Performance and Costs
On this page, I provide updates on the performance and costs of the example portfolio I set up using £10,000 of my own money.
Performance and Costs to date
On 11th May 2023, I invested £10,000 in a Tier 3, Higher-Risk Model Portfolio in a SIPP hosted by one of the four platforms that came out on top in the comprehensive review of 21 platforms in my book. The £10,000 included a 1% allocation to cash which is not included in the following table.
Here are the updates on performance and costs.
Date | Current* Value | Total Costs | Gross £ change | Gross Return | Net £ change | Net Return |
---|---|---|---|---|---|---|
29/04/24 | £11,297.72 | £145.83 | +£1,416.32 | +14.33% | £1,270.49 | +12.86% |
29/03/24 | £11,499.77 | -£139.84 | +£1,618.37 | +16.38% | £1,478.53 | +14.96% |
29/02/24 | £11,141.88 | -£133.85 | +£1,260.48 | +12.76% | +£1,126.63 | +11.40% |
31/01/24 | £10,845.57 | -£127.86 | +£964.17 | +9.76% | +£836.31 | +8.46% |
08/01/24 | £10,535.24 | -£121.87 | +£653.84 | +6.62% | +£531.97 | +5.38% |
30/11/23** | £10,370.20 | -£115.88 | +£488.80 | +4.95% | +£372.92 | +3.77% |
02/11/23 | £10,088.16 | -£114.89 | +£206.76 | +2.09% | +£91.87 | +0.93% |
30/09/23 | £10,211.45 | -£101.90 | +£330.05 | +3.34% | +£228.15 | +2.31% |
31/08/23 | £10,235.27 | -£88.91 | +£353.87 | +3.58% | +£264.96 | +2.68% |
31/07/23 | £10,361.36 | -£75.92 | +£434.96 | +4.40% | +£359.04 | +3.63% |
30/06/23 | £10,093.97 | -£62.93 | +£212.57 | +2.15% | +£149.64 | +1.51% |
11/05/23 | £9,881.40 | -£36.95 |
I do not include the cash allocation in these calculations as it was left uninvested
**I changed to the cheaper SIPP plan, for portfolios less than £50k, that cost £0.99 for the first month and £5.99/month thereafter.
My observations so far
- Performance: The timescale of less than a year means that the performance number is meaningless. I’ll only start to take much notice of it after a year when I rebalance. But, even then, I’ll retain my focus on a long-term investment time-scale i.e., eight or more years.
- Interest. They pay me a small amount for holding cash. I haven’t included this because it could confuse the picture. The consequence is that the overall performance is ever-so-slightly better than shown on the table.
- Costs: The total costs include the £5.99 I was charged for each of the four transactions I made when buying funds to include in my portfolio; total 4 x £5.99 = £23.96.
The costs on this account are slightly higher because it is a SIPP and that requires a bit more admin from the platform. In the case of the platform I’m using here, that means a monthly fee of £12.99 which equates to an annual service charge of £155.88.
However, this company (one of the four I recommend in my review of platforms in the book), has started offering much lower monthly SIPP fee for smaller accounts (this one qualifies) with one or two caveats. I’ve provided more detail in the monthly newsletter.
An ISA or General Investment Account would not incur the same costs.
The costs do not allow for the one-off £50 cashback Interactive Investor gave me. This offer might change. I put this back into my account and thereby earned a government rebate of 25% on it, worth £12.50.
The Ongoing Charge Fee that each fund takes (hence my 1% allocation to cash to cover these costs) has not yet been charged, hence it is not yet included. The OCF charge should work out at no more than 0.09% of my entire investment i.e., around £9 for the first year. That’s when the cost comparison with banks and investment companies will be stark; for example, a 1% annual OCF (more like what they will charge for active management) would cost around £100. Ouch!
I need to have enough cash on the balance of my account (i.e., not invested, just sitting there) to cover all these costs for 12 months. That’s £155.88 in service fees, £23.96 in transaction fees and £9 OCF which adds up to £188.84. The 2% allocation to cash equates to £200 which covers this comfortably.