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Please, could you explain why the returns on Aviva Pension MyM Baillie Gifford UK Equity Core Pn are so much better than those on Stan Life Baillie Gifford UK Equity Core?

16 February 2022

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Question by Andy

Please, could you explain why the returns on Aviva Pension MyM Baillie Gifford UK Equity Core Pn are so much better than those on Stan Life Baillie Gifford UK Equity Core?


Answered by Adam Holt

Hello Andy,

Great question, this is a really good example of the long term effect charges can have on the overall performance of a particular fund.

First thing to note, is that Baillie Gifford is the fund manager, the fund is called UK Equity Core and in your example that particular fund is being hosted by two different pension providers, Aviva and Standard Life.

Some fund managers will create versions of their mainstream funds available specifically for certain pension providers. The fund in question is available for both customers of certain Aviva and Standard Life pension contracts, however the charge being paid is not the same as the standard fund if it was accessed directly via a platform. Instead the pension providers are able to add some extra charges on top in order to faciliate access to that fund. This is quite common in workplace pension schemes, often the funds managed internally by the pension provider are relatively cheap and a limited external fund managers are offered but charged at a substantial premium.

Clearly this has had a big impact on the performance as one fund is up by about 7% more over the last five years compared to the other. But I wouldn't say that is the full story, as some pension providers may give you access to a particular fund at a lower price, but you may also be paying other fees in the background to compensate for the lower fund charges, at the same time some large employers are able to negotiate discounts so you get more competitive rates.

I hope that helps answer your question. If you are looking for financial advice on where to invest your pensions or to consolidate your different pension pots and get access to clean fund prices on a modern platform then please do feel free to get in touch.

Kind regards,
Adam

Answered by

Adam Holt

Independent Financial Adviser

I’m an Independent Financial Adviser who splits time between my office in London and working from home in Kent.