SIPP - please help me get out of this pickle!

travelodger

I admit upfront I am really ignorant about money issues and I'm sorry for that, and from time to time I need advice and help.

In November 2021 I had about £45k in a SIPP with HL, invested in managed funds. I was perfectly happy with it. I had seen it grow over the years, and enjoyed being able to see the figure rise each time I logged in to see my ISA and SIPP together.

Then someone on here (I am not blaming this person for my current predicament) said that it was stupid to have ones SIPP with HL because their fees are so high. He said clever people put their SIPP with Vanguard and several others agreed. I didn't want to be that fool so I switched my SIPP to Vanguard and changed my DD to pay into it monthly.

It wasn't so convenient to have to keep logging in to two different websites so I visited my SIPP less often. When I did, after a few weeks, it had lost £4,000! I was horrified!

OK so there was a recession, and everyone was losing. My ISA had taken a big downswing, too. We just needed to sit tight and wait. Eventually my ISA went from being in the red to being back in the blue again. All my finds are on an upward trajectory and I have already made several thousands in the past few months.

My SIPP, however, has not even reached what I invested. It's still worth £1,500 less than I put into it, and that figure has not changed in a year. I feel disgruntled with Vanguard and wish I had never switched to them.

My Stocks and Shares ISA is now doing really well.

Should I leave the Vanguard SIPP alone until it at least comes back up to the amount I have put in it, or should I withdraw now, lose the £1,500 and hope I'll make that money back by choosing my SIPP fund on HL wisely? 

masonic

You've mentioned the provider and the account type, but not the investments. It is the choice of investments that largely determines performance. You'd have faced the same outcome if you held the same funds at HL, but paid a little more in fees.

A £4k loss from £45k of investments doesn't seem out of the ordinary, nor that your investments haven't yet returned to their previous peak value.

travelodger

93% is in Target Retirement 2025 Fund - Accumulation and the rest LifeStrategy® 80% Equity Fund - Accumulation

travelodger

Those funds are not AFAIK available on HL.

On HL I had my SIPP invested in  FSSA Asia Focus which increased 5% in the past year :-(

masonic

travelodger said:

93% is in Target Retirement 2025 Fund - Accumulation and the rest LifeStrategy® 80% Equity Fund - Accumulation

The problem, then, is the asset allocation. You've put 93% into a fund that is by design heavily exposed to bonds. Bonds are sensitive to interest rate rises. Interest rates go up, bonds go down. Was there a good reason to opt for such a fund (e.g. you are purchasing an annuity in 2025 and wanted to lock in a particular income from this)? Annuity rates have been going up as bonds have been falling, so the income you can buy with your pot is probably no worse, so the fund is in some sense doing what it says on the tin.

Dazed_and_C0nfused

travelodger said:

Those funds are not AFAIK available on HL.

On HL I had my SIPP invested in  FSSA Asia Focus which increased 5% in the past year :-(

Pretty sure both of those are on HL.

But they almost certainly will cost more in fees on HL compared to going with Vanguard direct.

masonic

travelodger said:

On HL I had my SIPP invested in  FSSA Asia Focus which increased 5% in the past year :-(

That in itself is highly worrying. As our most prominent resident IFA would say, single sector investing is high risk investing. But the change from 100% equities in a single sector to ~40% equities and 60% bonds does not seem to be rational. It is best to choose investments that are appropriate to your objectives and risk tolerance, then choose the cheapest platform to hold those investments. Moving to Vanguard could have been a sound choice, but the seismic shift in investments has undermined any saving that could have been realised.

The remaining question to answer is why Target Retirement 2025? Is this an appropriate investment for your circumstances? Will you be using the SIPP to purchase an annuity on or around the target retirement date?

jimjames

One other thing to consider is the time that you moved the money to Vanguard and that any performance figures are based on the move at that time. You really need to compare it to the money you invested initially rather than the amount at the point of transfer otherwise you aren't comparing like with like.

I sold some shares a few months back to move into my ISA. In the ISA they are showing as making a loss but in reality I'm in a very good profit. Just because the point I moved them into the ISA reset the calculations means that performance figure is rather misleading.

BTW moving a SIPP from HL but not an ISA makes no sense. HL are equally expensive for ISAs and SIPPs so you'd really want to move both or none.

masonic

Referring to your other thread, in November 2021, just before your move to Vanguard, you said you held the following in your SIPP:

travelodger said:

2. My SIPP is entirely invested in HL MULTI-MANAGER BALANCED MANAGED TRUST CLASS A - ACCUMULATION.

https://forums.moneysavingexpert.com/discussion/comment/78748640/#Comment_78748640

I'm not sure if you held FSSA Asia Focus some years earlier than that, but its performance has not been vastly different to the Target Retirement fund despite the much higher risk. It has had a bit of a spurt in the past few months, but that's happened in 2020/2021 and it didn't last long. The HL MM fund was not good either. Vanguard LS 80, which you hold a little of, has also performed much better than the HL MM fund and similar to the FSSA Asia fund. The key thing to note is that the HL MM fund was expensive and poor value, and that seems to have been the basis of the discussion around moving to Vanguard in your other thread.

dunstonh

93% is in Target Retirement 2025 Fund - Accumulation and the rest LifeStrategy® 80% Equity Fund - Accumulation

Very different funds and the former would have suffered more in 2022 than the latter.

Nothing to do with Vanguard as you made these choices.   And events around the world in 2022 were not Vanguard's fault.

Those funds are not AFAIK available on HL.

They are available on every whole of market platform, including HL.

On HL I had my SIPP invested in  FSSA Asia Focus which increased 5% in the past year :-(

That is a bad choice for a 100% investment fund.   single sector investing is high risk investing

However, your selections are all over the place.   What made you select Vanguard TR 2025?

I feel disgruntled with Vanguard and wish I had never switched to them.

When you DIY, you select the investments.   Not Vanguard.     The decision is down to you or your financial adviser, if you have one.    Vanguard didnt tell you to go 56% equity on your pension but 80% equity on the ISA..    Excluding black swan events, the 80% equity would be expected to beat 56% equity in most periods.      That has happened to you in the first year and you are disgruntled.   It will probably happen 80% of the time.   

That is a bit like making yourself a cup of tea and a cup of coffee and then saying I am disgruntled with PG as the tea doesn't taste of coffee.

travelodger

@masonic thanks for correcting me, I must have misremembered. I have a very very bad memory, caused by a trauma. I'm doing my best.

A The remaining question to answer is why Target Retirement 2025?  B is this an appropriate investment for your circumstances? C Will you be using the SIPP to purchase an annuity on or around the target retirement date?

A) I have no idea. Maybe someone suggested it? B I don't know. C) No, I don't even know what an "annuity" is.  

@dunstonh What made you select Vanguard TR 2025? I do not have the foggiest idea.

Never mind the past. Please advise what I should do now. I am absolutely clueless. I didn't intend to have this money and I have no idea how to look after it.

Sometimes the stress of feeling the pressure to "do something" with this money gets so much that I feel like withdrawing it all and sticking  in under the mattress!

Altogether I have a quarter of a million pounds and that scares me to death!

Many thanks to anyone sage who can sort me out.