New SIPP - are my fund choices sensible

DeadlyD

@Scrounger

ii are offering up to £5,000 cashback on pension transfers (£1500 on a £200k transfer) and platform fees would be just £156pa for funds:

http://www.ii.co.uk/acq/open-sipp-account

A saving of £744pa over HL platform fees with much lower dealing costs (£3.99 vs £12.50 per trade).

Wow I have another I could transfer.. 

artyboy

DeadlyD said:

@Scrounger

ii are offering up to £5,000 cashback on pension transfers (£1500 on a £200k transfer) and platform fees would be just £156pa for funds:

http://www.ii.co.uk/acq/open-sipp-account

A saving of £744pa over HL platform fees with much lower dealing costs (£3.99 vs £12.50 per trade).

Wow I have another I could transfer.. 

if you have another one, then Charles Stanley are offering generous cashback money plus a fat referral fee if you know someone with an existing account. As I said... fill yer boots...

DeadlyD

Albermarle said:

Scrounger said:

DeadlyD said:

Thanks again! There is a recommendation to go with EFT's but think as a first timer I'll go for the Multi Asset funds to start with - a suggestion on my earlier thread. 

ii are offering up to £5,000 cashback on pension transfers (£1500 on a £200k transfer) and platform fees would be just £156pa for funds:

http://www.ii.co.uk/acq/open-sipp-account

A saving of £744pa over HL platform fees with much lower dealing costs (£3.99 vs £12.50 per trade).


Scrounger

There is really a big battle for market share going on .
Offering thousands in cashback and only charging £150 pa. Where is the sense in that ?

Its the same offer as H&L - the £5000 cashback is if you have £2m sadly I don't :

DeadlyD

Hi
Quick question whilst we are talking about transfers, is it always better to combine pensions? It seems to be the common viewpoint. I have another I could transfer with a small penalty with SJP, if so, what's the main benefit? 

dunstonh

There is really a big battle for market share going on .
Offering thousands in cashback and only charging £150 pa. Where is the sense in that ?

I guess when you have a large customer base paying three times the charges of the lower cost platforms, then you can afford to pay these cashbacks.

JohnWinder

'You seem to have specifically selected funds with low costs (circa 0.2%) but in doing so I think you will probably sacrifice yield/income performance and growth.

Can you tell us the basis for why you think that? We can then compare the basis for your thought with the results of the SPIVA reports and the Morningstar research suggesting higher costs are the best single predictor of worse returns, and Sharpe's (Nobel prize winner) 'arithmetic of active management' article.

'Only Vanguard fanboys recommend VLS nowadays.   Its not bad, certainly not but home bias and higher charges are negatives.'

Depending on where you are on the locus of control spectrum you can accept the view of an internet authority or you can find some information to inform you on the matter and make up your own mind about negatives. Here is a Vanguard paper. The reader, if they’re not Australian, has to do their own adjusting for relevant market considerations eg sector concentration in the home market, and the approach has a ‘finger to the breeze’ feel about it. Readers will reach different home bias percentages.

https://www.vanguard.ca/documents/home-bias-allocation.pdf

The other analysis has so much data that I can’t do it justice with a summary, but it tests home bias no more than 43% UK 55% global for UK investors and concludes it hasn’t been a bad mix over a recent 50 years. Readers might conclude less would suit them better from now on based on this analysis. https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/ 

DeadlyD

JohnWinder said:

'You seem to have specifically selected funds with low costs (circa 0.2%) but in doing so I think you will probably sacrifice yield/income performance and growth.

Can you tell us the basis for why you think that? We can then compare the basis for your thought with the results of the SPIVA reports and the Morningstar research suggesting higher costs are the best single predictor of worse returns, and Sharpe's (Nobel prize winner) 'arithmetic of active management' article.

'Only Vanguard fanboys recommend VLS nowadays.   Its not bad, certainly not but home bias and higher charges are negatives.'

Depending on where you are on the locus of control spectrum you can accept the view of an internet authority or you can find some information to inform you on the matter and make up your own mind about negatives. Here is a Vanguard paper. The reader, if they’re not Australian, has to do their own adjusting for relevant market considerations eg sector concentration in the home market, and the approach has a ‘finger to the breeze’ feel about it. Readers will reach different home bias percentages.

https://www.vanguard.ca/documents/home-bias-allocation.pdf

The other analysis has so much data that I can’t do it justice with a summary, but it tests home bias no more than 43% UK 55% global for UK investors and concludes it hasn’t been a bad mix over a recent 50 years. Readers might conclude less would suit them better from now on based on this analysis. https://www.bogleheads.org/blog/2020/03/02/50-years-of-investing-in-the-world-part-3/ 

Any comments on choosing the Multi asset funds as recommended in the Monevator article? see original question

JohnWinder

Some general thoughts:

