Vanguard: New Minimum Monthly Account charge

honeststeveo

Alexland said:

From what I understand it's down to how the pension scheme rules were drafted at the cutoff date. If the scheme rules said you can get access from 55 then the trustees can offer access at that age but if the scheme rules said you can get access from the age the government allows then it will go up to 57 and there's nothing the trustees or provider can do to bring that forward apart from the ill health special cases. All that Fidelity have done is confirm their rules specifically said age 55 so they believe their SIPP holders at the cutoff date have this protected access age.

I'm a bit hazy on this not having looked into the details for some time but my understanding was that the scheme rules have to allow 55 to be retained despite the changing legislation AND the provider has to choose to implement them. I thought that VGs rules allowed 55 but they were being hesitant of saying they would choose to persist the 55 and then that they had no plans to. I understood from another provider that it's within their gift to change their minds and persist the 55 even though they arent saying they will do so right now. So my hope with VG is that they might later decide they will persist the 55.
All that said I may well have gotten the wrong end of the stick with all of this! 

Alexland

honeststeveo said:

I'm a bit hazy on this not having looked into the details for some time but my understanding was that the scheme rules have to allow 55 to be retained despite the changing legislation AND the provider has to choose to implement them. I thought that VGs rules allowed 55 but they were being hesitant of saying they would choose to persist the 55 and then that they had no plans to. I understood from another provider that it's within their gift to change their minds and persist the 55 even though they arent saying they will do so right now. So my hope with VG is that they might later decide they will persist the 55.

I don't know how the Vanguard SIPP rules were drafted at the time. Their advertising material probably said age 55 but that may not have been reflected in the rules drafting. I would expect rules from a modern scheme would simply make reference to the government minimum access age rather than hard-code an age as there would have been an awareness that it might change and the drafters would not want to create a conflict. It's the older schemes that might have specified an age because a long time ago there may not have even been a government minimum age to reference.

But yes it's ultimately down to the trustees to determine if they want to allow access at that earlier age even if it's within their legal power which in the case of the Vanguard SIPP it may or may not be depending on the drafting at the time.

I guess it depends how much more this new minimum charge is above the % fees you were already paying (or will pay as the account grows, or the fee you might pay elsewhere) and the number of years you might pay it as to if the extra cost of keeping this possibility open for you is going to be worthwhile.

dgpur

Alexland said:

dgpur said:

The fund has been performing much better recently, and was one people advised to go for at the time. I accept that I first funded in late 2019, so I was willing to give it longer for obvious reasons. I’m essentially a lazy investor, and don’t want to be messing around with rethinking/guessing a different path. But the fee change has just put me right off. I can’t see the value.

Hmm you've got me wondering what it might be for something to perform poorly over that period. Did it have a heavy slug of bonds something like VLS40/60 or one of their Target Retirement funds that is coming up in the next few years perhaps? If so then a lot of investors who were in lower risk multi asset funds not just from Vanguard but with other fund managers were disappointed with returns during that period and it was a problem with the assets themselves unwinding valuations from a period of ultra low interest rates not the fund management.

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period. With my Vanguard fund still being sluggish. I’m aware that there can be a lot of reasons for that, but the extra cost in fees has made me feel like walking anyway. Feels like they want to slough off those who aren’t deep pocketed investors.

Hoenir

dgpur said:

Alexland said:

dgpur said:

The fund has been performing much better recently, and was one people advised to go for at the time. I accept that I first funded in late 2019, so I was willing to give it longer for obvious reasons. I’m essentially a lazy investor, and don’t want to be messing around with rethinking/guessing a different path. But the fee change has just put me right off. I can’t see the value.

Hmm you've got me wondering what it might be for something to perform poorly over that period. Did it have a heavy slug of bonds something like VLS40/60 or one of their Target Retirement funds that is coming up in the next few years perhaps? If so then a lot of investors who were in lower risk multi asset funds not just from Vanguard but with other fund managers were disappointed with returns during that period and it was a problem with the assets themselves unwinding valuations from a period of ultra low interest rates not the fund management.

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period. With my Vanguard fund still being sluggish. I’m aware that there can be a lot of reasons for that, but the extra cost in fees has made me feel like walking anyway. Feels like they want to slough off those who aren’t deep pocketed investors.

If you are concerned over £33 a year. Then stock market investments may not be for you. Reach the giddy heights of a £100k invested. Then your fund can be gyrating up or down by £1,000 or more in value within 24 hours. 

jbrassy

Hoenir said:

dgpur said:

Alexland said:

dgpur said:

The fund has been performing much better recently, and was one people advised to go for at the time. I accept that I first funded in late 2019, so I was willing to give it longer for obvious reasons. I’m essentially a lazy investor, and don’t want to be messing around with rethinking/guessing a different path. But the fee change has just put me right off. I can’t see the value.

Hmm you've got me wondering what it might be for something to perform poorly over that period. Did it have a heavy slug of bonds something like VLS40/60 or one of their Target Retirement funds that is coming up in the next few years perhaps? If so then a lot of investors who were in lower risk multi asset funds not just from Vanguard but with other fund managers were disappointed with returns during that period and it was a problem with the assets themselves unwinding valuations from a period of ultra low interest rates not the fund management.

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period. With my Vanguard fund still being sluggish. I’m aware that there can be a lot of reasons for that, but the extra cost in fees has made me feel like walking anyway. Feels like they want to slough off those who aren’t deep pocketed investors.

If you are concerned over £33 a year. Then stock market investments may not be for you. Reach the giddy heights of a £100k invested. Then your fund can be gyrating up or down by £1,000 or more in value within 24 hours. 

What you're talking about is irrelevant. If you have £100k invested, it will fluctuate that much in value irrespective of what investment platform you use. That is not what people are concerned about and it is not in their control.

