Pension providers, costs and funds - Opinions please

Fink_Nottle

Forever_Red said:

So far I've been looking at AJ Bell, Fidelity and Interactive Investor (but just heard that ii don't separate the UFPLS from the crystallised part, which put me off a little bit) 

Could you please explain your misgivings about II's approach? I know that they treat drawdown vs non-drawdown funds as one virtual lump, where funds are only notionally split across the two parts. Is this what you're referring to?
(Can't post a link, but a search for II SIPP Notional Split finds the right page)

Genuinely curious as to what you, or anyone else, sees as potential downsides? 

dunstonh

Nick_Dr1 said:

So, given that a 1 in 100 year event has happened with bonds, do we think that bonds are now a good investment and that returns on lower % equity lifestyle funds should pick up? From a simplistic view of buy when cheap or distressed, that would appear to be a reasonable conclusion?

Linton has given you a good response but I just want to emphasise it.

Bonds had previously gone through a period that was far better than the historical norm.  In effect, they have reverted to norm.  The chart below shows the unit price of a gilt fund.  The 1995 to 2007 is more typical of a cycle.   Post 2008 it went into a bubble because of the historically low interest rates and QE.    Then you have the inflation, rising interest rates and ending of QE and that bubble bursts.   Brown line is unit price of income units with income withdrawn and yellow is with income reinvested.     

aldershot

Linton said:

  Safe bonds are never cheap, they are priced at the right level given current circumstances.

Cheapness can be subjective. I would argue bonds are relatively cheap in comparison to equities at current yields. Or to put it another way, equity risk is comparatively expensive compared to bonds. 

Forever_Red

Fink_Nottle said:

Forever_Red said:

So far I've been looking at AJ Bell, Fidelity and Interactive Investor (but just heard that ii don't separate the UFPLS from the crystallised part, which put me off a little bit) 

Could you please explain your misgivings about II's approach? I know that they treat drawdown vs non-drawdown funds as one virtual lump, where funds are only notionally split across the two parts. Is this what you're referring to?
(Can't post a link, but a search for II SIPP Notional Split finds the right page)

Genuinely curious as to what you, or anyone else, sees as potential downsides? 

I'd read somewhere that ii didn't separate the crystallised and uncrystallised parts of the pension into different pots, so I'd pictured in my head that there was still going to be one big pot (part crystallised and part not) with just one big amount. Then I'd have to keep working out how much I'd taken tax free and how much of the pot hadn't been touched etc.
Now that I've read ii's notional split explanation, it's a lot less daunting that I envisaged 

Forever_Red

aldershot said:

Linton said:

  Safe bonds are never cheap, they are priced at the right level given current circumstances.

Cheapness can be subjective. I would argue bonds are relatively cheap in comparison to equities at current yields. Or to put it another way, equity risk is comparatively expensive compared to bonds. 

So when is supposed to be a good time to invest in bonds and gilts? I'm fascinated at Dunstonh's graph showing the reinvested part of the bonds (I take it that's the interest gained?) and how much it gained (is that due to compounding or because bonds got cheaper to buy with the interest payments?)

As you may have guessed, bonds & gilts aren't something I'd normally invest in.

Hoenir

Forever_Red said:

aldershot said:

Linton said:

  Safe bonds are never cheap, they are priced at the right level given current circumstances.

Cheapness can be subjective. I would argue bonds are relatively cheap in comparison to equities at current yields. Or to put it another way, equity risk is comparatively expensive compared to bonds. 

So when is supposed to be a good time to invest in bonds and gilts? 

When an investor deems it to be. Investor sentiment drives a market's momentum positively or negatively. Markets being influenced by thousands of individual trades every day. 

Forever_Red

Hoenir said
 

When an investor deems it to be. Investor sentiment drives a market's momentum positively or negatively. Markets being influenced by thousands of individual trades every day. 

So if me and my mates all buy now, we'll be quids in 

QrizB

Forever_Red said:

Hoenir said
 

When an investor deems it to be. Investor sentiment drives a market's momentum positively or negatively. Markets being influenced by thousands of individual trades every day. 

So if me and my mates all buy now, we'll be quids in 

If you buy individual gilts or bonds, you'll get exactly the yield you're expecting subject to the default risk you're taking.

If that is acceptable to you, buy away.

Forever_Red

QrizB said 

If you buy individual gilts or bonds, you'll get exactly the yield you're expecting subject to the default risk you're taking.

If that is acceptable to you, buy away.

I think I’ll stick with the Vanguard 100% equity and the Fidelity world index acc. Maybe throw some in the Vanguard 80% equity as well.

dunstonh

Forever_Red said:

QrizB said 

If you buy individual gilts or bonds, you'll get exactly the yield you're expecting subject to the default risk you're taking.

If that is acceptable to you, buy away.

I think I’ll stick with the Vanguard 100% equity and the Fidelity world index acc. Maybe throw some in the Vanguard 80% equity as well.

Just remember that the drop on those can be up to 50% in less frequent loss periods and even more in 1 in 100 year events (that the bonds have gone through recently).