JISAs with Fidelity Performing Poorly. Move it?

Misd_sixties22

Hello, 
I opened two JISAs with Fidelity over a year ago and it's performing quite badly and lost a few hundred between them. I know the market hasn't been great but compared to my AJ Bell LISA, it's much worse.  Can anyone recommend moving it elsewhere or should I just leave it? I chose Fidelity as it has low fees for children's accounts but I'm not that impressed so far!  I like to have a portfolio chosen for me and I just leave it to do its thing as I'm not knowledgeable enough to choose my own. so any advice would be appreciated.

Many thanks.

masonic

The performance will be down to your investments, not the provider. Both AJ Bell and Fidelity offer a DIY platform, so if you like to have a portfolio chosen for you, then unless you have an adviser, you are probably choosing your own investments from a marketing list, which can be a recipe for disaster if you don't understand what you are investing in.

Maybe if you shared what each account is invested in, we could comment on the apparent difference in performance.

Misd_sixties22

Thank you for your reply.  They have a 'Navigator' section where you select Funds which are then managed for you. I have a Growth Fund which is the middle risk fund to choose, neither cautious nor adventurous.

https://www.fidelity.co.uk/funds/find-fund-based-risk/#accordion-90b7a819

dunstonh

JISAs with Fidelity Performing Poorly. Move it?

Fidelity doesn't perform. They have no control over your returns.    

I know the market hasn't been great but compared to my AJ Bell LISA, it's much worse.  

Both AJ Bell and Fidelity are whole of market platforms.  They have near identical investments. So, its not logical to say one is better than the other based on investment returns.     

I chose Fidelity as it has low fees for children's accounts but I'm not that impressed so far!  

Choose whatever investments you have with AJ Bell if you want them to be the same.

 I like to have a portfolio chosen for me and I just leave it to do its thing as I'm not knowledgeable enough to choose my own. so any advice would be appreciated.

In which case, choose a simple low cost multi-asset fund from the likes of HSBC or Vanguard.

masonic

Misd_sixties22 said:

Thank you for your reply.  They have a 'Navigator' section where you select Funds which are then managed for you. I have a Growth Fund which is the middle risk fund to choose, neither cautious nor adventurous.

https://www.fidelity.co.uk/funds/find-fund-based-risk/#accordion-90b7a819

So you picked Growth -> Expert focus -> Middle option, which they suggest Fidelity Multi Asset Income & Growth Fund?

This is an expensive (0.97% fund fee) 50:50 equities/bonds fund. It has underperformed its peer group and sector average:

However, this fund holds slightly more in bonds than the others, so this isn't unexpected (it outperforms Vanguard Lifestrategy 40% Equity).

I'm afraid you've fallen for some clever marketing, where you have been led into an expensive fund under the mistaken belief that it is managed 'for you'. This fund isn't any different from the thousands of others that run on a specific set of objectives, and may or may not be suitable for any particular investor's circumstances. There are several much cheaper alternatives being managed in much the same way, but Fidelity doesn't make money from those. Hargreaves Lansdown has got a bad rap for pushing clients into its expensive house funds, this is no better.

The main driver of the poor performance is the 50% bonds component, as we've just had a black swan event where bonds have plummeted in value, but the high management charges are something to be avoided regardless of this. You are effectively paying a total cost (including platform fee) of 1.3% when you could get an equivalent fund, all in, for about a third of that cost.

I would guess that your AJ Bell LISA is invested quite differently (higher risk / less bonds) and so has performed better.

Alexland

Yes the problem is the fund not the platform choice - unfortunately most platforms selfishly guide newbies to their most lucrative products. A year isn't very long to judge performance but try and select something that has good long term prospects based on well accepted investing concepts (low cost, mostly passive, good level of shares exposure, etc).

As above, assuming you have a suitable time period before they will want to spend the money, have a look at the Vanguard Lifestrategy or HSBC Global Strategy multi asset fund series both of which are available at varying risk exposure levels and on both Fidelity and AJ Bell and mostly cost around the 0.20% pa ballpark.

