Dumping IFA portfolio to go DIY

aroominyork

thunderroad88 said:

aroominyork said:

I don't agree this portfolio is overcomplicated. Many people have a core developed world fund plus some smaller companies, an actively managed emerging markets fund and couple of other tilts. Given some of the other portfolios posted on here, this is not at the weird end of the spectrum. But moving to a self-managed index fund with a tilt or two could still be a good idea (it's what I would do in your situation).

This portfolio has done ok, some parts better than others. I could obviously easily replicate it and my adviser must have had reason to choose what he did (diversification?) and the splits he settled on. Compared to most of the favoured all world trackers, he seems to have put more in EM and small cos. so if I simply went for an all world tracker like the HSBC one or VWRP then I’d be changing the geographical and cap balance vs my existing but performance should be equal or better? Or I could put 85% into my existing Vanguard FTSE Dev Wrld ex Uk and split the rest between an EM fund and a global small cos. fund. as you are suggesting. Either way should be ok, lower costs and no adviser fees. Just need to pick the right funds or etfs….

Personal choice whether to change the allocations. Being overweight smaller companies and EMs adds a bit of oomph. Like Linton they would be my preference rather than more tech, given the Mag7's high weighting in any global index fund. It's also worth thinking about why your IFA includes a value fund - possibly to balance the growth-oriented smaller companies, EMs and tech - and whether that plays a role in the future. A couple of smart beta value ETFs are XDEV (quite hardcore value) and PSRW (less hardcore).

Linton

Bostonerimus1 said:

If you go DIY will you be able to keep the DFA funds? They are usually only available with an advisor. But if you like your asset allocation you'll be able to create something similar with Vanguard or any number of other fund families and lower what you pay in fees.

I DIY with a basically 3 fund portfolio of US equity Index, International ex US equity index and a small percentage in an income fund and don't really do any management and get good returns and save a lot of fees.

AIUI the Dmensional policy has changed.  Their EM fund is listed on II's set of funds for example.  However it looks like II will only trade it by phone.

artyboy

aroominyork said:

thunderroad88 said:

aroominyork said:

I don't agree this portfolio is overcomplicated. Many people have a core developed world fund plus some smaller companies, an actively managed emerging markets fund and couple of other tilts. Given some of the other portfolios posted on here, this is not at the weird end of the spectrum. But moving to a self-managed index fund with a tilt or two could still be a good idea (it's what I would do in your situation).

This portfolio has done ok, some parts better than others. I could obviously easily replicate it and my adviser must have had reason to choose what he did (diversification?) and the splits he settled on. Compared to most of the favoured all world trackers, he seems to have put more in EM and small cos. so if I simply went for an all world tracker like the HSBC one or VWRP then I’d be changing the geographical and cap balance vs my existing but performance should be equal or better? Or I could put 85% into my existing Vanguard FTSE Dev Wrld ex Uk and split the rest between an EM fund and a global small cos. fund. as you are suggesting. Either way should be ok, lower costs and no adviser fees. Just need to pick the right funds or etfs….

Personal choice whether to change the allocations. Being overweight smaller companies and EMs adds a bit of oomph. Like Linton they would be my preference rather than more tech, given the Mag7's high weighting in any global index fund. It's also worth thinking about why your IFA includes a value fund - possibly to balance the growth-oriented smaller companies, EMs and tech - and whether that plays a role in the future. A couple of smart beta value ETFs are XDEV (quite hardcore value) and PSRW (less hardcore).

Maybe an off the wall suggestion, but if there is a real appetite for smaller companies, could the main portfolio be readjusted towards larger caps, and a small amount taken out and reinvested in VCTs for the added tax relief?

Yes, it's a notch up in terms of risk, but if 'a bit of oomph' is what is desired here...?

Bostonerimus1

Linton said:

Bostonerimus1 said:

If you go DIY will you be able to keep the DFA funds? They are usually only available with an advisor. But if you like your asset allocation you'll be able to create something similar with Vanguard or any number of other fund families and lower what you pay in fees.

I DIY with a basically 3 fund portfolio of US equity Index, International ex US equity index and a small percentage in an income fund and don't really do any management and get good returns and save a lot of fees.

AIUI the Dmensional policy has changed.  Their EM fund is listed on II's set of funds for example.  However it looks like II will only trade it by phone.

Yes, this is from their Wiki page:

"In November 2020, the company announced it was augmenting its strictly advisor-access[19] and institutional[20] only mutual fund business model by offering openly-accessed exchange-traded funds.[21][22][23][24]"

JG1A

Looks like you are paying about 1.34% of your portfolio value every year, about 1% to your IFA and about 0.34% to cover fund and platform costs. If you ditch your IFA you save the 1% and its easy to replicate your portfolio on any platform such as Vanguard, Interactive Investor, with similar fund/platform costs.

thunderroad88

Linton said:

Bostonerimus1 said:

If you go DIY will you be able to keep the DFA funds? They are usually only available with an advisor. But if you like your asset allocation you'll be able to create something similar with Vanguard or any number of other fund families and lower what you pay in fees.

I DIY with a basically 3 fund portfolio of US equity Index, International ex US equity index and a small percentage in an income fund and don't really do any management and get good returns and save a lot of fees.

AIUI the Dmensional policy has changed.  Their EM fund is listed on II's set of funds for example.  However it looks like II will only trade it by phone.

