Sipp Investor: I'm seeking safety in cash

Manager diversification? The plural of "fund" is "tracker"!

15% cash sounds about right. I'm lower than that, but I hold a fair bit in short duration bonds and PFI infrastructure.

48% cash now and much of the rest in Troy Trojan and a few others

Waiting for the next big fall off the cliff before further buying.

And if it doesnt plunge, I have my money

if it does you dont have yours

Whenever the market climbs as it did recently you know what follows

Turned chicken

moving in and out of cash has a downside-loss of dividends and transaction costs-and although weve been used to a rollercoaster for the last few years that might change and you might miss the bus..

Hi Rob

Terrific piece. Thank you for sharing your experience with us.

Where do you feel the cash may eventually be allocated to?

Kind regards

Mark

still investing, am i too optomistic of the outcome in greece

15% in cash. Not exactly an earth shattering move. I'd always thought having 15 -20% in cash was a sensible allocation - hardly worthy of a headline

yes headline is quite misleading-not uncommon in financial journalism!

if 85% still invested he isnt really "seeking safety in cash" is he?

Thank you, there are a few people I listen to, you are one of them.

thanks rob. very interesting and informative article. just wondering why you are still in jupiter financial opportunities when it is right down at the bottom of the pile?

Interesting piece but the headline is totally misleading. Journoes are hysterical and seem intent upon inflicting hysteria on us all.

"seeking safety in cash" Hahahaha! this statement has got to be a joke. With the government printing massive amounts money for QE everyone should be selling their cash.

With a benchmark of 0% cash, having 15% in cash is most certainly a way to "seek safety". I don't think the headline is off-key at all. One thing that needs to be clarified in Mr K's investment approach is the performance objective and time he has alloted himself to get the returns he's looking for.

Would I have 15% of my pension / ISA pot in cash at the moment though, what with nil returns on deposit accounts? Ultimately it all depends on the individual, and isn't that what makes a market?

If you are using third party managers and funds to get the exposure to the markets, you need to look through their cash holdings and be incredibly mindful of the fact that you might be bullish of a particular asset class when the underlying manager is bearish - you diversify many many ways - not just by geography: Investment style, philosophy, concentration of holdings, number of stocks held etc etc.

The article is well written, and I too enjoy reading the monthly piece. Robert - thanks for taking the time to bear all.

Hi Mark

little too soon to say where the cash might go. Almost certainly will not be sovereign bonds in the west as I beleiev equilibrium yields are several percentage points above current levels. I am keeping my eye on the corporate debt market - there is yield, but the credit spread is typically correlated with equities, so may need a correction in equities first as I am already overwight equities. Otherwise, it is likely to be opportunistic, depending on how markets move in the future. You never know - if Euro markets crash as the absurdity of the handling of the Euro soverign debt crisis fully infects markets - it might be Euro equities!

Mark.

Give me a call on 01189810011 as I would like to run something by you.

Mark Faber says sell in May. Good track record for forecasting historically. Even suggests the latter half of this year could be another 1987. Will take a gamble and hang on til late April until undertaking major liquidations. If I get it wrong, only myself to blame.

Best of luck to all.

Hi all, many interesting comments again.

Let me start by saying that I know next to nothing about investments! I have a small fund (£120k) with Aegon, (which by the way has lost some 30k since I started in 1986) well anyway I panicked a couple of months a go and put it all into cash. Now I don’t know what to do. Any advice would be great, and what do you all think about me getting a financial adviser?.

Any feed back would be much appreciated

thanks

@ Alan Jennings

Phone Bestinvest and see if a transfer to them would be good for you.

They will pay £300 golden hello for investments over £100k plus upto £500 towards costs of moving from Aegon.

If you do move, they have a variety of relatively inexpensive methods of operating a portfolio for you.

Please note I have an account with Bestinvest but i have no other connection with them.

You could always invest in my iznop scheme. It offers £1,000 golden hello for new members investing over £100k and guaranteed 10% return per anum.

For each case for cash one reads of there's another says au contraire; liquidating and reinvesting for the private investor is expensive; then one can also miss the market high and the low both by a good margin, and what if the change is just a small correction anyway; can't see the Euro being allowed to bring about Armaggedon, and deleveraging is going to be conducted at a steady undramatic plod I think, so I'll do nothing much except watch.

Though I'm not into funds and prefer my own choice of equities by which I've survived for the past 18 years of ups and downs making a profit without recourse to panics into cash.

Many thanks for taking the trouble to reply, it would cost me £6k to transfer, but reading your advice it may be worth considering.

I can switch back to an another Aegon fund at any time I'm just trying to decide out of the 8500 on offer.... once again thanks

Investing £100k with a return of 10% per annum. I can match that and give a percentage of ownership in property.

what is particularly appealing about that particular China Fund please?

