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Rebalancing my SIPP
Michael Grimes
Posted: 16 April 2018 23:03:01(UTC)
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My SIPP is with HL and the mix is

Funds £290k (21 spread across all sectors and geographically)
Shares £55k (itv,Shell B, Saga and Taylor Wimpey)
IT £33k (CTY and FCSS)
Cash £114k

All income is reinvested as I have sufficient income from other sources
The cash is from pruning low performing funds in December and January.
In the next 2 years I will look to take 25% drawdown from the existing funds for passing on to my family.

I want to make a start on rebalancing the portfolio towards investment trusts by investing £100k
in a mix of £10k to £20k tranches in the next few months

I would welcome any thoughts as to which IT's to consider for the cash element
1 user thanked Michael Grimes for this post.
Harry Trout on 17/04/2018(UTC)
Alan Selwood
Posted: 16 April 2018 23:15:59(UTC)
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I think you are going to end up with far too much unnecessary diversification, and question whether it is worth investing in equities any money that you want to turn into cash in the next 2 years.

I personally would be wary of all of your individual shares, for various different reasons.
2 users thanked Alan Selwood for this post.
Michael Grimes on 17/04/2018(UTC), A M on 19/04/2018(UTC)
mcminvest
Posted: 17 April 2018 06:35:47(UTC)
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agree with Alan, your individual stocks could do with looking at especially if you want to drawd own, seems like good dividend income stocks would be better and there is good value out there at the moment which might give you growth also.

Sounds a good idea to rebalance and reduce as 21 funds probably means too much diversification.

https://www.theaic.co.uk/ here for IT info but you may know this already.

Overall, I think IT's are costly, check the 'hidden' costs like annual management on top of the OCF.

Good Luck!
1 user thanked mcminvest for this post.
Michael Grimes on 17/04/2018(UTC)
Tim D
Posted: 17 April 2018 08:42:41(UTC)
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If you have £290k in funds on HL you're presumably paying ~£1300 a year for that 0.45% platform fee. There are "flat fee" brokers who will host a SIPP for you for more like £300... that's another £1K a year for you. Sure, the HL website is very slick and I'm told the service is good... but is it really worth £1K a year?
6 users thanked Tim D for this post.
Harry Trout on 17/04/2018(UTC), mcminvest on 17/04/2018(UTC), Aminatidi on 17/04/2018(UTC), Michael Grimes on 17/04/2018(UTC), dlp6666 on 18/04/2018(UTC), A M on 19/04/2018(UTC)
AnthonyL
Posted: 17 April 2018 09:10:53(UTC)
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With regards to HL fees I'm with Fidelity and despite looking around I remain there for the following reasons:

On an amount over £250k fees are 0.2%
Fees are (or certainly appear to be) all in which includes:

Changing SIPP to drawdown

Changing drawdown amounts

Nominating which of your funds you want the drawdown to be taken from (hence I have a low volatility fund which I will top up from time to time)

Within an ISA you can have a set withdrawal plan at no extra cost (eg £500/month from say 4 nominated funds, £150 from 3 and £50 from 1)

No exit/close account fees.

Any other family members whose investment is less that the threshold will still benefit from the lower charge (standard rate is 0.35%).

And a free number to their call centre!
2 users thanked AnthonyL for this post.
mcminvest on 17/04/2018(UTC), Michael Grimes on 17/04/2018(UTC)
mcminvest
Posted: 17 April 2018 09:11:00(UTC)
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Tim D;60749 wrote:
If you have £290k in funds on HL you're presumably paying ~£1300 a year for that 0.45% platform fee. There are "flat fee" brokers who will host a SIPP for you for more like £300... that's another £1K a year for you. Sure, the HL website is very slick and I'm told the service is good... but is it really worth £1K a year?