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds

https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/

The sweet spot on these fund series is the balanced (circa 60%) or adventurous (circa 80%) shares exposure. Anything less and it might be better to just have a Cash JISA as the return is unlikely to justify the risk exposure and anything more then an index tracker fund is cheaper.

Personally my kids Fidelity JISAs are invested in the Fidelity Index World index tracker fund which is discounted to 0.10% pa on the Fidelity platform however as it's entirely global shares no bonds so has the potential to drop around 50% in a market crash which is only fine if you can cope with the distress this may cause (with the uncertainty of a market crash it can feel like it might drop much more - "this time it's different", etc) and have enough time ahead before needing the money to recover from the crashes.

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BJS8SJ34-fidelity-index-world-fund-p-acc/key-statistics

Whatever you do good luck - I have accounts at both Fidelity and AJ Bell and am happy with both.

jimjames

Any reason why you've not used the same funds as in your LISA? If you do that then the performance should be near identical apart from impact of charges

Alexland

jimjames said:

Any reason why you've not used the same funds as in your LISA? If you do that then the performance should be near identical apart from impact of charges

If they followed the same process on AJ Bell's website then they might have bought into AJ Bell's own funds which are some of the few that are unlikely to be found on Fidelity. I wouldn't want to buy these funds either but on small regular contributions the cheaper 0.31% multi asset ones might be almost acceptable as you save the £1.50 trade fee when buying them.

Alternatively they may have followed the direction to buy a 'ready made portfolio' of funds which seems to be designed to maximise £1.50 fund trading income. For example on a £1k balanced investment they are suggesting a mix of 7 different funds which would cost £10.50 to trade each time which seems a totally inappropriate suggestion for a newbie who might not know how to rebalance them with new contributions or assess their performance going forward.

Albermarle

masonic said:

Misd_sixties22 said:

Thank you for your reply.  They have a 'Navigator' section where you select Funds which are then managed for you. I have a Growth Fund which is the middle risk fund to choose, neither cautious nor adventurous.

https://www.fidelity.co.uk/funds/find-fund-based-risk/#accordion-90b7a819

So you picked Growth -> Expert focus -> Middle option, which they suggest Fidelity Multi Asset Income & Growth Fund?

This is an expensive (0.97% fund fee) 50:50 equities/bonds fund. It has underperformed its peer group and sector average:

However, this fund holds slightly more in bonds than the others, so this isn't unexpected (it outperforms Vanguard Lifestrategy 40% Equity).

I'm afraid you've fallen for some clever marketing, where you have been led into an expensive fund under the mistaken belief that it is managed 'for you'. This fund isn't any different from the thousands of others that run on a specific set of objectives, and may or may not be suitable for any particular investor's circumstances. There are several much cheaper alternatives being managed in much the same way, but Fidelity doesn't make money from those. Hargreaves Lansdown has got a bad rap for pushing clients into its expensive house funds, this is no better.

The main driver of the poor performance is the 50% bonds component, as we've just had a black swan event where bonds have plummeted in value, but the high management charges are something to be avoided regardless of this. You are effectively paying a total cost (including platform fee) of 1.3% when you could get an equivalent fund, all in, for about a third of that cost.

I would guess that your AJ Bell LISA is invested quite differently (higher risk / less bonds) and so has performed better.

However if you pick the managed , 'middle one' growth fund  , the performance is significantly better than VLS 60 ( +2% over 12 months) . If you pick the 'low cost' option - Fidelity multi asset allocator growth , the performance is similar to VLS 60 ( it is almost identical apart from the lower UK %) 

I suspect it is more that the AJ bell in house funds have outperformed, rather than Fidelity funds have underperformed.
This seemed to be the case from this info ( now a bit out of date)
Robo performance: January 2020 - June 2022 | Boring Money

dunstonh

This may also be timing issue.  e.g. AJ Bell set up earlier than Fidelity.  2022 being a negative year means that if Fidelity was set up just before that, then it would be down. Whereas if A J Bell is older, it would have a positive period before the drop occured.

xylophone

https://monevator.com/low-cost-index-trackers/

https://monevator.com/best-global-tracker-funds/

might be worth a look.