Rob,

Do you have view on Index Linked Corporate Bonds--Individual Co. or M&Gs Fund?

Worth considering for short term parked cash in SIPP?

Thanks for your structured comments on your own investments

OK simple question, in the past money in 'cash' would be in MM funds or indeed even the brokers holding fund, since both these options now pay zilch where do you 'hold' your cash Rob?

Rob,another great article as always.

Do you have a view on commercial property,

I was thinking about buying the Ishares uk Etf.

It is down over 50% in the last 5 yrs.

Thanks.

Hi all

Great comments, thanks. A number of questions too - will try and answer them all during the day.

Anon 2 - you ask why did I pick/ stick with Jupiter Financials. A good question given the performance of this fund within its sector over the last 3 years. This is a story of portfolio manager. Guy De Blonay joined Jupiter Jan 2010 - Guy was someone I followed and admired at New Star/ Henderson as a financials specialist. Normally I am wary of fund managers changing house, but in this case Guy joined Philip Gibbs who had done a great job on the fund up to then , steering it extremely well during the crisis of 2008-9. This looked like a knockout combination. Philip moved off the fund in mid 2010 and the fund has not impressesed since which I am surprised by given Guy's pedigree. I have cut my weighting in this fund significantly. A reminder why it is best to wait and see how a star fund manager does when he changes shop rather than following him/ her without question.

Hi Broomtree

Sadly there is no where today to hold cash short term that will give you any meaningful yield without capital risk. So it sits in my SIPP platform provider's cash client cash account earning (virtually) nothing. As cash is not in my benchmark, owning cash means I am underweight some other asset class - in this case bonds. My view is that goverment bonds carry significant capital risk right now, compensated by very little yield. Avoiding this loss is why I am in cash and helps me swallow the zero yield. For me cash is a tactical asset tjhat helps me manage the overall risk of the portfolio and exploit market volaitility/ opportunity.

Hi Seahound, hope you are prospering in these markets. Although I hold residential property investments (outside my SIPP), I have no particular insight on commercial property and so can't comment. Let us know how you get on.

Thanks Rob and all other contributors ................plenty to think about !

However one question I have is that should we SIPP holders tacitly accept the virtually zero returns on cash (I presume most are like the situation that pertains with my Hargreaves Lansdown SIPP) when we might like to ride out the storm and park some money in one or other of the bank deposits currently offering north of 3.5% for a two year investment ?

Thanks Rob for getting back just confirmed what I thought on cash. I have reduced my cash ISA's to emergency funds only the rate is so bad and moved much of it to my S&S ISA's because of poor rates. But to get nothing with inflation at over 4% seems crazy. The simple truth is that with the Government keeping rates low they are actually forcing people to take risk - and that is exactly what got us into the mess in the first place - strange logic and does not bode well going forward!

Hi, interesting article. With so many now in cash, sipp providers like HL are raking it in! paying virtually no interest to clients but getting say 4% themselves. they just love this 'safety first' market. Don't want to scare anyone but....what happens if HL and the like goes belly up?

I have a project that will give good returns guaranteed. Full disclosure to the right investors. Only one year term.

Alan,

I too had a similar fund with Aegon.

I had held a pension with the even worse Resolution.They are zombie fund holders and just bleed your money with annual high (very) charges and make you nothing. In my view if you stick with them you could end up with very little..

Whereas for exmaple HL pay me 0.10% for sitting on my cash, and offer regular cash temporary three month investments, Aegon CHARGE 1% for holding your cash. You are actually paying them to hold your cash, or you can invest in their cash fudn which pays out less than the annual charge so you lose money

It cost me £4000 "smoothing charges" to get out of the clutches of the ******* people at Resolution, into Aegon, who are subsidized from falling off a cliff by a Dutch Govt cash injection, and in my view are not as safe as th eBank of England .

I took the plunge and moved out of Aegon and have never been happier. The likes of Hargreaves landsdown will move you into a SIPP in a could pf weeks free of charge, and you can then take control of your money.

If you do nothing else this week get out of Aegon. One of my funds with them was held for 12 years. It was a "with profits", The projected earningns showed it would reach zero through fees 5 years before i retired - this is called a zombie fund. So you give them the money for 12 years, they pee it up against the wall, charging your 2%+ a year, and leave you with nothing.

This is why the likes of Resolution has bought out all those crap firms such as Alba, to take the pension money and zombie it into their pockets.

Aegon have high charges, even for cash, they offer a limited number of high cost funds probably managed by the tea boy and the cleaner. An IFA would recommend Aegon as they will pay him a large backhander for 4 years. - out of your money

for gods sake you have lost £36000, did that not ring your alarm bells??

