I'm disappointed with my Stocks & Shares ISA. Where should I move it to?
11 July 2019
Question by Jennifer
I have had roughly £40k in a Hargreaves Lansdown Stocks & Shares ISA for the past 2+ years, divided into £34k in their Portfolio Plus Balanced Growth and £5k in a mixture of shares I selected myself (£3.5k of that in Lloyd’s). While I am happy to keep the shares element, I don’t feel the managed portfolio is working for me and I could do better elsewhere. Over the 2+ years I am down 1% on initial investment. I would like to move away from Hargreaves Lansdown altogether, as in that period I have paid close to £350 in charges. I also have a separate ISA with Vanguard which is £20k in the LifeStrategy 80:20 which I am happy with. Where would you suggest I could invest the £34k for a better return? I am happy with balanced and some element of high risk. I’m 47, have two primary school age children, & live in central London. I also have a mortgage and a workplace pension. Many thanks.
Answered by Holly Mackay
I can't give you personal or regulated advice so this is food for thought only.
You don’t sound like you have much spare time, so just think about whether holding individual shares is the right approach for you.
It’s quite a high risk way to invest in terms of not spreading your investment risk around – you’re very wedded to the fortunes of one of two firms. So maybe ask what you’re trying to achieve by having a handful of shares?
Hargreaves Lansdown is always very well rated by users for service and ease of use, but their Portfolio Plus Balanced Growth option is pricey with an ongoing charge of 1.43% plus a platform admin fee of 0.45%. This will eat into returns.
I’d suggest a few routes:
Do you want someone to manage and blend the investments for you?
If so, then you mention Vanguard – you could transfer your Hargreaves Lansdown ISA there too, so all your ISAs would be under one roof.
You’d have to sell the Hargreaves Lansdown fund to move things over as Vanguard don’t hold other people’s funds. But do not close the ISA down – just get it in to cash, and then get Vanguard to transfer the ISA, so you can keep the money in the ISA shelter. You’re probably best off seeing if you can just delegate the whole transfer to Vanguard – get them to send you the right form to sign and let them manage this for you.
This will give you access to a much cheaper option - and it’s the lowest maintenance option - but you may miss out on superior active returns if the Hargreaves Lansdown fund has a blaze of glory. Vanguard – and passive funds by definition – will always be average. The highest risk they have in the LifeStrategy range is 100%
Alternatively you could stay at Hargreaves
Stay and choose a blend of options from their fund range instead. Their Wealth 50 preferred fund list helps you navigate your way into their analyst’s picks.
You have to keep an eye on this yourself, but charges will fall by around 0.7% a year using this approach.
You could move to a cheaper platform, but for all the hassle it will be about 0.1% cheaper a year, so I’m not sure it’s really worth it?
A recent article on our site shows the top fund picks across 7 platforms – so if you believe in the Wisdom of Crowds, this may help you navigate. This approach makes sense if you like the idea of picking a few actively managed funds which could do a lot better than passive investments – but could also under-perform and charge you more for the privilege.
Hargreaves does cap its administration fees at £45 a year on shares or investment trusts.
You could buy a mix of so-called Exchange Traded Funds (ETFs) from providers like BlackRock’s iShares – and map various global indices such as the FTSE 100 or the FTSE All Share for example. That would keep costs right down, but you’d need to feel confident that you could pick and blend these indices.
Or maybe choose a robo adviser
A final approach could be to choose a robo adviser – our Best Buys tables will help you see which might be best for you. They will adopt a passive approach and map a blend of investments to a risk profile for you.