Platform fees and fund fees are within the gift of investors. It's not about how much you pay in pounds and pence, it's about the compound losses these fees impose over the long run.

Alexland

dgpur said:

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period.

I've had accounts with Nutmeg and Wealthify and their portfolios generally invest in the same kind of asset mix as the VLS series if you select the same kind of risk level. Maybe your accounts with the robos were set to a higher level (in which case they would have less bonds which were problematic at the time) if they performed materially better over the same time period?
If you had invested in VLS80 or 100 you would have done much better at the time. But then at other times VLS60 would do better than a higher risk portfolio. The point of VLS60 is that it's a middle of the road balanced fund that should over the long term give an OK performance. You were unfortunate to buy it when the 40% that was bonds were offering a 'return free risk'. The market forgot that any asset, even something traditionally safe, can get risky if it's overpriced. A few of us on this forum were pointing that out at the time.
Now that bond prices have dropped they are offering a higher yield with less risk so VLS60 is much more attractive than it was. If anything it's the equities proportion that is starting to look risky again.

Chloe_G

I've got a small SIPP with Vanguard with the intention of using it to drawdown within the next 10 years to bridge a few years until my DB pension.  Can you do this with Investengine or do you have to move it elsewhere when you want to draw your pension?

dgpur

Alexland said:

dgpur said:

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period.

I've had accounts with Nutmeg and Wealthify and their portfolios generally invest in the same kind of asset mix as the VLS series if you select the same kind of risk level. Maybe your accounts with the robos were set to a higher level (in which case they would have less bonds which were problematic at the time) if they performed materially better over the same time period?
If you had invested in VLS80 or 100 you would have done much better at the time. But then at other times VLS60 would do better than a higher risk portfolio. The point of VLS60 is that it's a middle of the road balanced fund that should over the long term give an OK performance. You were unfortunate to buy it when the 40% that was bonds were offering a 'return free risk'. The market forgot that any asset, even something traditionally safe, can get risky if it's overpriced. A few of us on this forum were pointing that out at the time.
Now that bond prices have dropped they are offering a higher yield with less risk so VLS60 is much more attractive than it was. If anything it's the equities proportion that is starting to look risky again.

Thank you for your perspective here. It’s been genuinely helpful. My Nutmeg returns have been very good, set at 3/5 risk level. But it predated my Vanguard investment, so perhaps that’s how it held up better.

OldScientist

dgpur said:

Alexland said:

dgpur said:

The fund has been performing much better recently, and was one people advised to go for at the time. I accept that I first funded in late 2019, so I was willing to give it longer for obvious reasons. I’m essentially a lazy investor, and don’t want to be messing around with rethinking/guessing a different path. But the fee change has just put me right off. I can’t see the value.

Hmm you've got me wondering what it might be for something to perform poorly over that period. Did it have a heavy slug of bonds something like VLS40/60 or one of their Target Retirement funds that is coming up in the next few years perhaps? If so then a lot of investors who were in lower risk multi asset funds not just from Vanguard but with other fund managers were disappointed with returns during that period and it was a problem with the assets themselves unwinding valuations from a period of ultra low interest rates not the fund management.

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period. With my Vanguard fund still being sluggish. I’m aware that there can be a lot of reasons for that, but the extra cost in fees has made me feel like walking anyway. Feels like they want to slough off those who aren’t deep pocketed investors.

I note that
a) The performance of your funds at nutmeg and wealthify depend on what you have them invested in (i.e., are they also 60% equities and 40% bonds or are they 100% equities, etc.). Bond funds have had an unusually rough few years.
b) The fees at nutmeg (0.66% for fixed allocation below £100k - includes fund fee) and wealthify (0.6% up to £100k - includes fund fee) will be lower than vanguard (assuming a fund fee of 0.2%) with investments up to about £12k but more up to £100k. Haven't calculated a comparison for amounts beyond £100k, but it is easy to do.

Albermarle

dgpur said:

Alexland said:

dgpur said:

LifeStrategy 60% Equity Fund. As I noted I’m a fairly lazy investor, in the sense that I went with the general suggestion. I wanted to not worry and over many years see some progress. But I put in £10 grand, it immediately lost money, and it took 26 months to get back above what I put in. I know funds rise and fall and investing is long term, but my robo investments with Wealthify and Nutmeg barely struggled at all over that same period.

I've had accounts with Nutmeg and Wealthify and their portfolios generally invest in the same kind of asset mix as the VLS series if you select the same kind of risk level. Maybe your accounts with the robos were set to a higher level (in which case they would have less bonds which were problematic at the time) if they performed materially better over the same time period?
If you had invested in VLS80 or 100 you would have done much better at the time. But then at other times VLS60 would do better than a higher risk portfolio. The point of VLS60 is that it's a middle of the road balanced fund that should over the long term give an OK performance. You were unfortunate to buy it when the 40% that was bonds were offering a 'return free risk'. The market forgot that any asset, even something traditionally safe, can get risky if it's overpriced. A few of us on this forum were pointing that out at the time.
Now that bond prices have dropped they are offering a higher yield with less risk so VLS60 is much more attractive than it was. If anything it's the equities proportion that is starting to look risky again.

Thank you for your perspective here. It’s been genuinely helpful. My Nutmeg returns have been very good, set at 3/5 risk level. But it predated my Vanguard investment, so perhaps that’s how it held up better.

In addition, always be careful about exact time periods when comparing investments.
Some posters say things like 'this year' without being clear. In times of market volatility there can be a big difference between Jan 1st to say November 1st, and the previous 12 month before Nov 1st.
Plus some investment fund data sheets are only updated every 3 months .