Yes, shop around! HL do come out expensive in my opinion particularly above 50K (iI'm not there yet). I don't like companies like HL who say we get discount on the OCF for you but what they are really doing is 'hiding' their whopping 0.45% that goes on top! On every fund etc.! Some info here.

https://www.moneywise.co...right-sipp-platform-you

1 user thanked mcminvest for this post.
Michael Grimes on 17/04/2018(UTC)
Tom Bards
Posted: 17 April 2018 12:07:49(UTC)
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mcminvest;60753 wrote:
Tim D;60749 wrote:
If you have £290k in funds on HL you're presumably paying ~£1300 a year for that 0.45% platform fee. There are "flat fee" brokers who will host a SIPP for you for more like £300... that's another £1K a year for you. Sure, the HL website is very slick and I'm told the service is good... but is it really worth £1K a year?


Yes, shop around! HL do come out expensive in my opinion particularly above 50K (iI'm not there yet). I don't like companies like HL who say we get discount on the OCF for you but what they are really doing is 'hiding' their whopping 0.45% that goes on top! On every fund etc.! Some info here.

https://www.moneywise.co...right-sipp-platform-you




Depends.

Lindsell Train is 0.54% on HL and 0.74% on Charles Stanley. Latter platform cost is 0.25% so it basically works out to the same cost.

Also OP I would be cautious in moving over to IT's completely, many of them are much more expensive than they advertise.
4 users thanked Tom Bards for this post.
mcminvest on 17/04/2018(UTC), Harry Trout on 17/04/2018(UTC), Michael Grimes on 17/04/2018(UTC), dlp6666 on 18/04/2018(UTC)
MartynC
Posted: 17 April 2018 13:30:26(UTC)
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Michael Grimes;60743 wrote:
My SIPP is with HL and the mix is

Funds £290k (21 spread across all sectors and geographically)




If the 21 funds spread across all sectors are mainly equity funds then this portion is probably behaving like an expensive Global tracker. These could be replaced by a single ETF (Vanguard VWRL) at much lower cost or six regional ETFs if you wanted to adjust the regional equity allocations. A tracker fund like Vanguard Life-strategy could also be used but would attract HL's percentage fee.
3 users thanked MartynC for this post.
mcminvest on 17/04/2018(UTC), Tim D on 17/04/2018(UTC), Michael Grimes on 17/04/2018(UTC)
Tim D
Posted: 17 April 2018 14:39:35(UTC)
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Tom Bards;60758 wrote:
Lindsell Train is 0.54% on HL and 0.74% on Charles Stanley. Latter platform cost is 0.25% so it basically works out to the same cost.


0.65% for LT Global on ATS. Platform fee (for a SIPP) is a flat £252 p.a which is 0.25% of a £100K portfolio, 0.13% of a £200K portfolio, 0.084% of a £300K portfolio etc.
1 user thanked Tim D for this post.
Michael Grimes on 17/04/2018(UTC)
Michael Grimes
Posted: 17 April 2018 15:47:21(UTC)
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Thanks for all the helpful replies. I have just edited the original post because I failed to include the cash element !

I agree that my 21 funds probably mimic a tracker, but somehow I feel that going for a single tracker solution bears the risk that a slump in world economy just means a one way bet. I would hope that quality individual funds with some of their money invested in non quoted companies and a degree of skill by their managers would provide an element of diversification and risk management.

The HL charges are a concern being in excess of £1300 a year so going the IT route was in my mind. The other thing I cannot get used to is sitting on a cash pile which is not providing anything - even if its a Warren Buffett recommendation.

If my foray into a greater IT portfolio is successful over 6 months I would then look to cut back the funds element by the 25% drawdown and transfer at least 50% of the remaining into more IT (and/or ETF's)

I am thinking of an overall portfolio split roughly Funds 40% /IT40% /Shares 10% and Cash 10%
with the intention of a maximum 10 funds and 10 IT's
Tim D
Posted: 17 April 2018 16:13:57(UTC)
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Michael Grimes;60776 wrote:
I would hope that quality individual funds with some of their money invested in non quoted companies and a degree of skill by their managers would provide an element of diversification and risk management.