If I understand correctly, I can buy the three DFA funds in my pf with AJ Bell if that what I wanted to do. Must admit I’m not quite sure how to proceed. Opinion amongst respected posters who have kindly offered suggestions seems to be split…some feel my existing pf is reasonably well constructed so I could got to AJ Bell and buy all 7 funds and remain exactly as I am (albeit about £6k p.a. better off due to lower platform fees and no advice fees). Then again, there is some thought that I could do equally well and save similar on costs by simplifying to one world index tracker with possibly just  a couple of additional funds for a bit of oomph. I take on board the point about extra tech, so I must admit I may be leaning towards VWRP 85% and the remaining 15% split between EM and Global Small Cos (maybe keep DFA as although higher charges they’ve always been solid performers). And then there’s that value question…and I begin to feel like I’m chasing my tail. I do feel I’m making progress towards a decision though as the suggestions are prompting further research so I thank everyone who has chipped in.

Then all I have to do is break it to my ifa and get the ISA transfers from Nucleus platform done…that’ll be fun 😀

dunstonh

JG1A said:

Looks like you are paying about 1.34% of your portfolio value every year, about 1% to your IFA and about 0.34% to cover fund and platform costs. If you ditch your IFA you save the 1% and its easy to replicate your portfolio on any platform such as Vanguard, Interactive Investor, with similar fund/platform costs.

IFAs will include transaction charges in their disclosures.  DIY investors disregard these.   So, you would need to strip out the TC for a like for like comparison.       

Bostonerimus1

thunderroad88 said:

Linton said:

Bostonerimus1 said:

If you go DIY will you be able to keep the DFA funds? They are usually only available with an advisor. But if you like your asset allocation you'll be able to create something similar with Vanguard or any number of other fund families and lower what you pay in fees.

I DIY with a basically 3 fund portfolio of US equity Index, International ex US equity index and a small percentage in an income fund and don't really do any management and get good returns and save a lot of fees.

AIUI the Dmensional policy has changed.  Their EM fund is listed on II's set of funds for example.  However it looks like II will only trade it by phone.

If I understand correctly, I can buy the three DFA funds in my pf with AJ Bell if that what I wanted to do. Must admit I’m not quite sure how to proceed. Opinion amongst respected posters who have kindly offered suggestions seems to be split…some feel my existing pf is reasonably well constructed so I could got to AJ Bell and buy all 7 funds and remain exactly as I am (albeit about £6k p.a. better off due to lower platform fees and no advice fees). Then again, there is some thought that I could do equally well and save similar on costs by simplifying to one world index tracker with possibly just  a couple of additional funds for a bit of oomph. I take on board the point about extra tech, so I must admit I may be leaning towards VWRP 85% and the remaining 15% split between EM and Global Small Cos (maybe keep DFA as although higher charges they’ve always been solid performers). And then there’s that value question…and I begin to feel like I’m chasing my tail. I do feel I’m making progress towards a decision though as the suggestions are prompting further research so I thank everyone who has chipped in.

Then all I have to do is break it to my ifa and get the ISA transfers from Nucleus platform done…that’ll be fun 😀

There's no perfect solution and an almost infinite number of good solutions. Do your research and come up with something that's comfortable. I am on the K.I.S.S. end of the spectrum as I have a couple of "whole market" index equity funds and a small amount in an income fund that meshes well with the rest of my retirement finances and that I don't really have to manage which is another requirement that I put on my portfolio. I'm up 20% over the last year, but my high equity percentage could mean that I'm down 20% next year.

aroominyork

thunderroad88 said:

Linton said:

Bostonerimus1 said:

If you go DIY will you be able to keep the DFA funds? They are usually only available with an advisor. But if you like your asset allocation you'll be able to create something similar with Vanguard or any number of other fund families and lower what you pay in fees.

I DIY with a basically 3 fund portfolio of US equity Index, International ex US equity index and a small percentage in an income fund and don't really do any management and get good returns and save a lot of fees.

AIUI the Dmensional policy has changed.  Their EM fund is listed on II's set of funds for example.  However it looks like II will only trade it by phone.

If I understand correctly, I can buy the three DFA funds in my pf with AJ Bell if that what I wanted to do. Must admit I’m not quite sure how to proceed. Opinion amongst respected posters who have kindly offered suggestions seems to be split…some feel my existing pf is reasonably well constructed so I could got to AJ Bell and buy all 7 funds and remain exactly as I am (albeit about £6k p.a. better off due to lower platform fees and no advice fees). Then again, there is some thought that I could do equally well and save similar on costs by simplifying to one world index tracker with possibly just  a couple of additional funds for a bit of oomph. I take on board the point about extra tech, so I must admit I may be leaning towards VWRP 85% and the remaining 15% split between EM and Global Small Cos (maybe keep DFA as although higher charges they’ve always been solid performers). And then there’s that value question…and I begin to feel like I’m chasing my tail. I do feel I’m making progress towards a decision though as the suggestions are prompting further research so I thank everyone who has chipped in.

Then all I have to do is break it to my ifa and get the ISA transfers from Nucleus platform done…that’ll be fun 😀

...except that your IFA might change allocations as conditions change. In five years' time you might bump into him in the pub and say your investments have not done as well as when you were with him, and he replies "but I dumped smaller companies, emerging markets and value three years ago; I moved to quality stocks and infrastructure and my clients have done very well." So if you go your own way either have a strong core with few tilts, or be confident in how you construct your portfolio.

nick1234

I really don’t think you need to be paying an 8k per year IFA fee on top of other fund charges for those random funds, just stick is in Vangard global equity tracker or VLS 60/80 etc and save a small fortune