Stocks and shares ISA - Stick or twist?

j_netprofit

I appreciate we're majorly diverting from the OP now however....

Albermarle said:

crashes 40%.

40%?! When was the last time this happened?

Even covid didn't dip global trackers by 15%!

Plenty of food for thougt though susansue

dunstonh

jay_ftw said:

I appreciate we're majorly diverting from the OP now however....

Albermarle said:

crashes 40%.

40%?! When was the last time this happened?

Even covid didn't dip global trackers by 15%!

Plenty of food for thougt though susansue

Credit crunch was in the 40% ballpark.  Dot.com was over 50%.   Coronavirus was small fry by comparison at 25% for global trackers (not 15%)

Albermarle

dunstonh said:

jay_ftw said:

I appreciate we're majorly diverting from the OP now however....

Albermarle said:

crashes 40%.

40%?! When was the last time this happened?

Even covid didn't dip global trackers by 15%!

Plenty of food for thougt though susansue

Credit crunch was in the 40% ballpark.  Dot.com was over 50%.   Coronavirus was small fry by comparison at 25% for global trackers (not 15%)

Plus if you look at the index that many look to - the S&P 500 in Dollars, it dropped 32% in a month due to Covid.
Then after a good recovery, it dropped nearly 25% in the first 9 months of 2022. Since recovered again.

During the dot.com crash, the tech heavy Nasdaq dropped 78% and did not start to recover for 2.5 years.

susansue

In answer to the fee question, For a 'fully managed' fund I am paying 0.9% of fund value P.A., another amount to be recouped before I see a gain.

eskbanker

susansue said:

In answer to the fee question, For a 'fully managed' fund I am paying 0.9% of fund value P.A., another amount to be recouped before I see a gain.

https://www.nutmeg.com/our-fee suggests that the 'fully managed' option incurs costs of 1.01%, broken down as 0.75% platform fee, 0.22% fund management and 0.04% market spread.

This makes them relatively expensive, but when you chose them, you should have had visibility of these figures?  Which other platforms and investments did you consciously eliminate, and on what basis?

You should also have seen their standard disclaimer:

Investing is not a short-term option

The prevailing wisdom, with which we at Nutmeg agree, is that people should only invest with the long-term in mind. This will give your investments more time to ride out any shorter-term fluctuations in the markets.

dunstonh

susansue said:

In answer to the fee question, For a 'fully managed' fund I am paying 0.9% of fund value P.A., another amount to be recouped before I see a gain.

But which risk level.  Nutmeg have 10

susansue

Level 6. But that doesn't change a loss to a gain!

susansue

I have been thinking about this again, and please correct me if I have got it all wrong. 

 Over my 2 years of investment the management fee has cost me 0.9% PA, and the fund value is 3% below original. The average rate of inflation was 4.2% (ONS figure). So considering the real value of my fund, in year one -6% , (management fee & inflation erosion). In year two a further -6% so in real terms my fund needs to rise 15 % for me to break even. Also add to this the fact that it was not difficult to find other Investments which would have yielded 2% over this period, the figure rises to 19%. (ok, the last part is less concrete!) 

What do you think?

dunstonh

Level 6. But that doesn't change a loss to a gain!

Here is a chart showing the last 2 years on a global equities spread (red) and bonds spread (blue)



You can see the blue line for bonds is down around 9% over that period.  So, portfolios that have no bonds have done much better than portfolios that have bonds.  And the greater the amount of bonds, the lower the return will be and the more likely a loss position would be the case.

If Nutmeg were heavier in gilts, then that blue line would be worse.   Given the scale of the drop they show over 2022 to 2023, I think they were heavier in gilts than global bonds.   Their chart below which looks about 15% lower than peak (dark blue is nutmeg and the scale of the drop over 2022 suggests higher gilts)





Looking at 10 year performance, Nutmeg say 45.9% between 31/01/2024 and 31/01/2024.  Note that figure as the same period on 100% bonds or 100% equities is shown below over the same period (red=equities, blue = bonds).    However, I have also added our 60% equity blend, which is green and Vanguard Lifestrategy, 60% in purple, to give you comparisons, assuming that level 6 nutmeg equates to 60% equities.

eskbanker

susansue said:

I have been thinking about this again, and please correct me if I have got it all wrong. 

 Over my 2 years of investment the management fee has cost me 0.9% PA, and the fund value is 3% below original. The average rate of inflation was 4.2% (ONS figure). So considering the real value of my fund, in year one -6% , (management fee & inflation erosion). In year two a further -6% so in real terms my fund needs to rise 15 % for me to break even. Also add to this the fact that it was not difficult to find other Investments which would have yielded 2% over this period, the figure rises to 19%. (ok, the last part is less concrete!) 

What do you think?

Not sure what point you're trying to make?  Mathematically, yes, you can calculate a figure to break even in absolute or real terms, but the scale of that figure isn't indicative of any fault by your provider as such.  In terms of your comment about it not being difficult to find investments that would have yielded 2% over that period, why didn't you choose those, if that's what you wanted?