The appropriate choice is very dependent on an individual's quirkiness, particularly how many funds and what risk level. Yours are all much the same, but if you chose two from different providers you might feel less regret when one inevitably under-returns the other because at least you didn't put all your money on the 'loser'. Someone else might decide which looked most suitable, choose one only, then never look at the others again allowing for no regret and honouring the investment adage 'make your choice, don't mess with it and stick with it through thick and thin'. We have no idea what sort of person you are, but you do, so you just need to sort out issues like 'is Fidelity likely to go bankrupt, so I should spread that risk by holding HSBC as well?' Answer: few worry about that. There are other related issues like 'will I lose access to my money for weeks because HSBC gets hacked, so I should hold Vanguard as well?' There are many of these 'sub-issues' in your questions, as well as in other 'which fund' considerations, and you're unlikely to get them all presented to you succinctly with your one or two posts. Thus, it can be useful to take your time in choosing so you can read around, because it's all been said before and usually with more clarity in books or edited articles.

The easy way might be to ask for an answer, but the best choice will be one you make, informed.

I'd say each of those funds is sufficiently 'index-like' and constrained in how much they can deviate in response to market changes that you'd be getting the benefits of passive investing over active investing.

As to UK bias you'll have read the info I posted, and if not, sorry for the dead link. https://corporate.vanguard.com/content/dam/corp/research/pdf/Global-equity-investing-The-benefits-of-diversification-and-sizing-your-allocation-US-ISGGEB_042021_Online.pdf.  This should get it, although it’s the 2021 version; I was pointing you to the 2019 version.

Here's some advice, it's free and perhaps illegal to give advice when you hold yourself out as an interested amateur, but it's important: don't include one year's return figure when you're comparing funds that are so similar, as though it was a criterion for choosing.

We need to be very careful drawing conclusions from past performance data.

Past returns are always interesting, and very informative about what happened in the past - how well did it do; how often did it scare me; what’s the worst it was capable of; should I have chosen something different? 

But I don’t think it has anything reliable to tell us about the future, and the less so if we’re comparing rather different products.

Past performance does not guarantee future performance; how often is that written on a fund sheet?

Firstly, we’re looking at 1 year of performance in this thread. Unless what happens over 1 year will tell you what will happen over the next 30 years, a realistic investment time frame, what is the point? 

Secondly, long term return data has its own problem that there aren’t that many separate long term periods for which there is accurate return data with which to calculate accurate averages etc. 

Thirdly, there’ll be plenty of 10 year periods during which bonds outperformed stocks or one country's stocks outperformed another's . Does anyone seriously think that’s makes bonds a better returning long term investment than stocks? No way. Checking, from 1993 to 2013 stocks and bonds had very similar returns, but in the next 10 years stocks outperformed by a factor of 4.  https://www.portfoliovisualizer.com/backtest-asset-class-allocation#analysisResults 

Fourthly, if you’re comparing active fund returns there is research suggesting you’d be better off choosing the worse funds than the better ones for the future. Quote: ‘..the authors find that investors who chose managers with poor recent performance earned higher benchmark-adjusted returns than those who chose managers with superior recent performance. Their findings pose a challenge for asset owners: If past performance is used at all in selecting managers, it is the best-performing managers who should be replaced, not the underperforming ones.

Does Past Performance Matter in Investment Manager Selection?    Bradford Cornell, Jason Hsu and David Nanigian.  The Journal of Portfolio Management Summer 2017 https://jpm.pm-research.com/content/43/4/33

Choose the fund(s) that have the assets you want and the management style you want with reasonable charges.

DeadlyD

@JohnWinder Thank you! You answered some of my concerns that I have thought about.. thanks for such a considered response. I have reading to do so will report back, in the meantime as this is a "chunk" of my pension £200k of £350k, and as such my only income (I've dropped out of the rat race is it ever called that anymore? and have retrained as an addiction coach and Volunteer across 2 orgs) It is important that I manage this portion effectively but am willing to take risks. From what you say, the "passiveness" of these "funds is sufficiently 'index-like' and constrained in how much they can deviate in response to market changes that you'd be getting the benefits of passive investing over active investing" which suits me for now as it feels safer to start with and its mind boggling when faced with drop down options to choose from 000's of funds - where does one start. I will split them too, but will consider small £'s investments in perhaps a fund I find interesting but it feels I might as well just close my eyes and point at one with poor management! 
And lastly thanks for this "Choose the fund(s) that have the assets you want and the management style you want with reasonable charges." sounds like the best advice!! 
I'll read up.
Much appreciated
Deadly

Fermion

I think for UK investors you sometimes have to be careful about investment articles and analysis written for the US market. Think this very much applies to the home vs global arguments.

As we all know in the UK - the GBP currency is quite volatile compared to the relatively stable US$ currency. That was my primary rationale for my investment portfolio comprising circa 55%+ of global funds.

Worth reading the following UK written article on the potential impact of significant UK currency changes

https://www.abrdn.com/en-gb/personal/news-and-insights/impact-of-foreign-exchange-rates-on-investments