Standard Life Sterling Fund

purch · 16 January 2009 at 9:36AM

could ther be further shocks for investors in this "allegedly"safe haven for short term investement

Looking at the fact sheet for this SL Sterling Fund, it say's that nearly 50% of the fund is invested in Floating Rate Notes (FRN's)

No way that these instruments be classed as low risk, especially in the current environment, as the coupons change (floats) in response to changes in market conditions and credit risk of the Note issuer.

So these instruemnts have a 3rd tier of risk over and above the risk of the sort of paper a fund like this normally holds (default and mark to market) as the coupon can change too.

whiteflag_3 · 16 January 2009 at 10:56AM

minsky wrote: »

Has anyone else been affected by the Standard Life Sterling fund? Last year I had getting on for £100K in equity funds, had a bad feeling about the stock market so switched to a safer fund. Standard Life told me the safest, lowest risk one they offered was the Sterling fund - next to no growth but next to no risk. A safe haven to weather the storm and retain capital.
A year later it had fallen 8% and yesterday it fell another 5% in one day. And its supposed to be cash, like a deposit account. I've lost over 10 grand. 10 grand of missed holidays, clothes and meals out whilst I saved and 10 grand less for retirement. Meanwhile the fund manager gets a six figure salary and god knows what bonus.

Is there any way I can get my money back?

Mis-selling? Negligence?

If it was Standard Life that advised you, they were wrong as their lowest risk fund is their cash fund.

THinks Dh is being a little unfair on you as did seek advice from Standard Life and acted on incorrect information they gave you.

whiteflag_3 · 16 January 2009 at 11:01AM

EdInvestor wrote: »

If you move to a SIPP you can invest cash in an actual bank account with the usual safeguards. But an ordinary pension will not usually offer this.

Ed can you just confirm that cash deposits held within a SIPP are better protected than in a providers cash fund?

For example, what would be the position if you held £100K in a bank account within a SIPP and the bank went bust ( not inconceivable)
and a pension with £100K in a cash fund that folded?

dunstonh · 16 January 2009 at 11:04AM

If it was Standard Life that advised you, they were wrong as their lowest risk fund is their cash fund.

THinks Dh is being a little unfair on you as did seek advice from Standard Life and acted on incorrect information they gave you.

I'm not being unfair. Either you use an adviser or you dont. If you dont, then you dont get the same level of protection as you make the decisions. The exception is where the literature may not be compliant.

Perfect_Choice · 16 January 2009 at 11:25AM

I’ve been lucky with this reduction. Had already moved all on my main pension into the Managed Cash Fund after it became available in October 2008. However had 5% of my wife’s stakeholder pension in the Sterling Fund so took a small hit on that. I saw a warning sign on the 17th September when the fund selling price dropped from 136.5p to 135.9p which prompted me to move cash when the Managed Cash Fund appeared.

I agree Standard Life certainly do not look clean on their literature, why are there so many investors who thought this was a safe fund which, while it had the capability of a reduction, had only minor volatility risk, which a sudden 5% drop is certainly not!

A key literature change has been the fund profile statement and its emphasis on fund risk. I’ve copied the statement from the 30 September quarterly report and today’s profile. The profile statement as well as stating a change in investment detail, also changed from “extreme circumstances” to just “circumstances” in terms of the risk of a fall.

Perhaps somebody can reply on the obligations of Standard Life to notify investors of “significant” fund profile changes, since if the change below had been made aware to investors, they might have realised this fund was not quite as stable and a safe haven as some feel it was.

I also have a former Company pension fund with Skandia (whose monthly brochure I receive notifies me of fund objective changes), plus a SIPP so I distribute risk over pension providers as well. This is vital in today’s market I feel.

30 September 2008:
The Fund invests not only in bank/building society deposits but also holds other short-term sterling assets.
Some of the cash investments that the Fund may hold are not 'guaranteed' in the same way as
High Street Bank or Building Society Accounts are. Therefore, in extreme circumstances, it is
possible that the value of the Fund may fall.

Today:
The Fund is intended to provide market leading returns from a portfolio of money market instruments and invests not only in bank and building society deposits but also in a variety of other money market instruments such as Certificates of Deposits (CDs), Floating Rate Notes (FRNs) including Asset Backed Securities (ABSs) where, when purchased,repayment is typically expected within 3 years. The fund price is not guaranteed by Standard Life and there could be circumstances where the fund price may fall. A fall might happen if, for example, there is a default by one of the banks where some of the money is held or where there is an adverse market movement in the value of one or more of the securities held due to for instance a credit event or where the anticipated repayment term of an asset is extended.

dunstonh · 16 January 2009 at 11:54AM

The problem is that risk profiles used be providers dont fit one scale and may not correspond with each other. That is why they should not be used and you should stick to an independent scale which benchmarks itself as cash being risk 1.

Some providers treat the lowest fund in their range as risk 1. But realistically it can be risk 2 or 3 on an independent scale.

If you are going to be picking your own funds and investment strategy then you need to use your own risk scale and use independent sources of data and dont rely on providers in house ones.

whiteflag_3 · 16 January 2009 at 12:26PM

dunstonh wrote: »

I'm not being unfair. Either you use an adviser or you dont. If you dont, then you dont get the same level of protection as you make the decisions. The exception is where the literature may not be compliant.

So STandard Life are not allowed to advise thier direct clients on funds?

dunstonh · 16 January 2009 at 12:36PM

whiteflag wrote: »

So STandard Life are not allowed to advise thier direct clients on funds?

SL have a very small bank of advisers. I mentioned early in the thread if advice was taken or not and the responses suggested no adviser was involved. In which case, if they are just supplying literature, there is no advice liability.

Perfect_Choice · 16 January 2009 at 1:38PM

Agree no advice liabiity if you did not go through an IFA (who could have the liaibity I guess if the IFA mislead an investor).

Literature is the only issue here apart from providing a poor proactive service. A stated in my previous post, Standard Life changed the profile of the fund without any announcement.

As they changed it is such a way (i.e. removal of the word “extreme”) , did they effectively increase the risk profile of the fund without any communication to investors? Probably would not hold up in court but in principle, certainly seems wrong, unless buried in the pension T&Cs you are obliged to regular monitor Standard Life information to find this out yourself, in which case it will be our fault for not finding the risk of the fund had changed!!

artha · 16 January 2009 at 1:44PM

minsky wrote: »

Has anyone else been affected by the Standard Life Sterling fund? Last year I had getting on for £100K in equity funds, had a bad feeling about the stock market so switched to a safer fund. Standard Life told me the safest, lowest risk one they offered was the Sterling fund - next to no growth but next to no risk. A safe haven to weather the storm and retain capital.
A year later it had fallen 8% and yesterday it fell another 5% in one day. And its supposed to be cash, like a deposit account. I've lost over 10 grand. 10 grand of missed holidays, clothes and meals out whilst I saved and 10 grand less for retirement. Meanwhile the fund manager gets a six figure salary and god knows what bonus.

Is there any way I can get my money back?
Mis-selling? Negligence?

please excuse my ignorance but which sterling fund are you talking about?
Your original post got me worried and I posted a question (post 20, which nobody tackled with a reply). I've since looked at the SL site and realised that there seem to be various "Sterling Funds" or am I being confused and not realising that there is only one fund in various wrappers i.e pension, pension one, Life etc. The fund I'm about to enter(Pension One Sterling Fund), although showing a significant slide in recent days, has not shown a loss of 8%in the 12 months up to 12/12/08, in fact shown a very small gain. Comments please?

Standard Life Sterling Fund

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