Fund research question

Andy_Schleider

Hi there

In addition to my sketchy knowledge on bonds (thanks everyone for their help and input on that one!), I've also not done much in the way of fund selection. I've done a fair amount of research on clients' existing holdings and how they would compare to another portfolio, but I've been given this brief, and, to be completely honest, I have no idea where to start:

"I’d like to put together an advice record for £350k of cash held within his FPI portfolio bond which is held within his Malta QROPS, perhaps split between 3 low-cost ETFs"

I have another client looking for low cost ESG investments too.

I lost my fund research guru last year and I used to lean heavily on him for this sort of work as it's his strength and he enjoyed it, and now I need to find a way of learning how to do this myself.

I have access to FE analytics but I feel it's a case of "all the gear but no idea!"

Any tips/suggestions, and resources to refer to would be massively appreciated!

Jamie_Barnes

Hi Andy, sorry this is probably a bit late given the date you made the post but I've only just come across your question.

I might be getting the wrong end of the stick but I'd have alarm bells ringing here. Why is the adviser using a FPI bond within the QROPs pension? Surely it would have been far simpler and more cost effective to use a GIA type arrangement within a platform? My past knowledge of FPI bonds was that advisers tended to use them because of the very high levels of commission that could be levied onto portfolios which then meant clients would be stuck in those bonds for a very long time due to high exit costs. They also were poor when it came to due diligence of investment types and have allowed unregulated collective investment schemes to be held. Maybe this adviser inherited the client in this position already or isn't using FPI for that purpose, but from viewing on the outside it just doesn't really make sense. I've seen first hand the destruction this can cause to client pension funds.

Your actual question about ETFs leads me onto further questions I'd have for the adviser. Why ETFs? Why only 3? It's almost impossible to put together a suitable portfolio for an average client with just 3 ETFs unless they have specific requirements and are high risk. What other investments are already held within the bond (if any?) I'm assuming that maybe there is a requirement for passive investments and if that is the case a starting point could be the FE Passive universe, which is rated by FE themselves. This includes a fair number of ETF investments which can be compared against one another and have more in depth research.

Sorry to be blunt but I've had a past experience with FPI that makes me very very apprehensive when hearing them mentioned. Hopefully the FE point will help.

Jamie