Zurich funds

russtini

Help! Looking to save for kids college starting in 7-8 years time - have 500 per month to put away and appreciate boardie perspectives on Zurich. Was considering half in Global Select (Columbia Threadneedle) and half in Indexed Eurozone Equity as part of LifeSave Savings Plus. 
1 Is this considered a reasonable investment for a college fund?
2. Is 7-8 years long enough for this type of investment e.g. shares
3  Do you pay income tax on the gains when selling? 
4. Any alternative to consider before I take the plunge
I have dabbled in uk shares and understand risk side but new to regular funds- thanks!

Shai

In order to answer that question we would need to know what Zurich will charge you for those funds. Ring them up and ask them about the funds Total Expense Ratio and Annual Management Charges. Those numbers are suspiciously absent from their fund documents. Having dealt with Zurich before, those numbers are probably going to be sky high. While you're at it, also ask them about how you'll be taxed on profits you make from these funds.

russtini

he fund document calls out 1.55% entry and 2.7% mgt - are these high for managed with target 8% return.
One-off Costs Entry Costs 1.55% 
Exit Costs 0.00% 
Ongoing Costs Portfolio Transaction Costs 0.15% 
Other Ongoing Costs 2.70% 
Performance Fees 0% T 0% 
States if invested €1000 each year and cashed in after 7 years - total cost of 4.4% or €1,945.84.  So I read this as if I put in €6k per year then total cost is six times or approx €12k.
Thanks for the perspective..

Shai

Would you mind linking to those documents?

russtini

Sure:
https://www.zurichlife.ie/DocArchive/servlet/DocArchServlet?docId=DOC_14784&_ga=2.95336984.569024472.1534359162-954834884.1534359162&_gac=1.243018166.1534363010.EAIaIQobChMI5duRzevv3AIVipPtCh1pHQd-EAAYAiAAEgISG_D_BwE

AlmightyCushion

Those fees are ridiculous. You should invest in ETFs instead. The fees on ETFs will be much, much lower.

Shai

You might find this useful https://www.boards.ie/vbulletin/showthread.php?t=2057899030

Cute Hoor

Fully agree with the Cushion, invest in ETF's yourself.
Just one example, VOO, has a TER of 0.04%, share price has increased over 150% over the last 8 years (there have been ups and downs of course in the meantime), dividend paid every quarter which you can then use to increase your holding. Not earth shattering but steady and, given a fair headwind, likely to remain so. Something like VTI would have a more significant increase over your 8 year timeframe. Currency is probably the biggest risk

Shai

Those are only available through US brokers though. If you wanna go that route: VTI (up 15.29% over the last 52 weeks) and VOO (up 14.32%) are terrific. If you don't mind investing in a particular sector: VGT focusses on tech and is up 29.08%.

Easiest thing to do for someone in Ireland who doesn't wanna go through the hassle of dealing with currency conversions and getting set up with a US broker is to just go ahead and buy the VUSA ETF on DeGiro. VUSA is essentially the same as VOO and has a 0.07% expense ratio.

russtini

Im hearing you, how do ETFs compare in your view given This Zurich fund looks a safe but expensive bet:
Given headwind My 42k should end up to be Gross of between €60k and €90k with my net takehome around 53k to 71k (Moderate to high growth after tax). Is the main difference the €12k in costs that zurich eat over the 7 years?

Shai

There's multiple issues at play here:

- the Zurich funds are actively managed, whereas the Vanguard ETFs being mentioned above are passively managed. This is important because there's a good chance of a recession occurring during the next 8 years. Passive funds will react to this by following a market index (cause that's what passive funds do, they just track an index). Actively managed funds however have more leeway in how they will react to this. While in theory this leeway should be a positive, it often isn't because people will panic and do dumb things with your money.

- all the Vanguard ETFs mentioned above invest in the US. This means that if the US economy were to have a dip, so would your investments. You mentioned wanting to invest in 2 Zurich funds: one focussed on Europe and one focussed on the entire world. You can replicate this by investing in two ETFs, one for the EU and one for the rest of the world.

