Investment and Cost - Time to switch?

rjmachin

I currently have a LISA with AJBell that has £23k invested in VLS 80 and am currently paying around £4.70 per month in charges.

I am going to add another £4k + £1k (off the govenment) next week, taking it to around £28k, which would take my monthly fees to around £5.80.

I am considering switching to an ETF, such as the Vanguard FTSE All World, which has a cap of £3.50 per month, but has a higher dealing charge of £5 instead of £1.50 for funds like VLS 80.

I think the costs to switch to ETF would be:
Sell current funds: £1.50
Buy £4k of ETF: £5
Buy £1k of ETF: £5
12 months of fees: £42
Total: £53.50

I think the costs to switch stay with funds would be:
Buy £4k of funds: £1.50
Buy £1k of funds: £1.50
12 months of fees: £69.60
Total: £72.60

Do you think I have already passed the threshold when using ETF is better value than sticking with funds?

dunstonh

You don't appear to have factored in that a FTSE All world benchmarked OEIC is 0.10% a year cheaper and has outperformed the Vanguard ETF by nearly 10% since launch.

Albermarle

Your decision should be based on what is the correct investment for you, not for £20 in fees.

VLS 80 is 80% equity and you are looking at 100% equity. That is a change in investment strategy.

Also with the charges you have ignored the charges for the fund/ETF.

rjmachin

Thank you both for the feedback.

Albermarle said:

Your decision should be based on what is the correct investment for you, not for £20 in fees.

VLS 80 is 80% equity and you are looking at 100% equity. That is a change in investment strategy.

Also with the charges you have ignored the charges for the fund/ETF.

I expected the feedback on the change of equity allocation, I did intend to include that on my original post, but forgot as I was due to start work at 8am.

I am currently 43 and will not be able to access the LISA  money until 60, so I am happy to change to a higher equity percentage of 100%.

I intent to keep adding until 50, so hopefully by then I will get to around £60k, excluding growth, when the fees would be £150ish per year.

I ignored the charges as the one I looked at had the same (0.22%)

dunstonh said:

You don't appear to have factored in that a FTSE All world benchmarked OEIC is 0.10% a year cheaper and has outperformed the Vanguard ETF by nearly 10% since launch.

Do you mean VWRL vs VLS80?   They both seem to have a 0.22% ongoing charge?

Or, did you mean HSBC FTSE All-World Index C Acc at 0.12%

I can see the Invesco FTSE All-World ETF Acc GBP is 0.15%, so happy with those rather than the vanguard one.  (Thanks both for pointing this out)

I just thought if I change to an ETF, I would like a Global/All World one to get the whole of market.   I know the VLS funds are UK heavy, but am not concerned about keeping that.

Thanks

rjmachin

dunstonh said:

You don't appear to have factored in that a FTSE All world benchmarked OEIC is 0.10% a year cheaper and has outperformed the Vanguard ETF by nearly 10% since launch.

Edited previous post, did you mean HSBC FTSE All-World Index C Acc at 0.12%

dunstonh

Do you mean VWRL vs VLS80?   They both seem to have a 0.22% ongoing charge?

No point comparing those two as one is a global tracker and the other is a multi-asset fund.

Edited previous post, did you mean HSBC FTSE All-World Index C Acc at 0.12%

That would be an OEIC equivalent of the Vanguard fund.

Lower charges & better past performance (which is relevant with trackers using the same benchmark).