First thing you should ask is what are the Bank of Ireland barons charging you for managing the fund and what stock index are they benchmarking the fund against.
No doubt, Bank of Ireland have a glossy brochure for the fund which perhaps details the annual management charge (amc) in small writing, and I would hazard that this is about 1.5%. They will probably claim that they manage volatility by cashing out individual shareholdings if individual stock price drops by a certain %, hence protecting your fund, and sounding like they can justify the 1.5% amc. All bullsh1t imo.
There are 3 levels of charges in a fund.
1. AMC – Annual Management charge – the glossy brochure one (often in small print).
2. TER – Total Expense ratio (it incorporates the AMC)
3. TCO – Total Cost of Ownership (it incorporates TER)
The Total Expense Ratio is not the total cost as there are also costs such as brokerage fees, trading costs and rebalancing costs. The funds are likely to be rebalanced each month as the weightings of the underlying assets change, and therefore re-allocation is required. Also to buy and sell the funds will incur brokerage and trading costs.
The TCO shows all the cost of you holding the fund. The TCO consists of the TER plus the costs of buying the funds at the outset, rebalancing the fund each month and selling the funds. (These costs are items such as prevailing brokerage commission rates, spreads and stamp duty rates).
I would hazard a guess that BOI will not tell you what the TCO is – however if they claim to be a reputable investment firm, then they should give you this figure.
I would also say with confidence that they are underperforming their benchmark – probably by the cost of their total charges or by more.
If their AMC is 1.5%, then the TCO could be as high as 2.5-3%.
Impact of the charges on your fund: Financial literature quote that an expense ratio of 1.5 per cent per annum over the working lifetime (roughly 35-40 years I guess) would reduce a final pension pot/AVC pot by 22 per cent, whereas an expense ratio of 0.5 per cent would reduce the same pot by 9 per cent. Thus, an increase of 0.1 per cent(or even 0.01 per cent) in charges still has a significant impact on your investment.
Hence if I was you, I’d find out the total charges for the fund first (I wouldn’t mind to hear what it is) and how the fund has performed against its benchmark, and then try to get something like a cheap tracker fund, index fund that matches that benchmark instead.
I find it amazing how many people trust banks, advisors etc to manage their money, and are completely ignorant of the total fees and charges.
Now to your other question about leaving it in developed word equities or moving it. Hard to tell I guess - it’s very hard to time the market. However the punchbowl of low interest rates and liquidity (quantitative easing and cheap financing) will likely be having to end soon (in the UK and US anyhow), so I would be wary of stocks when this becomes more imminent or if the current mergers and acquisitions splurge stalls. Stocks have been well bid up since 2009 due to this central bank largesse, and stocks now look a tad expensive, as well as companies having record high profit margins. Profit margins tend to revert to the mean as workers demand more pay rises etc as the economy picks up.
Depends what % of your wealth or savings is in this fund, maybe look to rebalance it and to diversify some of it – e.g. invest some in oil majors, commodity majors. Keep some in cash to buy corrections in the market perhaps. If investing in other funds, make sure that they are low cost. An emerging market fund could be part of it, e.g. Russia!
You could even assemble your own high dividend portfolio –pharma, utilities, oil majors but the tax is excruciating if a higher rate taxpayer.