ETF vs Zurich fund

[Shawtank123]

Hi All,

I am currently investing child allowance into a mixture of 50% Berkshire Hathaway and 50% into an ETF iShares Core MSCI World UCITS ETF USD (Acc) IE00B4L5Y983
(purchased once yearly for tax reporting - not ideal I know).

I came across the below fund from a financial advisor at a workplace meeting and was wondering what people's thoughts are on it versus the above. It goes against the great Warren Buffet's advice in that it's an actively managed fund, however, it's performance has been phenomenal. Greater than the ETF over the last 5 years, for example.
It has also been about since 2001 and is not one of these funds that only came about post recession.

With an AMC of 1%, I'm aware it's more costly than the ETF. However, for simplicity sake, am I mad that I'm considering switching over to it? Anybody suggest any faults with it or reasons to steer clear?

- Zurich 5 star global fund - fund factsheet here https://www.zurichlife.ie/static/do...07.890914460.1695904678-1043894350.1695810274

 

[GSheehy]

It goes against the great Warren Buffet's advice in that it's an actively managed fund,

In fairness, Warren was never absolute. He undestood that the devil rides the back of those that are certain.

His widely quoted advice to the masses include - most people - the great majority - on average - in aggregate

What tool are you using to compare the performance of your 50/50 mix to the fund fact sheet and what cost are built in to that tool?

Comparing what you have with the 5*5 Global isn't on a like-for-like basis.


Gerard

www.investandsave.ie

 

[Babhdan]

Are there any hidden charges ? is the AMC everything? Also compare 33% capital gains versus 41% equvi.

 

[Steven Barrett]

1% of €140 a month plan isn't very much to pay for the administration and managing the taxation of your plan.

Compare that to the time spent on doing it yourself?

 

[ClubMan]

1% of €140 a month plan isn't very much to pay for the administration and managing the taxation of your plan.

But it's 1% of the total fund on ongoing basis.
For a unit linked fund I'd be looking for something as close to 0.5% as possible.
I'd also go with a passively managed index tracker to keep the costs down and because I don't believe that active management beats the market over the medium/long term (if at all).

 

[GSheehy]

Are there any hidden charges ?

it's performance has been phenomenal.

The OP is comparing the past performance of the fund.

You can't hide charges (be they CIVs/OOCs or Portfolio Transaction Costs) in past performance figures, they're included. The issue arises when past performance figures are compared and you don't know what level of AMC (if any) is included by each provider. I don't know of a performance comparison tool that factors in an accurate representation on a like-for-like basis, so don't believe them. You have to manually do it, and to do that you have to understand the pricing structure that each provider uses. The chances of getting all providers to agree on a set criteria to correlate figures is remote.

That's why I asked about the tool for comapring the 50/50 split, because we don't know what charges (if any at all) are included in that comparison. It's highly likely that no charges are included in the ETF comparison.

 

[Steven Barrett]

But it's 1% of the total fund on ongoing basis.
For a unit linked fund I'd be looking for something as close to 0.5% as possible.
I'd also go with a passively managed index tracker to keep the costs down and because I don't believe that active management beats the market over the medium/long term (if at all).

I know. We always look at the percentage cost of plans (that's how the world of finance works) but in the case of small cases, such as €140 a month, the cost in monetary terms is tiny for what you are getting. It will take close to a decade for the life company to start making any money from this case.

There are no regular saver plans at 0.5%. Due to the shorter nature of the products and the smaller contribution levels, they are priced higher than pensions.

 

[ClubMan]

There are no regular saver plans at 0.5%.

Read what I said...

For a unit linked fund I'd be looking for something as close to 0.5% as possible.

I have some at 0.625% AMC.

 

[silvergrove]

hi Clubman,

I was looking at setting up a PRSA , the best i could find was 0.9% with standard life - vanguard funds.

Could you point me to the provider who is providing you AMC of 0.625% for a unit linked fund?

Thanks,
Silvergrove

 

[Shawtank123]

Thanks for all of the great replies. I guess what has surprised me is the performance of this account given that it is an actively managed fund. I would have expected the passive funds annualised performance to have been greater over a long time period ~7years, but this is not the case. Is this too short of a time period perhaps?

Apologies, I should have clarified. I plan to no longer invest in Berkshire given that 1) I no longer have an annual CGT allowance available, 2) I'm uncomfortable with it's diversification given so much stock in Apple.

That's why I asked about the tool for comapring the 50/50 split, because we don't know what charges (if any at all) are included in that comparison. It's highly likely that no charges are included in the ETF comparison.

This is the cost comparison tool I use to compare the ETF vs Zurich fund.
- As a cost comparison tool I have always used the below calculator which shows the impact of investment charges and calculates the final fund balance given investment charges. Comparing the AMC of the ETF vs the Zurich costs (1% vs 0.2%), there is a fund difference of about €4000 by the time college starts.
- This is assuming both funds return 8% annualised over 14 years.
- For reference, the 5 year annualised performance of the ETF is 8.7%, Zurich 5 year= 10.4%, 10 year = 11%

Candid Money: Investment Charges Impact Calculator

Calculate how charges might impact your investments

www.candidmoney.com

The OP is comparing the past performance of the fund.

Correct. Whilst I know it doesn't give a full indicator of future performance, as an investor I have to say that I like to see performance through difficult periods. The Zurich fund has data back to 2001. So many other funds that I see appear to only have started ~2009, post recession.

1% of €140 a month plan isn't very much to pay for the administration and managing the taxation of your plan.

Compare that to the time spent on doing it yourself?

And this is exactly my thinking. If it was my pension, I would absolutely be pursuing the lower cost option given the higher values and length of time exposed to charges (current AVC's invested in passive fund with AMC of 0.15%). However, for this situation I am beginning to lean toward the Zurich. Never thought I'd say that!

Additionally, my ETF method of investing 1-2 times annually is something I know is not ideal. I do this solely to save myself the hassle and probably inability to manage monthly ETF taxation implications in 8 years time. Hence, the fund also sounding more attractive!

I guess where the differences would really compound would be if I were to have a second/third child and you are talking higher amounts, longer time period etc.