Junior SIPP selection

mountaindreams

I am considering opening a Junior SIPP with Fidelity for my children. This is a long term investment for them and I want to keep it simple. I was thinking of something like the Fidelity Index World Fund Accumulation. Would it be unwise to invest in a single fund or would it be better to balance it out with something else such as a UK fund?

dunstonh

Would it be unwise to invest in a single fund or would it be better to balance it out with something else such as a UK fund?

Fidelity Index World is a UK domiciled fund.   It invests globally but it is domiciled here.
If you meant investing in the UK rather than its domicile then that would be bad quality investing as it would be 100% in one country and lack diversity.    And the UK has been dire for 15 years.  A global spread is better quality.

A single fund is fine if the underlying assets achieve your objectives.  

mountaindreams

Thank you. Are they any advantage/disadvantages of a fund being UK domiciled?

I was asking if there is a need to invest in something other than global but I suppose by it being global it will have ore balance than choosing a specific locale

poseidon1

dunstonh said:

Would it be unwise to invest in a single fund or would it be better to balance it out with something else such as a UK fund?

Fidelity Index World is a UK domiciled fund.   It invests globally but it is domiciled here.
If you meant investing in the UK rather than its domicile then that would be bad quality investing as it would be 100% in one country and lack diversity.    And the UK has been dire for 15 years.  A global spread is better quality.

A single fund is fine if the underlying assets achieve your objectives.  

If it weren't for dividends (reinvested), UK ftse 100 has been dire for almost 25 years - see link.

https://www.schroders.com/en-gb/uk/intermediary/insights/dividend-reinvestment/

Extraordinary to realise that ftse 100 hit 6930 at its height in 1999, and only 18.5% above that level 25 years later. By contrast, S & P 500 has risen 455% over the same period.

j_netprofit

mountaindreams said:

I am considering opening a Junior SIPP with Fidelity for my children. This is a long term investment for them and I want to keep it simple. I was thinking of something like the Fidelity Index World Fund Accumulation. Would it be unwise to invest in a single fund or would it be better to balance it out with something else such as a UK fund?

This is exactly, what I opened for my children. Same provider, same fund.

A single global index is fine, adding a UK fund will tip the balance it sounds you're looking to achieve. 

Alexland

I've been with Fidelity continuously with one account or another for over 20 years and am a happy customer. My kids have their free SIPPs invested in Fidelity Index World Acc. It's not a lot of money but a well diversified selection of equities, zero maintenance and ultra low cost.

On their free JISAs then I have started de-risking them into a multi asset portfolio based on my view of medium term attractiveness of assets but for a child's SIPP it's super long term so 100% equities should be fine as long as you are OK seeing it drop around 50% every so often when markets crash. However if you want a smoother ride on a more important sum of money maybe look at a multi asset fund or running a multi asset portfolio of funds.

mountaindreams

Thanks all for your comments.

@Alexland what kind of spread of assets do you have in your JISAs?

cloud_dog

We went with a slightly different approach to @Alexland with the JISA for ours.  We used the Fidelity fund in the JISA, but at age 15/16 we started to contribute to a cash savings account.  Then at age 18 we discussed options for the S&S and savings accounts, suggesting that the S&S remain invested (as was, Fidelity Index World) for post Uni life with the cash savings account used for now money.

Ours also has a Fidelity SIPP, which we contribute the minimum in to each month.  The idea is just to ensure they have one, and one where our excess money could be directed into.  Now it is an adult SIPP it incurs the full 0.35% charge and whilst the account has a protected access age of 55, I am wondering if I should move it to a lower cost platform (with loss of said protected age).

Alexland

mountaindreams said:

Thanks all for your comments.

@Alexland what kind of spread of assets do you have in your JISAs?

My kids JISAs are currently 70% equities and 30% bonds although they are still a decade from being likely to spend the money they have done well more than doubling the contributions so am locking in some of the gains. They were fortunate I moved them to cash a few months before the covid crash then back into 100% equities for the recovery and subsequent gains. Bonds look reasonably attractive again and US equities are looking a bit expensive (as they often do) so I don't see the point taking excessive risk right now at least not on a medium term investment.

Alexland

cloud_dog said:

Ours also has a Fidelity SIPP, which we contribute the minimum in to each month.  The idea is just to ensure they have one, and one where our excess money could be directed into.  Now it is an adult SIPP it incurs the full 0.35% charge and whilst the account has a protected access age of 55, I am wondering if I should move it to a lower cost platform (with loss of said protected age).

I guess it depends how much they have accumulated in the SIPPs as to how significant the adult rate really is to keep the option open of having an account they might in future contribute into to get age 55 access. If it's only costing a few pence a month in increased fees (compared to elsewhere) it might be nice to keep the option open for them while making any new contributions elsewhere via a cheaper SIPP (although I guess the small contributions you are currently paying save them from paying the minimum account charge) or maybe a workplace pension which may get salary sacrifice etc.

For wealth customers then I presume as long as they stay registered as household members the kids will graduate onto the 0.20% adult rate even if they don't meet the minimum investment level which isn't too bad.

mountaindreams

Thanks for sharing.