Invest Engine SIPP and the FSCS protection limit

dllive

Hi,

I currently have above the FSCS protection limit in my Vanguard SIPP. (Invested in Vanguard funds on the Vanguard platform).

Im thinking about using another platform - probably Invest Engine as there are no platform fees.

A few questions please:

1) Is there a decent low cost non-Vanguard ETF equivalent of FTSE Global All Cap Index Fund Accumulation? Because Ive always used the Vanguard platform, Ive been restricted to investing in only their funds.

2) Am I right in thinking ETFs are not covered by FSCS protection?

3) Am I being overly sensitive about the FSCS protection for investments? Do people usually spread their pensions with other companies when they hit the FSCS limit? Im just concerned about having all my eggs in one basket.

Thanks

Johnjdc

It's not so much that ETFs aren't protected by FSCS as that the question doesn't make sense. The money you have invested is invested in a thing. Unless your platform turns out to be a scam, that amount of the thing is yours. Even if the platform collapsed, you own the thing - realistically someone else would buy the customer base. There's no way of losing the thing (though of course its value can go down rather than up). That's different from a bank where effectively by having a savings account you have lent money directly to the bank.

masonic

If InvestEngine stole your ETF shares from your pension and then went into administration, then yes you'd be covered by the FSCS. The loss from whatever they stole would be shared between all investors in the ETF in question, so the likelihood of them being able to make off with enough for your personal loss to be £85k is vanishingly small. However, if the Vanguard ETF stole your money instead of using it to buy shares in the companies making up the index, and then Vanguard failed, you'd have no protection (because the investment company whose shares you bought (the ETF) simply fell in value).

GeoffTF

dllive said:

1) Is there a decent low cost non-Vanguard ETF equivalent of FTSE Global All Cap Index Fund Accumulation? Because Ive always used the Vanguard platform, Ive been restricted to investing in only their funds.

2) Am I right in thinking ETFs are not covered by FSCS protection?

3) Am I being overly sensitive about the FSCS protection for investments? Do people usually spread their pensions with other companies when they hit the FSCS limit? Im just concerned about having all my eggs in one basket.

1) I do not believe that there is a direct equivalent.

2) Yes, but I would not worry with Vanguard.

3) Some do, and others avoid free start ups like InvestEngine. I would suggest that you use one of the big platforms.

dunstonh

3) Am I being overly sensitive about the FSCS protection for investments? Do people usually spread their pensions with other companies when they hit the FSCS limit? Im just concerned about having all my eggs in one basket.

Yes, you are being overly sensitive.  Most people do not spread their investments over multiple providers/platforms.

If you were going to some small niche player that is unprofitable and/or has a high volume of illiquid assets then it is more important.   

Moving some assets to InvestEngine would, in my opinion, increase your risk.   Investengine is a tiny player with tiny revenues, is loss-making and reliant on financial backers.  That would filter it out on my research criteria.   However, it would be the sort of scenario where you would want FSCS protection just in case.     It's a reverse scenario to Vanguard.  i.e. you asking if you need to diversify providers away from Vanguard, and the answer is no, but would be yes if you were talking about InvestEngine.

dllive

Thanks all for allaying my fears. Perhaps Ill keep my SIPP with Vanguard.

I suppose the other reason for using Invest Engine is that it doesnt charge platform fees. But, for the sake of a few hundred £ per year that Vanguard charges, it buys me peace of mind.