Conversely the money I moved out of Aegon has amply recovered the "smoothing" and is fairly safely in my HL sIPP

I detest these pension companies, and have recommended my family to give them a very wide berth.

There you go. Anyone disagree ?

Hm, stripped of his knighthood? No. He's done nothing dishonourable. Sacked from his job? Yes. He's been an extremely poor central bank governor. Before the crisis? Remember his NICE economy? He couldn't have been more wrong. Anyone with an ounce of understanding saw it was a was a house of cards built on cheap money, debt & imported inflation. Why didn't he? When the crisis happened? He got his nickers in a twist about moral hazard at precisely the wrong time! Since the crisis? Well this isn't so easy. If you're in a government with loads of debt are you going to say 'no thanks' to a dose of inflation? If you're a house owner are you going to say 'no thanks' to having house prices propped up by ludicrously low interests rate? Likewise if you have credit card debts. On the other hand if you're a prudent saver watching your carefully husbanded assets inflated away to bail out the imprudent & the feckless & those who think houses are for investing in rather than living in, then you're going to be screaming mad! King is doing what the politicians (of all main parties) want him to do. It's a cooperative effort. Hence the knighthood. After all it would be in no one interests, would it?, if he were to tell too much in his memoirs! lol

Thanks Banjofred,

All you say is spot on (I have just paid my annual charge) I was put into Aegon by Openwork Market Solutions in 2007, apparently I paid for their ongoing service ( i'm not what it is) by an up front one off commission payment when their adviser recommended that I moved from Zurich to Aegon

I'm sure that you are right that the situation that I find myself in is of my own making, but I honestly thought that I was paying the fee to a fund manager that knew what he was doing and would protect me. It appears that the only one not making money from my plan is me and I'm 62 now so time is not on my side to reverse the trend...thanks again

Alan,

I transferred at age 60

I am doing ok choosing my own investments.

The amount held in cash aearns a small interest,

the SIPP can go into drawdown.

Perhaps AEGON wont shaft you??

Ask them for a final pension statement with options for transfer. They have ot give you this within 21 days. You can still decide to stay.

Chances are you paid around 4 grand to the IFA, plus an ongoing trail commission. If you feel you were wrongly advised perhaps you can go to the ombudsman and scare the **** out of him.

Remember Alan when in danger when in doubt run in circles scream and shout. You get no points by being nice, and I always find I have gained every time when turning nasty.

Another 3% or more of your pension is going to fade away before you retire

Act

Hargreaves Lansdowne actually pay 0.25% on held cash over a certain balance. Very good firm to deal with. I would not touch an insurance company investment proposal, or Hight Street bank investment proposal, with the preverbiable barge pole. Do your own research and investments, pay for advice when specifically needed and keep IFA's involvement to an absolute minimum.

Any views on holing index linked corporate bonds or M&Gs fund in a SIPP as an altrnative to getting zilch in a cash account??

Think Van McCoy playing the hustle came on when reading Mr.Roberts posting-- Do Citywire Monitor these??

Love that song

Hi Judy

Apologies - I did reply to your original question but somehow the gremlins seem to have intercepted it. The gist of my reply was as follows:

1) Coprorate index linked have 3 sources of risk/return - the level of interest rates on gilts, the real yield on index linked gilts and the interest rate spread between corporates and gilts. The first 2 of these I believe are expensive as they are discounting deflation/ depression for many many years to come which I do not buy into. The third may have value but corporate spreads are correlated to equity markets which I am overweight already. So they are not for me.

2) I am a fan of M&G as a bond house. However their corporate indexed link fund is quite young and has not performed well in its short life compared to either M&G's index linked gilt fund or its corporate bond fund. This may in part reflect the underlying illiquidity of corporate indexed linked funds.

Rob,

Many thanks for your considered reply.

People that ridicule others without inquiring into the facts should not comment at all.

I have good reasons for offering what I am, you obviously put trust in your advisors or traders.

I dont, I have been stung to the degree that my home and my livelyhood are at stake and I will offer the best deal I can to keep them.

Banks not lending and alternative funding want to charge way over the odds.

If you want to know the facts, contact me through citywire.

In answer to your comment of citywire monitoring, yes they do.

Does anyone here read the 'Monevator'? His website is great for tricks & tips for low cost pensions and what to invest in with the lowest TER's. Reading the comments here there's some horror stories about charges made by some pension providers and makes me feel I'm doing better than I give myself credit for managing my SIPP using investment trusts.

For those people holding cash in their SIPP and who are fed up of the appallingly low rates of interest I wanted to bring to their attention a best buy table for SIPP deposit accounts.

It has circa 80 accounts on it, is remarkably comprehensive and free to use. Anyway I hope this helps SIPP investors, the link is:

http://www.investmentsense.co.uk/free-services/best-buy-savings-accounts/accounts-for-pensions/