Managed Funds Opinions Please - New to Funds Investment

Hi All,

Ive just “bought out” my previous UK employers final salary pension and an about to invest the funds. At present the funds needs to be invested in the UK in a PPP until I’m 55 when I can start transferring them into super in Aus. The firm I used to do the pension transfer (Uk and Aus based) are also offering on going management of the investment (I invest in property so I’m always cautious of an adviser who also knows a great account and developer who can look after me etc etc.)

However I have researched this mob and they seem pretty well regarded. I’ve also done plenty of research and read about managed V passive, LIC, ETF etc etc. and it seems like quite a complex area.

My risk profile came out as balanced so basically the current proposal is to invest in a number of global funds with about 70% in equities mainly US, Japan, UK and Europe with the rest in bonds, property and a small amount in cash. All up annual fees for this are about 1.8% pa.

I’m pretty time poor at the moment so thinking about giving them a go for at least 12 months to see if they can beat the market as pitched. This will also give me time to do some more homework on investment strategy etc.(any links to learning materials appreciated)

Just wondering what the opinions of the wealth of knowledge and experience on here are in regard to my situation?

If I need to provide more info / context for you to respond please let me know.

Thanks in advance for any replies.

 

1.8% is a massive stitch up.

Look into something like this ;

Vanguard: Helping you reach your investing goals | Vanguard

 

Thanks for the reply. Just to be clear that’s 0.8% for the management fee. 0.3% for the platform and 0.7% is the OCF for the various funds within the portfolio. So I’m assuming it’s the 0.8% for ongoing management / advice that is the rip off?

 

It’s all a clip basically...just packaging. Caveat is I don’t know what you need from a UK pension standpoint. I’d follow these developments ;
Vanguard: Helping you reach your investing goals | Vanguard As will likely be your cheapest (best option)

For comparison, we can access the same
Exposures in super (industry finds) from around 0.2- 0.7% (indexed to full active) inclusive of all costs. When a long term 70/30 portfolio expected to to return 6-8% pa, 1.8% in fees is egregious.

 

I think @The Falcon has steered you in the right direction.

In practical terms, paying 1.8% when you might be looking at 7% per annum return... this means roughly 25% of your returns will be lost to fees.

 

Thanks for your replies I will certainly look into the vanguard option a little more. I did have a look at the various vanguard products when doing me research but didn’t really feel confident enough to manage it myself immediately. The buy out value of the pension was sort of an unexpected windfall and I’m quite risk adverse with it.

I’ve looked at the some of the funds that make up the portfolio on independent sites like the FT and Morningstar and them do seem to have outperformed the benchmark by more than the extra 1% i would be paying but i know I’m green here and may be misreading things.

Please don’t take my replies as not heeding or valuing the advice I have asked for. I’m just trying to fully understand the situation.

 

Those funds that have recently out performed are now more likely to underperform.

Also, the ones listed look great but they dont list all the funds that closed due to underperformance.

 

@Froxy @Snowball @The Falcon thanks again for taking the time to reply. I had a look at the vanguard fund and have a couple more questions. Probably dumb ones due to my lack of knowledge but I’m here to learn.

I can see vanguard fees are much lower than what has been proposed to me but it mentions excluding transaction charges. Any idea how often these occur and what they cost. The current proposal I have has 2 “rebalances” per annum when transaction charges may be applied depending on changes in funds.

Can I just purchase the shares directly or do I need some kind of wrapper or investment platform that will add to fees?

The vanguard overview doc shows performance against a vanguard benchmark which shows this fund outperforms. However the key information doc shows performance against a “composite index” which appears to show worse performance. Am I correct?

Would I be more exposed to the risk of losing my investment if something went wrong with vanguard (I assume unlikely given their size) as opposed to being invested in multiple funds?

Sorry if I’m being a pain just trying to learn.

Thanks

 

Hi again,

I’ve done some more reading on the vanguard fund mentioned above and have to admit it appears to represent a very similar set of asset classes and market allocations as the 11 funds I’m currently being advised to invest in.

I couldn’t figure out if I can invest in this fund as a non UK resident nor seem to figure out if I need to purchase via an online platform.

I will give them a call next week but if anyone knows the answer please let me know.

Cheers

 

Just keep reading before making any decisions.

@Nodrog favourite i believe

If you can skip step 1 you are ahead of the pack

 

One day I might get there.

However there’s no guilt anymore, we just keep saving and investing in what meets our needs financially and psychologically. As long as someone else does the work be that a combination of passive / active whilst keeping it simple.

 

Thanks for sharing I think the adviser I have been talking to may want me to move straight to step 3!

 

Hi again

I spoke to vanguard today and they advised I can’t invest via their UK platform as it’s for residents only. However the platform my current “potential” advisor has set up called transact does allow me to buy vanguard funds including the one suggested above by @The Falcon

Vanguard: Helping you reach your investing goals | Vanguard

Given the funds I have to invest are significant what are your views on diversification. Should I be looking at more than one fund or does the nature of the fund above itself being global and spread across equity and bonds provide diversification in itself?

Thanks