Free Fund Switches

G

GSheehy

Registered User
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Opinions on whether free fund switches lead to bad decisions on timing the market?

The offerings on the market vary from 4 to unlimited and it's sometimes sold as a marketing feature.
 
Any data available on how often people actually use their free fund switches? Or on whether people who have free fund switched switch more often than people who don't?

Unless people who have free switches make switches that they wouldn't otherwise make, the question of whether they make good or bad switches doesn't really arise.
 
As an inexperienced investor, when I started out, I split across five different funds, including a little bit in gold, energy/sustainable resources, etc

After a few years and some sense :)D) I decided to switch these just into international equity and european equity and a small bit of emerging markets. As I had five funds, this involved five switches, so I had to do this over two years as I get four fund switches per year for free.

So whilst I don't think anyone would be using four per year, I think periodically, if you want to rebalance your portfolio a little bit, maybe for currency risk or so forth, that switching or rebalancing once every five to ten years might be something of value in terms of long-term strategy.
 
Took a pension out of 100% US equities circa 2014 and split it between European and emerging markets with a much diluted US.
Took me a good few years to realise my error as US powered ahead of both.

Never bet against America

Other than switching back to US and switching another pension out of lifestyling to 100% international equities, I don't switch as you're just faffing about.
 
TomEdison said:
Actually, now might be a good time to bet against America.
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Maybe so but feels like unless you've done this in Dec 24 them you've missed the boat but who knows, Trumps only concern is being in the headlines being the narcissist that he is.
 
Trump is unpredictable, obviously. But if he does even half the things he says he's going to do — and, NB, everything he has done so far is something he previously said he would do — then the US has not reached the bottom yet, by a long chalk.

Essentially, to take a positive view on the US right now, relative to the rest of the world, I think you have to take the view that Trump is going to be reined in and neutralised by the people around him. But it seems to me that the people around him have been chosen precisely because they can't or won't do that. The fact that they haven't already reined him in, when they clearly should have, tends to reinforce that impression. So I find it difficult to take a positive view.
 
TomEdison said:
Actually, now might be a good time to bet against America.
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Maybe not bet against it but at least not be overweight US given that even the global funds are now 70% weighted to US .
Obviously 2014 would have been terrible timing to be betting against US and buying emerging markets and European, now it's a different story given the US has already had its 15 years of out performance .
 
Persia said:
Maybe so but feels like unless you've done this in Dec 24 them you've missed the boat but who knows, Trumps only concern is being in the headlines being the narcissist that he is.
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S&P has recovered somewhat and is now only down 4.26% YTD so there is still time. Obviously the dollar has also dropped a bit. I'm continuing my bet against America and the dollar as believe there is a significant chance of recession and stagflation in the latter part of this year.
 
@GSheehy

In answer to your original question, I think a limited number of free switches, per year, is fair. Albeit, I'd also let them roll forward, for say 3 years, if not used, each year.

While I don't think it's right to be charged for every switch, I also think that a deterrent is needed, to stop people from almost "day trading".
 
I think combined with advice from your advisor, it's a good thing.

But chopping and changing constantly is not going to do anyone any good.

Unio (acumen and trust) advised to look at European equities in Dec.
 
MrEarl said:
In answer to your original question, I think a limited number of free switches, per year, is fair. Albeit, I'd also let them roll forward, for say 3 years, if not used, each year. While I don't think it's right to be charged for every switch, I also think that a deterrent is needed, to stop people from almost "day trading".
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I'd agree with this and go one step further and say that having access to a reasonable number of free switches per year (say 4/6) can encourage good practice, such as gradually moving from one fund to another, availing of pound cost averaging/risk spreading and avoiding knee jerk (all at once) transfers. Unlimited transfers is fine if the operator's platform supports it seamlessly and doesn't generate too much cost/overhead, but for the reasons stated above it's probably not a great idea of itself and is likely to be important to a very small percentage of investors.

@GSheehy I'd be interested to hear your opinion
 
My first role was in Group Admin in Zurich Life (Eagle Star at the time). I remember being told that any fund switches got the price of the next day, which was in place to stop people switching in and out of the market.

Investors and advisors are more knowledgeable than in the past. Investments aren't in geared equities or 100% Indian equity. People are in more diversified portfolios and have a better understanding of how the markets work.

It also helps that there hasn't been a major crash like 2008 since. Any major falls since then have been short lived and employment has stayed strong. When there is another major crash and unemployment rises, we will see how people react then.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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