You can hope all you like, but there's zero evidence that active managers are on average actually any good at dodging bullets. "But I'll only pick the quality managers!" you might say... but the bad news is there's no reliable way of identifying them in advance (other than that low charges are the best predictor of future success).

My personal theory is that going with active management at least gives you the satisfaction of having someone to blame when it all goes pear shaped: "oh dear, old so-and-so just didn't get out in time". If you sink your cash in passives, you still have to pick some sort of asset allocation... and if you pick wrong you've noone to blame but yourself.
2 users thanked Tim D for this post.
Michael Grimes on 17/04/2018(UTC), dlp6666 on 18/04/2018(UTC)
MartynC
Posted: 17 April 2018 19:06:49(UTC)
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Tim D;60778 wrote:
Michael Grimes;60776 wrote:
I would hope that quality individual funds with some of their money invested in non quoted companies and a degree of skill by their managers would provide an element of diversification and risk management.


You can hope all you like, but there's zero evidence that active managers are on average actually any good at dodging bullets. "But I'll only pick the quality managers!" you might say... but the bad news is there's no reliable way of identifying them in advance (other than that low charges are the best predictor of future success).

My personal theory is that going with active management at least gives you the satisfaction of having someone to blame when it all goes pear shaped: "oh dear, old so-and-so just didn't get out in time". If you sink your cash in passives, you still have to pick some sort of asset allocation... and if you pick wrong you've noone to blame but yourself.


The problem is that if it all goes pear shaped the active manager still takes his fee.
I think there is a lot to be said for having the bulk of an equity portfolio in a passive global tracker and active in specialist areas like small cap, emerging markets and frontier markets.

I do not have any experience of Bonds as I hold cash as a hedge instead.
2 users thanked MartynC for this post.
Bellabeck on 18/04/2018(UTC), Alan M on 19/04/2018(UTC)
Split Cap Jim
Posted: 17 April 2018 19:15:15(UTC)
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HL is quite competitive, cost wise if you switch the funds to shares/ETF/ITs - so my HL SIPP is very IT heavy.

In addition if you are going to go down the IT route then I would consider things like Private Equity and property which are better suited to the closed end format.
For Private Equity I would consider trusts like PIN, HVPE, SLPE or PEYS
For Property you could look at TRY and PCTN

Though we all know trackers are cheaper, this is a forum for ITs so hopefully you will get some other recommendations.



3 users thanked Split Cap Jim for this post.
Michael Grimes on 18/04/2018(UTC), dlp6666 on 18/04/2018(UTC), Jon Snow on 18/04/2018(UTC)
Steve Allott
Posted: 17 April 2018 19:39:02(UTC)
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I am with HL and most of my holding are IT’s. I have a few ftse 100 which will be sold when the time is right. The three funds I have left will be sold shortly so there will be no more ‘uncapped’ 0.45% charges. I much prefer IT’s and REITs and the charges from HL with no funds are competitive.
1 user thanked Steve Allott for this post.
Michael Grimes on 18/04/2018(UTC)
Tony Airey
Posted: 17 April 2018 19:52:06(UTC)
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There is no substitute for professional advice.

If I want advice on my teeth, I pay a dentist. If I want financial advice I pay a stockbroker/wealth manager/fund manager.

I wouldn't use the internet to seek (amateur) advice on any subject.

With apologies to all well-meaning posters on this column.
1 user thanked Tony Airey for this post.
Tim D on 17/04/2018(UTC)
Tim D
Posted: 17 April 2018 20:46:53(UTC)
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Tony Airey;60794 wrote:
If I want advice on my teeth, I pay a dentist. If I want financial advice I pay a stockbroker/wealth manager/fund manager.


If dentistry's fees model operated like the financial services industry, your dentist would extract one of your teeth every couple of years and stick it in their own mouth.

