Virgin Money investments and pensions business is being sold to Octopus Money

wmb194

jt666 said:

I feel leaving a lump sum with a maxi Isa is a waste of time over the long run I had a matured PEP with £9K which sat with Virgin Maxi ISA for 30 odd years and the valuation after that time is less than if it sat at 3.5% in a Standard fixed rate ISA you would also have the benefit getting your money without waiting for markets to recover etc

The only time I think it makes sense to have a stocks and shares ISA is if you pay in a regular amount every month because then you buy some units at the top and some at the bottom of the market and it should beat fixed rate but the charges for management and the opportunity for stock cycling in and out of your investment pot for the benefit of stockbrokers will always drag down any potential to beat fixed rates let alone inflation

Just my opinion

Have you included dividends in that calculation?

masonic

jt666 said:

How has Virgin's UK share tracker fund performed in the last 17 years compared to the funds you have mentioned ?

I am not assuming anything by the way I am telling you how my investment with Virgin performed over the many years I have held it and giving my personal opinion not financial advice

I'm sure that there were better performing funds as you are illustrating in your commentary on my post

 I expect you chose to invest in one of those 

My IFA has retired now but the investments he selected for me didn't do much better they might have done with increased risk its a trade off I suppose

Perhaps I could have done with your expert advice at that time 

This one? https://uk.virginmoney.com/investments/existing-customers/uk-index-tracking-trust-fund/

Over the longest time period available for the HSBC FTSE All Share Index tracker (the worst option I mentioned), the Virgin equivalent has underperformed it by quite some margin. It tracked fairly closely over the first 5 years. In the last 10 years it underperformed by about 1.5% per year. A high quality fund would hug the index that it is tracking. You can hardly differentiate between the index and the HSBC fund over the above 20 year period.

Performance prior to 2005 can be judged by using the FTSE All Share index itself (orange).

Over this 10 year period, it only doubled in value (7.7% annualised return), but the index returned 9.1% and the difference (1.4%) is consistent with charges for such funds in that era plus some tracking error. So it looks like it came off the rails in the last 10-15 years. Perhaps in part because investors fled to better quality funds.

On top of this, you may have had account fees and adviser fees, which would have eaten more of your returns. So it is clear how the poor outcome has arisen.

Had you been reading the forum back in the 2000s and 2010s, then you'd have seen a lot of commentary about new lower cost funds that would have made a significant difference to your outcome, and you'd also have seen a lot of advocacy for globally diversifying and avoiding single country investing, which has also been a drag on your returns.

For the avoidance of doubt, my previous post was in response to the statement I bolded, implying that S&S ISAs are not worth it unless you drip-feed. The issue here was the choice of investment and provider, and failure to switch to better options that became available in the last 10-15 years. It is important not to conflate issues with specific investments and S&S ISAs in general.

masonic

wmb194 said:

jt666 said:

I feel leaving a lump sum with a maxi Isa is a waste of time over the long run I had a matured PEP with £9K which sat with Virgin Maxi ISA for 30 odd years and the valuation after that time is less than if it sat at 3.5% in a Standard fixed rate ISA you would also have the benefit getting your money without waiting for markets to recover etc

The only time I think it makes sense to have a stocks and shares ISA is if you pay in a regular amount every month because then you buy some units at the top and some at the bottom of the market and it should beat fixed rate but the charges for management and the opportunity for stock cycling in and out of your investment pot for the benefit of stockbrokers will always drag down any potential to beat fixed rates let alone inflation

Just my opinion

Have you included dividends in that calculation?

Good catch. Over 30 years, the fund delivered 6.2%pa with reinvested dividends, but only 3.5%pa without. Clearly if the difference (2.7%) were drawn down from a fixed rate cash ISA, then it would be worth a lot less than the S&S ISA.

Eyeful

jt666

1. Its not just the funds performance that affect what you get back. It is also the fees and charges of the fund and advisor.
Play around with the T-Rex below and you will see what you end up with.
https://larrybates.ca/t-rex-score/

2. Before trusting any type of FA with your money for investing. Or if you want to DIY, then I suggest you watch this. It may change your mind.
https://www.kroijer.com/

dunstonh

How has Virgin's UK share tracker fund performed in the last 17 years compared to the funds you have mentioned ?

Virgin's old products were rubbish.  Expensive, compared to other stakeholder pensions, and very limited investment choice.