Good fund choices for SIPP?

MeteredOut

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Springfield1970

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Exactly, that's why I've instructed my advisor to get out of them and find something safe.  He was about to move 3 of the 5 anyway.  We found some other funds that are not tech heavy.

Springfield1970

cloud_dog said:

Springfield1970 said:

3. Get to the point soon where I can drop the WA, and get over the £250k sum to have no charges there either. 

You mentioned the 'no charges when you get to £250k', but are you sure that is correct?  More usually with these types of charging schedules it means that the amount above the £250k level does not incur a charge.

oh ok. yes that makes sense. 

Exodi

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Agree with this.

@Springfield1970

One of the more popular basic global index funds is HSBC FTSE All World Index (other funds exist) - this would have returned ~20% in the last 12 months and ~65% in the last 5 years.

The common rationale of 'waiting to recover' is flawed and you can see this in a simple thought experiment:

Imagine that instead of being having 20% allocations in random Baillie Gifford funds, you suddenly had your portfolio balance all in cash in your account. Would you then decide to go all back into the previous funds or would you invest somewhere else?

I can't help much as I'm not a fan of any of your setup - the funds, fees, platform, 'wealth advisor'... the idea of paying someone 0.75% pa for your allocation slightly irritates me.

My annual cost is 0.27% (that includes fund fees), yours I work out as 1.64% (so over 6x more).

Albermarle

Springfield1970 said:

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Exactly, that's why I've instructed my advisor to get out of them and find something safe.  He was about to move 3 of the 5 anyway.  We found some other funds that are not tech heavy.

Investments are never 'safe' . Only that from historical information and experience some are seen as more or less risky/volatile than others. 

Bostonerimus1

Springfield1970 said:

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Exactly, that's why I've instructed my advisor to get out of them and find something safe.  He was about to move 3 of the 5 anyway.  We found some other funds that are not tech heavy.

What is your strategy here? Do you really want 4%, why the changes and to what? You have a while to retirement and hopefully a long time after that so is there an overall plan?

I applaud your IFA for using a relatively small number of funds in your portfolio, but the fund choices have overlap and seem to be more about hype than a long term strategy. I have a big bias for index funds because they are inexpensive and I would never hold a portfolio of such active funds preferring a couple of index equity funds that cover the global stock markets.

Springfield1970

Exodi said:

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Agree with this.

@Springfield1970

One of the more popular basic global index funds is HSBC FTSE All World Index (other funds exist) - this would have returned ~20% in the last 12 months and ~65% in the last 5 years.

The common rationale of 'waiting to recover' is flawed and you can see this in a simple thought experiment:

Imagine that instead of being having 20% allocations in random Baillie Gifford funds, you suddenly had your portfolio balance all in cash in your account. Would you then decide to go all back into the previous funds or would you invest somewhere else?

I can't help much as I'm not a fan of any of your setup - the funds, fees, platform, 'wealth advisor'... the idea of paying someone 0.75% pa for your allocation slightly irritates me.

My annual cost is 0.27% (that includes fund fees), yours I work out as 1.64% (so over 6x more).

Hi Exodi thank you for your reply

I also agree that the funds I was in were fluke, and could have just as easily gone nowhere like they did for the previous years. I got lucky.

Re the HSBC fund, that also gives me doubt. How can it keep going up at that rate?   It seems like its had its day. Im looking for something less volatile. Less too good to be true.

Re the thought experiment, I would have been slightly better in cash ISA the whole time.  Luckily I didn't instruct my WA to get out a year ago.  I also have friends whose pensions have gone nowhere in the last 10 years, so I feel like it's been an acceptable return.  The free 20% tax rebate from the government is golden and makes up for lack of return.  

Re the WA, yes it's a snooty title, but the fact is he has made me much wealthier, when I went to see him I had zero pension, was highly suspicious of the whole industry, and he convinced me to stop paying 40% tax and take a leap of faith, and explained that because he makes .75% on me, he and his team are highly motivated to make profit...I like that.  Every year we meet for an hour and argue over my finances, fund choices, emotional decisions and tax implications.  He questions everything.  

