Anyone exiting funds for guaranteed cash?

GeoffTF

solidpro said:

GeoffTF said:

Vanguard FTSE All-World UCITS ETF (GBP) | VWRL is near its all time high in total return terms:

https://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000WAHE&tab=13&InvestmentType=FE

Buy high, sell low is what I heard somewhere else!

Nobody knows whether the price is going up or down. I was responding to someone who said that his global equity tracker had lost him a lot of money. I do not expect it had.

Doctor_Who

GeoffTF said:

Doctor_Who said:

coastline said:

Royal London Short Term Money Market (Class Y) Accumulation Fund Price & Information (hl.co.uk)

I hold this fund in my SIPP for money I'll need to withdraw in the next year or two. The HL website says that this accumulation fund pays interest, not dividends (although it also mentions an ex-dividend date), is this correct? Obviously in my SIPP it makes no difference for tax purposes, but if held in a GIA there's a tax difference for interest vs dividends.

HL is correct.

Thanks. I wonder why Fidelity give a 'Dividend history' for this fund on their website if the income is interest. I could find nothing in the RL fund documentation to say what the income is classed as.

masonic

Sea_Shell said:

Sea_Shell said:

I don't know anything about money market funds!!

Where's best to read up on them?

Available via Fidelity?

My limited research this morning, it appears that they track base rates, have no fscs protection and are subject to a fee.

Hmm, struggling to see the benefits (unless you need ISA tax status)

If you invest in a money market fund you would have the same FSCS protection as if you invested in a bond or equity fund (i.e. protection against either the investment platform or fund house going bust or losing your assets due to fraud). If you were to invest in a money market ETF, then the protection would be just for the investment platform. They are most useful for money held in a SIPP or S&S ISA that you want or need to keep within the account.

Malthusian

Doctor_Who said:

Thanks. I wonder why Fidelity give a 'Dividend history' for this fund on their website if the income is interest.

Because their website is badly written. It should say "Distributions" not "Dividends" which would cover both bases.

 I could find nothing in the RL fund documentation to say what the income is classed as.

Interest. All funds which hold at least 60% of their assets in cash or fixed interest will have their income classed as interest. For any "money market" fund this will be 100%.

Sea_Shell said:

So, asking the question in another way...

At what interest rate would you be tempted away from a fund that is just "ticking" along ?   (ISA status and tax aside)

No interest rate is going to tempt me away from earning interest rate + X%, where X% is the unknown amount that would be earned from putting capital at risk in a diversified portfolio for the long term, and I can be confident that I won't need to access the money in however long that takes.

GeoffTF

Sea_Shell said:

My limited research this morning, it appears that they track base rates, have no fscs protection and are subject to a fee.

Hmm, struggling to see the benefits (unless you need ISA tax status)

The RL fund paid more than any bank account for the amount of money that I had to invest. The risk of losing money is very low. The commission was negligible in my case.

GeoffTF

Malthusian said:

No interest rate is going to tempt me away from earning interest rate + X%, where X% is the unknown amount that would be earned from putting capital at risk in a diversified portfolio for the long term, and I can be confident that I won't need to access the money in however long that takes.

That has always been true eventually for the two markets that have survived for 100 years plus. We do not know whether it will be true in the future. Even if it proves to be true over the next 100 years, some of us cannot wait decades for fallen equities to come good.

charlie12525

masonic said:

Sea_Shell said:

Sea_Shell said:

I don't know anything about money market funds!!

Where's best to read up on them?

Available via Fidelity?

My limited research this morning, it appears that they track base rates, have no fscs protection and are subject to a fee.

Hmm, struggling to see the benefits (unless you need ISA tax status)

If you invest in a money market fund you would have the same FSCS protection as if you invested in a bond or equity fund (i.e. protection against either the investment platform or fund house going bust or losing your assets due to fraud). If you were to invest in a money market ETF, then the protection would be just for the investment platform. They are most useful for money held in a SIPP or S&S ISA that you want or need to keep within the account.

I think I'm going to put some of my SIPP into either a money market fund (probably RL or Aberdeen) or CSH2.

Apart from the different platform fees for funds and ETFs are there any other factors I should take into consideration before chosing one or the other?

masonic

charlie12525 said:

masonic said:

Sea_Shell said:

Sea_Shell said:

I don't know anything about money market funds!!

Where's best to read up on them?

Available via Fidelity?

My limited research this morning, it appears that they track base rates, have no fscs protection and are subject to a fee.

Hmm, struggling to see the benefits (unless you need ISA tax status)

If you invest in a money market fund you would have the same FSCS protection as if you invested in a bond or equity fund (i.e. protection against either the investment platform or fund house going bust or losing your assets due to fraud). If you were to invest in a money market ETF, then the protection would be just for the investment platform. They are most useful for money held in a SIPP or S&S ISA that you want or need to keep within the account.

I think I'm going to put some of my SIPP into either a money market fund (probably RL or Aberdeen) or CSH2.

Apart from the different platform fees for funds and ETFs are there any other factors I should take into consideration before chosing one or the other?

There are several differences, including liquidity (the ETF can be sold intra-day), minimum investment (you will need to trade whole ETF shares and the share price is >£1000), and the ETF has bid/offer spread, while the funds will probably carry an active management cost. The platform fee difference is usually the main driver for those who can make a substantial saving by opting for exchange traded investments.

GeoffTF

masonic said:

charlie12525 said:

masonic said:

Sea_Shell said:

Sea_Shell said:

I don't know anything about money market funds!!

Where's best to read up on them?

Available via Fidelity?

My limited research this morning, it appears that they track base rates, have no fscs protection and are subject to a fee.

Hmm, struggling to see the benefits (unless you need ISA tax status)

If you invest in a money market fund you would have the same FSCS protection as if you invested in a bond or equity fund (i.e. protection against either the investment platform or fund house going bust or losing your assets due to fraud). If you were to invest in a money market ETF, then the protection would be just for the investment platform. They are most useful for money held in a SIPP or S&S ISA that you want or need to keep within the account.

I think I'm going to put some of my SIPP into either a money market fund (probably RL or Aberdeen) or CSH2.

Apart from the different platform fees for funds and ETFs are there any other factors I should take into consideration before chosing one or the other?

There are several differences, including liquidity (the ETF can be sold intra-day), minimum investment (you will need to trade whole ETF shares and the share price is >£1000), and the ETF has bid/offer spread, while the funds will probably carry an active management cost. The platform fee difference is usually the main driver for those who can make a substantial saving by opting for exchange traded investments.

RL is actively managed with an OCF of 0.1%. CSH2 uses interest swaps to track SONIA with an OCF of 0.07% and a spread of about 0.03%.

Hal17

The original post from Sea Shell was very interesting in that I have the same dilemma, but from a very different viewpoint. My father who is 92 has been living independently for many years and I always thought he would out live me. He had a fall last week and almost overnight will now need to go into a care home when he is discharged from hospital.

I have transferred my Vanguard S&S ISA to cash and am in the process of looking to find 1 year fixed ISA's for the money. I am looking at Shawbrook at 4.63% and Virgin Money at 4.56%. I have other cash to fund his care for over 12 months so a fix for one year will work.

Before I send out the transfer forms, are there any signs in the market that ISA interest rates might rise in the next few weeks? I appreciate this is a loaded question, but thought I would ask. Many thanks.