Pension - money market funds

coni7

Hello , please can you answer my question due conflicting answers I've had from friends. 

I have a vanguard SIPP and have bought short term sterling money market funds as an income because I'm retired and not ready yet to buy any more funds this month. 
My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Regards

NedS

No, a Money Market Fund is an investment fund and does not have the £85,000 FCSC protection that a bank account may have.

Marcon

coni7 said:

Hello , please can you answer my question due conflicting answers I've had from friends. 

I have a vanguard SIPP and have bought short term sterling money market funds as an income because I'm retired and not ready yet to buy any more funds this month. 
My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Regards

Might it make sense to ask the provider (in this case Vanguard) - not least because it would flag to them that they could usefully include such information in their plan literature/on their website. 

dunstonh

My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Not the right question.

Money market OEICs/UTs are covered by the FSCS but money market ETFs are not.

But FSCS with investments is different to deposits.

coni7

dunstonh said:

My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Not the right question.

Money market OEICs/UTs are covered by the FSCS but money market ETFs are not.

But FSCS with investments is different to deposits.

It states on my sipp under the mmf that it's UK OEIC,  so this is covered then? 
Sorry for being a novice just trying to learn
Thank you 

Albermarle

coni7 said:

dunstonh said:

My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Not the right question.

Money market OEICs/UTs are covered by the FSCS but money market ETFs are not.

But FSCS with investments is different to deposits.

It states on my sipp under the mmf that it's UK OEIC,  so this is covered then? 
Sorry for being a novice just trying to learn
Thank you 

Yes it is covered but mainly in case you lost money to fraud, gross maladministration etc.

If the fund lost you money due to market conditions, there is no cover. Same as with all investments.

On the positive side the chance of collapse of a mainstream STMM fund ( like with Vanguard) is seen as very unlikely.

coni7

Albermarle said:

coni7 said:

dunstonh said:

My question is are money market funds protected by the fcsc within my pension,  is there any protection?

Not the right question.

Money market OEICs/UTs are covered by the FSCS but money market ETFs are not.

But FSCS with investments is different to deposits.

It states on my sipp under the mmf that it's UK OEIC,  so this is covered then? 
Sorry for being a novice just trying to learn
Thank you 

Yes it is covered but mainly in case you lost money to fraud, gross maladministration etc.

If the fund lost you money due to market conditions, there is no cover. Same as with all investments.

On the positive side the chance of collapse of a mainstream STMM fund ( like with Vanguard) is seen as very unlikely.

Thankyou so much for the education,  so to clarify even other funds ie lifestrategy ones come under this umbrella of protection? 

Linton

All regulated OIEC/UTs and platform providers have £85K FSCS protection (the cover is not per fund but rather per provider).  However if you are using mainstream funds and mainstream platforms the chance that cover for either will be needed is minimal.

The key point to bear in mind is that with a bank account the ownership of the money rests with the bank.  The bank can use it to pay its own debts or any other expenses it wants.  WIth both platforms and fund managers investors' money is ring-fenced with the platform and fund managers' authority limited to simply managing it.

In many discussions in the past on this topic no-one has been able to come up with a realistic example of where the FSCS cover could be invoked.  The one example where I believe FSCS money was used was one where the platform and the investments it provided were not mainstream and so there were significant expenses incurred recovering the money.  But since those costs were spread  over all the investors they were well below the £85K limit.

Note that as Dunstonh says ETFs are not covered and neither are ITs.  The reason being that FSCS covers pooled investment risk rather than the risk you incur by choosing to invest in specific shares.

.

coni7

Thanks for putting my mind at rest and there's some cover with these in my sipp, I was concerned due to listening to the wrong person 

Much appreciated 

dunstonh

Thanks for putting my mind at rest and there's some cover with these in my sipp, I was concerned due to listening to the wrong person 

Although the protection is largely pointless in the mainstream as its very different to deposits protection.