Etfs or tracker funds in a sipp

jazzy23

Hi I am 60, with 3 global tracker funds in a sipp, I hope to start drawdown at 63 but will continue working part time.

I have 3 global equities but keep reading about etfs. I can't say I really understand the difference, but read I should use them instead. Can anyone help me understand and decide?

FYI I have 60% in equities. 40% in cash and bonds.

Thanks

dunstonh

Etfs or tracker funds in a sipp

Trackers can be ETFs, OEICs/UTs or insured funds.

I have 3 global equities but keep reading about etfs. I can't say I really understand the difference, but read I should use them instead. Can anyone help me understand and decide?

Why did they say you should use them instead?

Is your reading source current or out-of-date?

Since unbundling in 2013, the cost of UT/OEICs and ETFs is broadly similar with some UT/OEICs cheaper in some areas and some ETFs cheaper in others.

Some platforms target direct assets to discount their pricing (which includes ETFs)

leosayer

ETFs are funds just like the ones you already hold.

The only material difference to you is that they can be traded like company shares which may make them cheaper to hold on some platforms depending on how often you trade and the total value.

I hold two different types of global index tracker funds and neither of them are ETFs.

Rattusnorvegicus

i use etf's mostly. Why? for liquidity, i tend to trade highly liquid ones, and can drop very large chunks in 30 seconds. the other reason is i dont get charged for holding ETFs so it makes my overall admin fees cheaper.

its just a wrapper for funds, theres no need to get too excited about the difference for the average investor.

Its a personal choice what a person holds, and if its a tracker of a major index or group of index , the wrapper isnt going to matter too much to most people.

poseidon1

https://forums.moneysavingexpert.com/discussion/6657485/etfs-or-tracker-funds-in-a-sipp

Etfs provide speedier access to cash on disposal in drawdown scenarios ( per @Rattusnorvegicus within 30 seconds).

By contrast triggering a sale of unit trust funds could take a couple of days ( or more) if there is an intervening weekend.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81904935#Comment_81904935

There is a plan for most UK‑domiciled listed investments to move to a standard T+1 settlement cycle by 2027, with many UK funds also expected to speed up, though not necessarily all the way to T+1

incus432

I switched from funds to ETFs as a) it saved me a lot of money on fees on my platform (true of many) and b) sale and purchase are instant, unlike funds which can take a day or two.

Linton

My choice of fund is totally based on exactly what it invests in. If there were both OIEC and ETF versions of the same fund I would choose the latter because the trade is faster.

A concern I do have regards the size of the trade. If one wanted to invest a lump sum of, for example, £100K could there be problems buying an ETF, particularly if the fund was relatively obscure? I feel, without any personal experience, that buying directly from the manager rather than the open market could be easier and cheaper.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81905472#Comment_81905472

It should be noted that there is some variation in fees for global trackers, ETFs and funds, so that is a consideration as well.

It is not huge but can be up to 0.1%.