I adjusted my risk profile yesterday, and have changed the funds to a more moderate/dynamic approach.
Watch this space.  I hope we can all learn here, the whole thing is intimidating with all its jargon and elitism, and differing opinions.

I hope to be as 'low fees' as you are one day when I figured this all out.  At the moment I'm happy to pay the higher percentage as on my own I would have still been giving half my higher income bracket to the government in taxes and NI, not paying off my mortgage until 2037 (instead of 2030), and having 0% pension instead of the nice nest egg I have now.  I feel like I made a great decision 7 years ago.

Springfield1970

Bostonerimus1 said:

Springfield1970 said:

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Exactly, that's why I've instructed my advisor to get out of them and find something safe.  He was about to move 3 of the 5 anyway.  We found some other funds that are not tech heavy.

What is your strategy here? Do you really want 4%, why the changes and to what? You have a while to retirement and hopefully a long time after that so is there an overall plan?

I applaud your IFA for using a relatively small number of funds in your portfolio, but the fund choices have overlap and seem to be more about hype than a long term strategy. I have a big bias for index funds because they are inexpensive and I would never hold a portfolio of such active funds preferring a couple of index equity funds that cover the global stock markets.

Hi, thank you for your reply.

I need 4% growth to achieve my goals.  We've changed my plan to a moderate/dynamic plan, and the goal is 5% growth and 2.5% inflation.  I'll reassess annually. The high risk funds aren't for me, and I was lucky to get a good return, but that only happened in the past year.

We discussed index funds and he doesn't think the time is right for them.  As he is making a percentage from me, I trust that his self interest makes him motivated to choose well.

I would like to be far more informed before I start making decisions on my own.

MeteredOut

Springfield1970 said:

Bostonerimus1 said:

Springfield1970 said:

MeteredOut said:

Just because the funds achieved 16% growth does not mean that they were suddenly the correct funds to be in. Have you checked what a basic tracker fund would have returned over the same time period of time?

Exactly, that's why I've instructed my advisor to get out of them and find something safe.  He was about to move 3 of the 5 anyway.  We found some other funds that are not tech heavy.

What is your strategy here? Do you really want 4%, why the changes and to what? You have a while to retirement and hopefully a long time after that so is there an overall plan?

I applaud your IFA for using a relatively small number of funds in your portfolio, but the fund choices have overlap and seem to be more about hype than a long term strategy. I have a big bias for index funds because they are inexpensive and I would never hold a portfolio of such active funds preferring a couple of index equity funds that cover the global stock markets.

Hi, thank you for your reply.

I need 4% growth to achieve my goals.  We've changed my plan to a moderate/dynamic plan, and the goal is 5% growth and 2.5% inflation.  I'll reassess annually. The high risk funds aren't for me, and I was lucky to get a good return, but that only happened in the past year.

We discussed index funds and he doesn't think the time is right for them.  As he is making a percentage from me, I trust that his self interest makes him motivated to choose well.

I would like to be far more informed before I start making decisions on my own.

I believe there is an argument that you got an average (or even below-average, once charges are taken into account) return for the past year, rather than good, compared to the rest of the market. I sense a bit of confirmation bias in your responses with regards to continuing to use the Wealth Advisor. 

I'd suggest your posts indicate a level of knowledge where you could fairly quickly move to DIY and save that cost, or an IFA and reduce that cost.

JohnWinder

‘Re the HSBC fund, that also gives me doubt….Im looking for something less volatile. Less too good to be true.

If HSBC are truthfully reporting how well they are tracking that index, then the fund returns can’t be anything other than true. If the index returns were that good/bad, and the fund tracked the index closely, the returns must be true. ‘Too good to be true’ can’t enter into it.

‘have changed the funds to a more moderate/dynamic approach.
… with all its jargon

‘dynamic’ is a step past jargon for this reader.

….index funds and he doesn't think the time is right for them

Well, he’s ignoring a wealth of academic literature spanning decades, or knows something none of us know. Investing in some suitable index funds means you don’t have do anything to them until your circumstances change, which might invalidate some of his annual 0.75% work.  Getting someone to understand something that their income relies on them not understanding is a big job.

‘As he is making a percentage from me, I trust that his self interest makes him motivated to choose well.’

He’d be twice as motivated, not wanting his income to fall, if his fee was half.