Moving a PEP to ISA manager and exiting L&G Fixed Interest?

earlgrey_3

My wife has a large holding in "L&G Fixed Interest" trust which has a pretty lousy track record relative to the sector especially in the last 4 years or so. Don't think it's ever struggled above the 3rd quartile for the sector in that period. Overall I don't think it's ever got near the base rate. Aside from the crunch and currency issues not sure if there's any other excuse for the performance or just bad management. It's invested 98% fixed interest, 54.6% in UK.

Chart:

It's an asset class that's recommended to people in our position and we're in bumpy times but I'm questioning whether we need to be in bond UTs at all when few seem to perform well and when we're heavily in cash anyway. We're 61 and just retired with decent pensions. Doesn't seem to be much upside, plenty of downside, and overall lack of return seems a high price for the balancing they should give. I find the different flavours of bonds and fixed interest the hardest to get my head round.

The units are held in a PEP directly with L&G. What I thought of doing was to tranfer them into my wife's newly funded Hargreaves Lansdowne ISA (thanks to those here who suggested them). Should I be aware of any costs or disadvantages in doing that? Can the units be transferred to the new manager without any selling?

If all or part of the money stays in bonds was looking at the Henderson or F&C Strategic Bond or even L&G High Income but would welcome other ideas. I'll only be tinkering at the margins. Or is now the time to "hold tightly on to nurse, for fear of meeting something worse"?

dunstonh

The fund historically was basically almost a passive tracker of the sector average. Always coming out mid table more often than not. In 2005 it got a new manager and performance under him has taken it downhill.

Its currently 95.86 fixed interest and 4.14% cash

It's an asset class that's recommended to people in our position and we're in bumpy times but I'm questioning whether we need to be in bond UTs at all when few seem to perform well and when we're heavily in cash anyway.

You have a pretty poor corporate bond in just one fixed interest sector. Its not well invested but nothing wrong with having fixed interest funds. You are also looking at just a limited period of time when it wasnt a good time to be in fixed interest funds.

I find the different flavours of bonds and fixed interest the hardest to get my head round.

This is why you research or seek advice.

Should I be aware of any costs or disadvantages in doing that? Can the units be transferred to the new manager without any selling?

If you transfer then you will be out of the market for a few days and will lose out on gains (or miss out on losses) during that period. If you re-register the holding then you will not be out of the market. There is usually no cost on re-registering or transferring.

If all or part of the money stays in bonds was looking at the Henderson or F&C Strategic Bond or even L&G High Income but would welcome other ideas.

Why?

L&G high income ( and F&C Strategic bond) gives you access to the UK other bonds sector but its still a mid table average performer and there are far better options within that sector. Indeed, given the wide risk spread of that sector (and any sector) a variety does make sense.

You need to look at the asset/sector allocation as you are too focused on the same areas. You need a variety and you havent got that with your choices. Depending on your overall holdings, you may be sensible in bulding in some higher yielding equity funds for a proportion that is suitable for your risk profile.

earlgrey_3

Thanks for reply.

dunstonh wrote: »

The fund historically was basically almost a passive tracker of the sector average. Always coming out mid table more often than not. In 2005 it got a new manager and performance under him has taken it downhill.

Yes I noticed the poor performance coincided exactly with his appointment and was giving him the benefit of the doubt in case there were other factors. Prior to that seems it was thereabouts.

If you transfer then you will be out of the market for a few days and will lose out on gains (or miss out on losses) during that period. If you re-register the holding then you will not be out of the market. There is usually no cost on re-registering or transferring.

So if the intention is to switch everything to other fund(s) either transfering or re-registering will be the same but if we intend to keep part then re-registering might be the better option? We could then sell and reinvest one tranche at a time.

L&G high income ( and F&C Strategic bond) gives you access to the UK other bonds sector but its still a mid table average performer and there are far better options within that sector. Indeed, given the wide risk spread of that sector (and any sector) a variety does make sense.

Will look at that and the possible options. It's quite a large amount and way too much as a single holding so the intention was to spread it around.

Depending on your overall holdings, you may be sensible in bulding in some higher yielding equity funds for a proportion that is suitable for your risk profile.

She does have a fair sum directly in equities and other UT PEPs as do I though most would say as a result we're more heavily biassed towards the UK than we should be.

earlgrey_3

If you transfer then you will be out of the market for a few days and will lose out on gains (or miss out on losses) during that period. If you re-register the holding then you will not be out of the market. There is usually no cost on re-registering or transferring.

I emailed H-L asking for a form to re-register the units with them and got this reply. The form is here http://www.h-l.co.uk/home/literature_display/doc_id/115.hl. Bearing in mind that I want to re-register does this look right? It's a PEP that's to be transferred btw rather than an ISA.

If you choose to transfer the ISA into the Vantage ISA, you would be given the choice of transferring as stock or cash. A stock transfer would be a re-registration of stock into our ISA wrapper. A cash transfer would mean that the stock is encashed before transferring the proceeds into the Vantage. For either of these options, you would need to complete the Vantage Stocks & Shares ISA Transfer form.

Another option would be to change the agency of your investment to Hargreaves Lansdown. In this case, the ISA will remain with Legal & General but we would be able to access information regarding your ISA. We would then be able to list the fund in the ‘Other investments section’ of your ISA. Please see the link below for further information:

http://www.h-l.co.uk/fund_research/view_all_investments.hl

I hope this is of assistance. If you have any further queries please do not hesitate to contact our Helpdesk on 0117 900 9000.

dunstonh

Do you want to check that link again as its not working for me.

earlgrey_3

Sorry, that was the url but they won't allow access without jumping through the hoops.

It's a PDF. Have put it here: http://www.btinternet.com/~longline/temp/form.pdf

earlgrey_3

Spoke to HL this morning and it seems they make no distinction between the terms. Which is strange when Cavendish Online carefully explain the difference here http://www.cavendishonline.co.uk/COL/FNW/FAQs.htm as do Fidelity/Fundsnetwork here: http://www.fidelity.co.uk/adviser/fnw/about/rereg/ducks.pdf

What is the difference between Reregister and Transfer and how do I know whether to Reregister or Transfer?

Reregistration means that the underlying fund manager remains the same but the plan administrator will change from the current one (which is presumably the same as the current fund manager) to Fidelity Fundsnetwork. The units are not sold and there is no cost to this transaction. Transfer is where the existing fund manager encashes your funds and send the cash to Fidelity Fundsnetwork for reinvestment in your chosen funds. There is a cost incurred in the repurchase of funds with Fundsnetwork which is usually the initial charge less our initial commission, and this can range from nil to 2.75%.

I'll complete and send back the HL form with a notation so there's no misunderstanding.

dunstonh

HL are giving you duff information. That form you linked to from HL asks the question in part 4 and asks you to select stock transfer or cash transfer.

Stock transfer is re-registration and cash transfer is selling the holdings and the previous provider sending a cheque to HL for them to reinvest into new funds of your choice.