This sort of comparison with other professions always reminds me of this amusing contrary piece: https://www.whitecoatinv...advisors-arent-doctors/

Certainly agree advice can be well worth paying for in some circumstances though. But it's important to understand what the value you're getting really is. People don't have their dentist buy their toothpaste for them.
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Captain Slugwash on 17/04/2018(UTC), Fell Walker on 18/04/2018(UTC), dlp6666 on 18/04/2018(UTC), Mr Helpful on 18/04/2018(UTC), David 111 on 18/04/2018(UTC), Alan M on 19/04/2018(UTC)
JohnW
Posted: 17 April 2018 20:55:03(UTC)
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Tony Airey;60794 wrote:
There is no substitute for professional advice.

If I want advice on my teeth, I pay a dentist. If I want financial advice I pay a stockbroker/wealth manager/fund manager.

I wouldn't use the internet to seek (amateur) advice on any subject.

With apologies to all well-meaning posters on this column.


OK then, lets just shut this site down and pay the professionals. No thank you very much.
1 user thanked JohnW for this post.
Alan M on 19/04/2018(UTC)
lynne shaffer
Posted: 18 April 2018 07:46:46(UTC)
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I have lost more money with Wealth Managers than in any other way!!

The FCA clearly agreed with my complaint about one and awarded me a large sum!
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Mr Helpful on 18/04/2018(UTC), Alan M on 19/04/2018(UTC)
Mr Helpful
Posted: 18 April 2018 10:32:02(UTC)
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Tony Airey;60794 wrote:
1. There is no substitute for professional advice.
2. If I want financial advice I pay a stockbroker/wealth manager/fund manager.
3. I wouldn't use the internet to seek (amateur) advice on any subject.

The standard response is to say "no one cares more about your money than you".

1. The first difficulty is that most investors start out with 4 or 5 digit sums of little interest or relevance to the financial industry. Over the years the portfolio with diligence may grow to 6, 7, digits or beyond.
At what point do we hand over the management to others; having learnt much along the way?

2. One lesson we learn along the way is to diversify, diversify, diversify; so a single point management runs counter to this lesson.
And having garnered sufficient wealth digits, how do we then avoid handing over all our wealth to the Bernie Madoffs of this world?
We also notice the good guys like Terry Smith and Tony Dye penalised for standing out against fashionable dogma of the financial industry.

3. This is a valid point.
There is much good info on the internet, but also much poor info.
However we now have the likes of Bogleheads to spread albeit maybe slightly slanted gospel. But certainly welcome information and fire-power to the private investor.
Citywire also continually contributes to this process.
And it will be noted that if something daft is proposed on the Citywire Forum; a welter of counter-opinion will emerge. It is a meeting of usually open minds, not a single view. A team effort from which we continually learn.

However thanks for raising the subject; which probably merits a thread of its' own.
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paul armstrong
Posted: 18 April 2018 18:04:36(UTC)
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Agree with comments about HL costs and don't care for Fidelity who quietly charge for holding cash. HL is worth the extra % differentiable over them however a flat fee provider would save a lot of money, but you know that.

With that many funds and holdings you are kidding yourself if you think you are managing that lot. I would sell the shares and simplify ultimately down to maybe 8 holdings, assuming you don't want bonds much ( I assume your youngish).

Any money you might need within the next 5 years should not be in equities in my view.

I am looking to invest £300k pension money and I am going towards a 40/60 bond equity split with a significant direct holding in an IL gilt, ie not a fund.

Equities will all be collectives as why take the additional risk and I have no reason to think I am a stock picker. Don't like the low discounts now prevalent on ITs and their fee advantage isnt what it was.

Assuming I was young and could take the risk I can't see why a core holding in HSBC Dynamic, and/or Vanguard LS 80 plus a few ETFs or funds wouldn't do whatever job you have in mind. No holding less than 8% btw as what is the point :).

My four pence worth anyway.
4 users thanked paul armstrong for this post.
Michael Grimes on 18/04/2018(UTC), mcminvest on 18/04/2018(UTC), Tim D on 18/04/2018(UTC), Alan M on 19/04/2018(UTC)
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