermarle

HL charges a % of your total fund 0.45%
The other main whole of market '% chargers' are Fidelity  0.35% and Aj Bell - 0.25% ( but with a charge for buying and selling)

II is a 'flat fee ' charger , so the larger your ISA, the more competitive the price becomes + there are some dealing charges with a certain number free. The platform 'Iweb' is even cheaper and there are others .

As mentioned if you do not invest in funds but in 'exchange traded products' the '% chargers' have a lowish cap so can become competitive again .
Also the lower price platforms tend to charge extra for SIPPs and drawdown , whereas for the others they do not.

Any reason why you are funding an ISA rather than a pension ( to get tax relief) ?

StarryEyes

Thank you to both george4064 and Albermarle for your responses. 

I'm not sure how best to describe my risk tolerance, low to medium perhaps?  I'm a natural saver, living well within my means.  My reason for starting a S&S ISA years ago was to hopefully get a better return than keeping all my savings in cash.  As a new investor back then, all I really understood was how not to invest in individual shares (too risky) and that 'time in the market was better than trying to time the market'.  A regular monthly investment seemed the way to go.
Of course I now realize that my initial FTSE100 funding was risky, which is why I switched my monthly investing into VLS80.

I have to be honest and say that there's a lot about investing I still need to learn.

Anyway, here's the portfolio with %
39.3%   HSBC FTSE 100 Index
31.4%   Vanguard Lifestrategy 80% Equity
7.6%     Legal & General US Index Trust
5.6%     iShares Pacific ex Japan Equity Index
5.5%     Legal & General European Index
4.9%     iShares Japan Equity Index
4.6%     Legal & General All Stocks Gilt Index Trust
1%        Individual bank shares

Really I'm happiest with a kind of 'set up and forget' sort of investment.  I won't be doing lots of buying and selling, but just plodding along with the regular monthly investment.  I assume each one of those counts as 1 trade, so 12 trades per year.  I am hopeful to continue like this for the next 10 years at least.

Regarding Abermarle's pension question, again I have to be honest and say I understand pensions even less than I do Investments!  I do pay into a workplace pension though.

Many thanks for taking the time to respond.

Albermarle

Regarding Abermarle's pension question, again I have to be honest and say I understand pensions even less than I do Investments!  I do pay into a workplace pension though.

A pension is an investment . Within your workplace pension , your money is in investment funds , same as with your ISA.

You need to look at S&S ISA + pension + cash savings etc all in the round , not just individually .

So firstly have a good look at your workplace pension and how it is invested , just in the same way you have thought about how your ISA is invested .

Then think about that extra pension contributions could be better than ISA contributions , due to the tax benefits of contributing to a pension . Especially if you are not likely to want to access the money until your mid/late Fifties . In this case pension beats ISA, due to the tax relief on contributions .

masonic

StarryEyes said:

Anyway, here's the portfolio with %
39.3%   HSBC FTSE 100 Index
31.4%   Vanguard Lifestrategy 80% Equity
7.6%     Legal & General US Index Trust
5.6%     iShares Pacific ex Japan Equity Index
5.5%     Legal & General European Index
4.9%     iShares Japan Equity Index
4.6%     Legal & General All Stocks Gilt Index Trust
1%        Individual bank shares

Have you considered going 100% Vanguard Lifestrategy 80% Equity? I'm not really seeing what the other overlapping holdings are adding (beyond more UK bias). I should add this portfolio does not look consistent with a low-medium risk tolerance. Looks above average risk, definitely in the high category. Majority would find this too high risk. If held together with a generous % cash, then that would change things.

StarryEyes

Albermarle said:

Regarding Abermarle's pension question, again I have to be honest and say I understand pensions even less than I do Investments!  I do pay into a workplace pension though.

A pension is an investment . Within your workplace pension , your money is in investment funds , same as with your ISA.

You need to look at S&S ISA + pension + cash savings etc all in the round , not just individually .

So firstly have a good look at your workplace pension and how it is invested , just in the same way you have thought about how your ISA is invested .

Then think about that extra pension contributions could be better than ISA contributions , due to the tax benefits of contributing to a pension . Especially if you are not likely to want to access the money until your mid/late Fifties . In this case pension beats ISA, due to the tax relief on contributions .

Thanks Albermale.  I will definitely look at my workplace pension and see what additional contributions I'm allowed to make.  It's not something I've ever considered before so thank you for highlighting this.  I've just found it all so confusing in the past.  It doesn't help that the pension scheme keeps changing (3rd one now since I joined the company and even the current one is only temporary until the company successfully lobbies the government for a change in legislation).
I will dig out all my pension information and do further research.

StarryEyes

masonic said

Have you considered going 100% Vanguard Lifestrategy 80% Equity? I'm not really seeing what the other overlapping holdings are adding (beyond more UK bias). I should add this portfolio does not look consistent with a low-medium risk tolerance. Looks above average risk, definitely in the high category. Majority would find this too high risk. If held together with a generous % cash, then that would change things.

Thanks masonic.  Yes, I would consider  switching it all into VLS80, it would certainly make things simpler I suppose.  Any downsides to doing this I wonder?
Definitely didn't realize my portfolio was in the high risk category!  Just goes to show how much I need to learn.  Is it just the strong UK bias making it high risk, or am I missing something else?
I assume that if my ISA was purely VLS80, then it would be far simper process switching to a cheaper platform.

masonic

StarryEyes said:

masonic said

Have you considered going 100% Vanguard Lifestrategy 80% Equity? I'm not really seeing what the other overlapping holdings are adding (beyond more UK bias). I should add this portfolio does not look consistent with a low-medium risk tolerance. Looks above average risk, definitely in the high category. Majority would find this too high risk. If held together with a generous % cash, then that would change things.

Thanks masonic.  Yes, I would consider  switching it all into VLS80, it would certainly make things simpler I suppose.  Any downsides to doing this I wonder?
Definitely didn't realize my portfolio was in the high risk category!  Just goes to show how much I need to learn.  Is it just the strong UK bias making it high risk, or am I missing something else?
I assume that if my ISA was purely VLS80, then it would be far simper process switching to a cheaper platform.

It's high risk because at present it is >80% equities, this is above the risk tolerance of most people. If you were not having sleepless nights as your investments fell during the Covid crash, then perhaps you are just underestimating your risk tolerance.

The UK bias (very slightly) lowers the risk, just because it lowers the US allocation, which is dominated by growth/tech companies. If the 30% UK bias already in VLS wasn't enough for you, then you could simplify to two funds (VLS plus UK - preferably FTSE All share for diversification). Since there are no charges for fund switches, and you are simplifying, it would make sense to do this before transferring.

jimjames

The other option for switching is iWeb. It's got a £100 opening fee but no charge beyond that for holding investments. It's £5 per buy so would be more expensive to buy each month although still much cheaper than £45 pm for HL fees.