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  • FIRST POST
    • jrsga
    • By jrsga 12th Mar 18, 10:03 AM
    • 77Posts
    • 2Thanks
    jrsga
    Stocks and Shares ISA
    • #1
    • 12th Mar 18, 10:03 AM
    Stocks and Shares ISA 12th Mar 18 at 10:03 AM
    Hi

    After Virgin being much maligned over the annual 1% fee on their S&S ISA (Virgin FTSE all share index) I am looking to transfer it.

    At the moment I am considering Vanguards FTSE one that tracks the UK index with a annual fee of 0.08%. It appears to me it is the most profitable (3.85%) over the last year.

    Can anyone offer any advice as to an alternative?

    I have also used this years 20K ISA cash allowance. Can I now transfer the Virgint S&S ISA to another provider with no issue?

    thanks
Page 1
    • dunstonh
    • By dunstonh 12th Mar 18, 10:32 AM
    • 92,556 Posts
    • 59,837 Thanks
    dunstonh
    • #2
    • 12th Mar 18, 10:32 AM
    • #2
    • 12th Mar 18, 10:32 AM
    At the moment I am considering Vanguards FTSE one that tracks the UK index with a annual fee of 0.08%. It appears to me it is the most profitable (3.85%) over the last year.
    Single sector funds are designed to be held in a wider portfolio of other single sector funds. So, you have identified the fund you are going to hold in one sector. i.e. UK equity. What about the rest?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • jrsga
    • By jrsga 12th Mar 18, 11:41 AM
    • 77 Posts
    • 2 Thanks
    jrsga
    • #3
    • 12th Mar 18, 11:41 AM
    • #3
    • 12th Mar 18, 11:41 AM
    Single sector funds are designed to be held in a wider portfolio of other single sector funds. So, you have identified the fund you are going to hold in one sector. i.e. UK equity. What about the rest?
    Originally posted by dunstonh
    No I have not, do enlighten me?

    Essentially I understand passive investing on indexes gets a good return typically?
    • dunstonh
    • By dunstonh 12th Mar 18, 12:21 PM
    • 92,556 Posts
    • 59,837 Thanks
    dunstonh
    • #4
    • 12th Mar 18, 12:21 PM
    • #4
    • 12th Mar 18, 12:21 PM
    Essentially I understand passive investing on indexes gets a good return typically?
    No. They get mid table returns on a discrete basis. When viewed on a cumulative basis (over time) they tend to move to top half.

    However, whether it is managed or passive is not the issue here. It is the structure of your portfolio. Whether you build the portfolio with managed or passive doesnt matter. How you diversify and allocate the weightings to each sector is the important thing.

    Currently, you have 100% allocated to UK Equity. That is bad investing. Do you think investors in Germany are thinking "I must invest 100% of my money in the UK". No.

    As you have chosen single sector fund investing, you need to decide how much you are going to put in each of the major investment sectors. e.g how much in US equity etc You then select a fund for each of those sectors. Then you rebalance them on an annual basis.

    Alternatively, you go with a multi-asset fund that does this for you.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Tom99
    • By Tom99 12th Mar 18, 12:35 PM
    • 2,057 Posts
    • 1,383 Thanks
    Tom99
    • #5
    • 12th Mar 18, 12:35 PM
    • #5
    • 12th Mar 18, 12:35 PM
    Investing in just UK is not necessarily bad investing providing the person accepts that they are ruling out large markets elsewhere which may or may not do better than the UK.
    • bowlhead99
    • By bowlhead99 12th Mar 18, 1:19 PM
    • 7,820 Posts
    • 14,286 Thanks
    bowlhead99
    • #6
    • 12th Mar 18, 1:19 PM
    • #6
    • 12th Mar 18, 1:19 PM
    Investing in just UK is not necessarily bad investing providing the person accepts that they are ruling out large markets elsewhere which may or may not do better than the UK.
    Originally posted by Tom99
    If they are investing in just the UK via a FTSE all-share tracker they are deciding to put all their money into large companies but focusing exclusively on the $3-trillion -worth of companies that picked the London stock exchange to list their shares and ignoring the nearly $50- trillion worth of companies that are investible but listed somewhere else.

    They are also getting a very skewed allocation of their investment to certain industries that appear as a large component of the UK FTSE (oil and gas, financials, 'big pharma', tobacco etc) while missing some sectors entirely (the UK exchange doesn't have any real allocation to car manufacturers, Facebooks, Google's, Twitters, Weibos, Microsofts, Sony's or Apples or Samsungs etc.

    So, it's pretty poor quality investing. You could say, "well, easiest thing to do is just put my money in this 5% of the world markets and ignore the other 95%, after all it's a binary choice it will either do better or worse, so if I toss a coin on average it is probably about the same".

    If you think the UK stock market index will be a great place to invest, perhaps put a fifth or quarter or third or half of your money into it. That still leaves plenty of money to 'hedge your bets' by putting the rest of your money into other areas to cover the risk you are wrong and picked the worst performing place first.

    As dunstonh says: a specialist index that invests in one area will necessarily miss out the other areas so it can focus on what its owners want it to do. But the other owners will have several other funds too. Don't be the schmuck who bought it thinking "well, lots of other people buy it and they can't all be wrong". They are not buying *just* that fund.

    So, to get a sensible allocation starting with that fund you'd have to either buy that fund plus a bunch of others alongside it, or drop that fund and buy some all-in one fund which covers a variety of investment areas instead.
    • Tom99
    • By Tom99 12th Mar 18, 1:40 PM
    • 2,057 Posts
    • 1,383 Thanks
    Tom99
    • #7
    • 12th Mar 18, 1:40 PM
    • #7
    • 12th Mar 18, 1:40 PM
    You could say, "well, easiest thing to do is just put my money in this 5% of the world markets and ignore the other 95%, after all it's a binary choice it will either do better or worse, so if I toss a coin on average it is probably about the same".
    Originally posted by bowlhead99
    But if that is what an investor chooses to do, knowing they are excluding the rest of the world, that does not automatically mean their investment choice is bad and poor quality.
    It just means they have decided not to spread their investment risk as thinly as possible.
    • jrsga
    • By jrsga 12th Mar 18, 2:15 PM
    • 77 Posts
    • 2 Thanks
    jrsga
    • #8
    • 12th Mar 18, 2:15 PM
    • #8
    • 12th Mar 18, 2:15 PM
    But if that is what an investor chooses to do, knowing they are excluding the rest of the world, that does not automatically mean their investment choice is bad and poor quality.
    It just means they have decided not to spread their investment risk as thinly as possible.
    Originally posted by Tom99
    Firstly I don't want to pay 1% p.a anymore.

    I haven't chosen a single fund specificlly its just seems a realtively good return on history for dumping ones money but if I am missing out potentially on so much more where do I start?
    How do I diversify?

    I have also used this years 20K ISA cash allowance. Can I now transfer the Virgin S&S ISA to another provider with no issue?

    Many thanks to all.
    • jimjames
    • By jimjames 12th Mar 18, 9:45 PM
    • 12,579 Posts
    • 11,225 Thanks
    jimjames
    • #9
    • 12th Mar 18, 9:45 PM
    • #9
    • 12th Mar 18, 9:45 PM
    I have also used this years 20K ISA cash allowance. Can I now transfer the Virgin S&S ISA to another provider with no issue?

    Many thanks to all.
    Originally posted by jrsga
    Yes you can. Contact the new provider. Fill in their paperwork for the transfer. Job done
    Remember the saying: if it looks too good to be true it almost certainly is.
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