First Time DIY Portfolio

dunstonh

noclaf said:

dunstonh said:

RichardS said:

coastline said:

Although the OP hasn't indicated placing the pension into ETF's it's worth reading about FSCS investment protection. This forum is split in opinion about ETF's and some won't buy them . I hold them at times but only the main ETF's UK domiciled and with large market capitalisation. Eg..VWRL, ISF etc where funds have billions in them.
Article is decent and reading the comments I came across a post about the IE platform. Scroll down near the bottom to post 53 by S M dated March 13th, 2023 ,8.29pm. Perhaps other posters can add to this ?

FSCS investment protection: are you covered by the investor compensation scheme? - Monevator

Thanks for this. There’s a lot to read in there and lots of things I do not understand. I saw the response from IE - comment 72 I think but that didn’t help me much either. So what’s the bottom line - where can I passively invest and be 100% covered (let’s say I have a £26k ISA and a £200k pension). Which types of funds and which platforms? Would I have to stay away from ETFs all together or if not how do I know which ones are safest?

Either stick to pension funds (which have 100% FSCS protection with no upper limit) or use UT/OEIC funds which have £85k per fund house (not per fund).

Would I have to stay away from ETFs all together or if not how do I know which ones are safest?

Its a risk based decision that only you can make.     Thankfully, since 2013 when unbundling occurred, the difference between OEICs/UTs and ETFs in terms of pricing is minimal.  Indeed, in some cases the OEIC/UT is cheaper and in many cases, it is virtually the same.  

If using big ETF's from the established firms (Vanguard, HSBC, BlackRock, State Street to name a couple that I currently invest in) realistically how significant is the risk?

It depends on the ETF you buy.   Knowing the differences in replication methods is key.    Get the right ones and there isn't really any additional risk.

RichardS

So does all this mean mean it’s much safer to have a SIP on say the Vanguard platform and select non ETF funds in a portfolio rather than say, a platform like IE (they are introducing SIPs very soon I think) where they only have ETFs ?

MK62

Ultimately, yes. 
Having said that the risk does appear to be relatively small - perhaps a larger risk isn't in the actual loss of money per se, but in the loss of access to it while things are sorted out following any one of a number of possible failure scenarios. It's for this reason I would at least keep the pension and ISA separate......hard to quantify this risk though (my view is that it's still relatively small, especially if you stick to the larger, more established players (and probably more expensive tbh).
As for the FSCS, personally I find the lack of clarity about what is protected and what isn't, at least in the investment world, to be a little concerning......I guess the old caveat about having all your eggs in the same basket still applies today as much as ever.