Aegon - GIA and Stocks & Shares ISA - Alternatives/Ideas

BigBlueSky

I'm trying to help a family member who is reviewing their investments. They were taken out by their partner years ago who is no longer with us.

They are using the Aegon platform and have the following investments. Identical investments in both their GIA and ISA (although much more being held in the GIA).

27% held within the ISA
72% held within the GIA

Also, they haven't used their ISA allowance in years.

HSBC Wld Seltn - Div Dist Pfl C Inc (29%) - OCF 0.74%
Premier Miton MltAstDist C I£ (25%) - OCF 1.1%
Janus Henderson CtMng I I (22%) - OCF 0.76%
CT MMNavDis C Inc (21%) - OCF 1.45%

Same percentage spread between GIA and ISA.

They are all distributing and they are happy with the income they are receiving from these investments.

I use DIY platforms myself - Trading212, Freetrade, Interactive Investor, iWeb (now Scottish Widows) and trying to help them out as best I can.

I was hoping to get people's opinions on the following thoughts I had about it.

1. Are these actual investments any good. They will have been taken out years ago and I've never come across them myself.
2. The fees seem very high for what they seem to be.
3. If they try and move them from their GIA to ISA they will need to sell in the GIA, pay capital gains tax if over the annual amount, and can then re-buy within the ISA.
4. Looking at alternative platforms but if they keep these same investments seem to be restricted, as a lot of the no/low cost ones don't offer these, even when they do offer funds such as Freetrade. I'm not sure what the platform fees are from Aegon or their buy/sell fee. Hopefully will get some more information from them to do a better comparison.

I'm interested in hearing other people's thoughts.

Thanks in advance

masonic

Scottish Widows Share Dealing is an option with a much wider range of funds available, so transferring there could be the ideal option.

As a significant holding is in the GIA, then that limits the ability to change without incurring CGT, but otherwise I think there is a strong case for rip it up and start again. These are expensive funds where the fee is probably unjustifiable. But the tax implications of changing are also probably unpalatable.

You'd need to find out more about how much capital gain is wrapped up in these funds to assess whether it would be feasible to make a gradual change within the CGT allowance over several tax years.

For example the two cautious funds are generating total returns of only around 5% pa, the majority of which is income, so there may be very little capital gain on these. It also means the ~1% management fee averaged across the two funds represents about 20% of the returns!

If income is the focus, then this may limit the use of index trackers, although there are some ETFs available with an income focus. Investment trusts can give a better balance of cost vs dividend, and there are also REITs, but you would need to DYOR.

BigBlueSky

Thanks, masonic, that’s really helpful. I appreciate the detailed breakdown. I’m still trying to weigh up the trade-off between keeping the current funds for their monthly distributions versus moving to lower-fee options, especially considering the CGT implications on the GIA.

The existing dividends being paid our from the GIA I assume don't count towards CGT, purely when the assets are sold and realised ?

I’d be very interested in any thoughts you have on how to structure a portfolio that could maintain a near-monthly income stream while reducing fees, and whether you think a gradual transition using the CGT allowance is the most practical approach.

I'm looking at some income-focused ETFs and other options too.

Such as Vanguard FTSE All-World High Dividend Yield ETF and adding in a bond ETF, but that won't pay monthly dividends.

Then looked at

Global Equity 60% - Such as VWRL / VWCE
Global Bonds 40% - Such as AGBP

Or just go for something like the LifeStrategy 60% - Higher fees that going for ETF's, but easier for rebalancing etc, but still the issue with non-regular dividends.

masonic

There are others here that are more adept at hanging together income portfolios than me, but even the investment platforms seem to be giving recommendations these days (e.g. https://www.ii.co.uk/analysis-commentary/nine-investment-trusts-generate-ps10000-income-2026-ii538046 and https://www.ajbell.co.uk/news/five-funds-and-trusts-pay-dividends-monthly ). Obviously DYOR. I think Investor's Chronicle run (or used to run) an income portfolio that they'd regularly review.

As to your CGT question, the income can be excluded from the gain. Since the holdings all look to be Inc units, then that makes things simple. You just need to consider the disposal price as income has already been removed from the equation. There might be a little bit of equalisation when the units were purchased, but if you have access to all the info, then calculating the gain should be straightforward.

I'd challenge whether dividends really are needed, or if drawing from total return would be acceptable. Natural yield is very convenient, but comes with some compromises in terms of diversification, choices and cost.

20122013

My ex IFA had opted for over 23 funds (S&S ISA) via Aegon, due to the choice of funds and higher fees I had sold and transferred out of and into a more streamlined portfolio to a new provider. I had called some providers to check whether they have similar or alternative funds to mine..

Even though there was some funds I wanted to keep it was simpler to sell all and start over. As I am not a frequent trader, I find my current platform provide the information I need and also they offer a fixed fee.

BigBlueSky

https://forums.moneysavingexpert.com/discussion/comment/81923902#Comment_81923902

Thanks. There are many providers now that either offer a fixed fee or no fee at all, or even pay you to move to them, and certainly looking into those as options.

It is just the large capital gains tax bill with selling off the GIA investments that is the issue. That isn't a problem with the ISA though.

Going to speak to her and see what she wants to do. Looks like with platform and investment fees she is paying around £1,500 per year, which is dreadful.

helibird

Just remind your family member that the income from these will need to go on a SA tax return if it exceeds the dividend allowance. If their partner was doing this they may no be aware of this