Rearranging my YouInvest SIPP

I have had a YouInvest (formerly Sippdeal) SIPP (Self Invested Personal Pension) wrapper since 2011.  It came about when I first started transferring expensive insurance company based Stakeholder and Group Personal Pensions across to SIPP’s to save on expenses.  Over the years this SIPP has grown steadily to become a significant portion of my wealth as it now contains circa £200,000.

Within the YouInvest SIPP I was holding the following three investment products:

• The Vanguard FTSE U.K. All Share Index Unit Trust with annual expenses of 0.08%;
• The Vanguard U.K. Inflation-Linked Gilt Index Fund with annual expenses of 0.15%; and
• The iShares European Property Yield UCITS (IPRP) with annual expenses of 0.4%.

For the privilege of using the YouInvest SIPP wrapper I was also paying annual expenses of £300 which was coming in the form of:

• A YouInvest SIPP custody charge of £25 per quarter as my SIPP value was greater than £20,000; and
• A YouInvest Funds (Unit trusts and OEICs) charge of 0.2% per annum but which was capped at a maximum of £50 per quarter

Life was good and even though I didn’t like paying the £300 per annum I didn’t do anything about it as to correct it I would have had to be out of the market and might lose significantly more than I gained.  That was until I received a notification from YouInvest in early August 2016 that they were intending to change their charging structure from the 01 October 2016 which included a great reason [sic] for the change – “We believe this will be easier to understand, whilst maintaining AJ Bell’s commitment to offering some of the lowest charges in the market.”

Now in life I have learnt that anytime somebody changes T&C’s on you it is worth your while to sit down and understand what they are changing as more times than not it is better for them than you.  In the YouInvest instance this was proven very correct.  My annual charges were about to go from £300 per annum to £505 per annum, a 68% increase, via the following new expenses structure:

• A YouInvest SIPP custody charge (Shares inc. investment trusts, ETFs, gilts and bonds) of 0.25% per annum but which is capped at £25 per quarter.
• A YouInvest SIPP custody charge (Funds inc. unit trusts, OEICs and structured products) of 0.25% per annum for the first £250,000 but which important is not capped.  This was the critical change that affected me greatly.

So for me the killer was my OEIC/mutual funds with YouInvest effectively moving from a pseudo flat fee platform to a percentage fee platform.  It was time to make a move.  I looked at leaving YouInvest as well as restructuring my products within the YouInvest wrapper.  Having crunched some numbers I realised if I could change the products with YouInvest from OEIC/mutual funds to ETF’s they remained competitive so that was the route I took.  The problem was that I was unable to find a low cost FTSE All Share ETF to replace my Vanguard fund.  Time to get creative...

I’ve written previously about the structure of the FTSE All Share Index.  In short:

• 78% is actually the Top 100 (the FTSE100 which is actually 101) companies;
• 16% is the next 250 (the FTSE250 which is actually 251) companies;
• 3% is the next 291 (the FTSE Small Cap Index) companies; and
• 2% remains via 258 companies.

Eyeballing that and knowing that there were low cost FTSE100 and FTSE250 ETF’s about I created myself a pseudo FTSE All Share with the following products:

• 75% VUKE (Vanguard FTSE100 ETF) with annual expenses of 0.09%; and
• 25% VMID (Vanguard FTSE250 ETF) with annual expenses of 0.10%.

I also sold my Vanguard U.K. Inflation-Linked Gilt Index Fund and replaced it with INXG (iShares Index Linked Gilts ETF) which unfortunately carries annual expenses of 0.25%.

The end result was that instead of my wrapper and product expenses going up by £205 per annum I was able to reduce them by £139.  Total time invested was about 2 hours.  I’ll also add that to reduce market moving while I was out of the market risk I completed the shift in 2 tranches a few days apart.  Total cost to complete the move was £79.50 which will pay for itself in about 2.8 months.

The end result on my total wealth is that total expenses have reduced from 0.254% per annum to now stand at 0.243% meaning I am still paying some £2,559 per annum in product/wrapper expenses.  Much better than some but hopefully with time more opportunities will open up to further reduce.

For me a worthwhile use of my time but as always DYOR.  Finally, for anyone interested in the full maths here it is:

Click to enlarge, Turning a £205 AJBell YouInvest expense increase into a £139 reduction