Excessive or reasonable charges for managed SIPP?

Prism wrote: »

Its all very well to compare performance during this wonderful period of growth but it will be more interesting during a downturn or crash. Will the DIY investor try and time the market and sell out some or all of their investments (I bet lots will as they have invested way beyond their risk level)? Will the IFA portfolio do what its supposed to and reduce the losses? Maybe both do equally as bad. Impossible to tell as we haven't had an event now for over 10 years. What I do know is that early and late 2018 this forum had a large number of posts from investors asking, and sometime advising others, on when to sell their holdings as apparently we were days from an equities crash. Thats the worry with doing it yourself

You have control over your investments whether you use an IFA or not. I remember a thread on here discussing why an IFA had chosen to invest in an expensive multi-asset fund (resulting in charges about 2%) rather than using cheaper building blocks to design a balanced portfolio.

Apparently the IFA needs to make sure the client doesn't do something stupid if he sees one of the funds plummet and the other skyrocket :rotfl:

Linton wrote: »

I agree that the future for drawdown for most people should be in packaged solutions. Whether this is actually practicable I am unsure bearing in mind the very wide range of people's circumstances and objectives. Managing de-ccumulation is much more complex than managing accumulation.

How many fundamentally different circumstances and objectives are there actually? It should be trivially easy for a good piece of software to take a few variables, such as retirement age, attitude to risk and maybe 4 or 5 others that would cope with 99% of people and be able to recommend an investment strategy.

However this is moot - the packaged solutions dont yet exist.

Workplace pensions, robo?

I disagree that the term DIY should be restricted to individual shares and bonds. You can compare the situation with electronics - very few professionals or amateur DIYers design their circuits at the transistor level, they use packaged components and standard software. The skill lies in configuring these so they work together. Much the same as investing with funds.

And they can configure them using a template or instruction manual written by an expert if they want. That would likely get them a better result than using an an Independant Circuit Advisor to tell them what to do :rotfl:

Deleted_User wrote: »

So, OPs portfolio underperformed every single year. How did you annualize to show OP outperform on average? What am I missing?

Morningstar provides annualised figures.

OP invested at some point in Jan 2016. In Jan 2016 VLS80 went down 2.4%. If I exclude January, OPs portfolio looks even worse, but the trend is clear.

From Morningstar: returns for complete years:
Year/OP/VLS80/VLS60

2014/17.37/12.44/12.13
2015/6.34/3.19/2.85
2016/20.95/22.15./18.27
2017/15.24/10.91/8.67
2018/-4.05/-4.04/-3.11
YTD/7.08/8.27/7.05

If you disagree with the numbers I suggest you do what I did and put the OPs portfolio into one of the many online portfolio tracking systems. Anyone else who is interested can do the same. It would be interesting to see.

But the OPs numbers are different. For 2018 it could easily be the charges. For the others perhaps we need more info from the OP. Has the portfolio changed over time? Were there any large additions since January 2016 or by the end of January 2016 was the portfolio much the same size as now and invested in the same way? Or Morningstar could be wrong or I could have typed the numbers in wrongly - as I say its no great effort to check.

You say OPs portfolio is 30% bonds (it’s not, but never mind).

I said it was 70% Equity. Morningstars figures:
Equity: 69.9
Bonds: 14.6
Cash: 4.1
Other:11.4

The 2/3rds of the "other" is Property. Yes, real physical property, made out of concrete, steel, bricks etc. Property has similar levels of returns to bonds, perhaps a bit higher but with "events". I dont know why they happen, perhaps revaluations. Most of the rest of "other" is in an otherwise mainly bond fund, so I guess some sort of derivative.

So matching up with a hypothetical VLS70 does not seem unreasonable to me.

That’s cool, very impressive that it suffered larger losses in 2018. How does that work?

According to Morningstar the difference was minimal.



Also, the portfolio has a much lower % US than VLS. The US recovered more quickly than elsewhere from the correction. It also has a higher % small companies which again are taking longer to recover.

zagfles wrote: »

How many fundamentally different circumstances and objectives are there actually? It should be trivially easy for a good piece of software to take a few variables, such as retirement age, attitude to risk and maybe 4 or 5 others that would cope with 99% of people and be able to recommend an investment strategy.

I am talking about drawdown not accumulation. Drawdown over 30 years is not trivial and there are a large range of variables.

Workplace pensions, robo?

workplace DC pensions dont manage drawdown. Perhaps you can correct me - but I dont believe robo does either.

Linton wrote: »

I am talking about drawdown not accumulation. Drawdown over 30 years is not trivial and there are a large range of variables.

Even 20 or 30 variables would be trivial for a good piece of software. I would imagine IFAs rely on software to design portfolios anyway.

workplace DC pensions dont manage drawdown. Perhaps you can correct me - but I dont believe robo does either.

Possibly not yet, but I'm sure they will as more and more people become reliant on large workplace pensions.