Minimising time out of market when switching investments

GeoffTF

Apart from time out of the market, you also risk pricing differences. OEICs use swing pricing, which can work for or against you. ETFs can trade at a premium or a discount, which can also work for or against you. You cannot reasonably average these out by switching in stages with a £16K investment. ETFs also have a spread. iWeb does not do LISAs, so you cannot just transfer your account to them.

Hoenir

FIREmenow said:

The time has come to move my AJ Bell LISA investments into ETFs to cap the fees. There's about £16k in in HSBC FTSE All-World Index C Acc.

How much are you expecting to save?  Which ETF are you considering? 

aroominyork

If you have available cash there are ways to avoid being out of the market. In the new tax year I will want to move £20k from an Inc. index fund in a trading account to an Acc. index fund in my ISA. I will buy the ISA from cash and on the same day sell £20k worth from the trading account and when it settles after three days withdraw the cash. (In fact over a week or two I will be using that single cash buffer to also fund my wife's ISA and my SIPP without being out of the market at all.)

FIREmenow

Thanks all,

The ETF is Ishares MSCI ACWI UCITS ETF USD (ACC) GBP

The saving will be capping annual platform fees to £42pa going foward instead of uncapped fees at 0.25%.  LISA has just over 20 years to grow yet so want to make the switch now as it has just reached the tipping point.  There is also ~£2k in the LISA in a bond ETF. 

Considering fund fees (that are higher for the ETF) and platform fees together, rough figures are that combined fees will reduce over time from 0.39% to 0.27% if everything is ETFs without factoring in growth, or down to 0.23% assuming 5% growth pa.

Regarding the suggestion of waiting until new tax year to use new money to make £4k switches over several days - is the argument is that having £4k out of the market for 5 days is better than having £16k out of the market for one day?  When compared to investing the new money on 6 April as usual.

The performance and voliatility of the ETF seems very similar to the HSBC fund, so does this reduce the risk of having £16k out for one day, as @masonic highlighted?

Thanks for all your thoughts