- US ETFs (which cannot be bought on EU brokers) and UCITS ETFs are taxed in different ways and have different loss offset rules. There's threads about this on the front page of this forum. But to be clear, they are still vastly preferable over those Zurich funds.

For you, it might just be a case of finding some low-cost ETFs you're comfortable with. But, no matter what, those Zurich funds are pure poison.

AlmightyCushion

russtini wrote: »

Im hearing you, how do ETFs compare in your view given This Zurich fund looks a safe but expensive bet:
Given headwind My 42k should end up to be Gross of between €60k and €90k with my net takehome around 53k to 71k (Moderate to high growth after tax). Is the main difference the €12k in costs that zurich eat over the 7 years?

None of these are guarantees, they're just projections. If the Zurich fund invests in stocks then it is not a safe bet. How did this Zurich fund perform in 2008? I bet it lost a shít load in value just like pretty much every other investment. We could have a stock market crash this time next year and the Zurich fund will lose a lot of money just like an ETF. You have to remember that all investment is risky whether it's in an ETF or that Zurich fund. Both could lose you significant sums of money.

An ETF that tracks the S&P500 will, over the long term, outperform most actively managed funds especially ones like this that have such crazy high fees. That makes an ETF the better option in my eyes. What are the chances you or I are able to identify the small handful of funds that will beat the market?

AlmightyCushion

Shai wrote: »

There's multiple issues at play here:

- the Zurich funds are actively managed, whereas the Vanguard ETFs being mentioned above are passively managed. This is important because there's a good chance of a recession occurring during the next 8 years. Passive funds will react to this by following a market index (cause that's what passive funds do, they just track an index). Actively managed funds however have more leeway in how they will react to this. While in theory this leeway should be a positive, it often isn't because people will panic and do dumb things with your money.

- all the Vanguard ETFs mentioned above invest in the US. This means that if the US economy were to have a dip, so would your investments. You mentioned wanting to invest in 2 Zurich funds: one focussed on Europe and one focussed on the entire world. You can replicate this by investing in two ETFs, one for the EU and one for the rest of the world.

- US ETFs (which cannot be bought on EU brokers) and UCITS ETFs are taxed in different ways and have different loss offset rules. There's threads about this on the front page of this forum. But to be clear, they are still vastly preferable over those Zurich funds.

For you, it might just be a case of finding some low-cost ETFs you're comfortable with. But, no matter what, those Zurich funds are pure poison.

On the tax issue, OP is looking at an investment of less than 8 years so at least he doesn't have to deal with deemed disposal so makes the tax issue a little better.

elbyrneo

russtini wrote: »

he fund document calls out 1.55% entry and 2.7% mgt - are these high for managed with target 8% return.
One-off Costs Entry Costs 1.55% 
Exit Costs 0.00% 
Ongoing Costs Portfolio Transaction Costs 0.15% 
Other Ongoing Costs 2.70% 
Performance Fees 0% T 0% 
States if invested €1000 each year and cashed in after 7 years - total cost of 4.4% or €1,945.84.  So I read this as if I put in €6k per year then total cost is six times or approx €12k.
Thanks for the perspective..

As other posters have said, even for an actively managed fund those fees are extremely excessive.

You need to research passive v active funds and decide which you are most comfortable with firstly.

Great advice given here on the passive ETF route. If you prefer an active managed fund, then would consider:

Entry / Exit fees: should be NIL.
OCF/other Ongoing costs. Ideally less than 1%, up to 1.5% for aggressively managed funds. Think of this as a hurdle - your per annum growth needs to be this just to come out even. You are paying for the benefit of active management (If you believe in it).
Ongoing PTC costs: wouldn't be too concerned about this. Comes on the back of PRIIPs regulations, costs are implicit trading costs and means of calculation is inconsistent across the industry.
Perf fees: likely zero for what you are going for, make sure though.

In terms of fund choice, comes down to your risk appetite. Low risk bond/cash funds, higher risk equity focussed funds, but consider multi-asset funds too which with a good mix might meet your balanced needs.

But yeah those Zurich Fees are scandalous!!

russtini

thanks all - will digest and look in to digero and the and ETF route more, appreciate the help.