Switching from accumulation to income

Including Financial Independence and Retiring Early (FIRE)
spiderbill
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Switching from accumulation to income

Postby spiderbill » November 29th, 2016, 1:50 pm

Hope this is a suitable place for this question - there doesn't yet seem to be a dedicated OEIC board AFAICS.

As mentioned on another thread I'm planning on retiring in the near future. Among my investents is a Scottish Widows ISA Accumulation OEIC. It's done ok in the last few years, pretty much matching the FT100 Total return index. I now want to investigate how to switch it (or a replacement) from accumulation to income producing while remaining invested. But it's rather unclear how I can go about this.

I was speaking to Scottish Widows about something else the other day and asked about it - the chap basically told me that I should sell bits of the account to produce cash. That struck me as a pretty clumsy way to go about things, especially as that account has no online facility so I'd have to do it by letter.

I was looking through their various information sheets about income-based OEICs and found the whole subject very opaque - everything seemed to talk about values rather than likely income and the graphs I was able to generate seemed to show that values of income generating funds were often negative when income wasn't reinvested. I then did a search and found this article abotu how most fund platforms make it difficult for you to convert to income http://citywire.co.uk/money/fund-platforms-stopping-you-converting-to-income/a948114.

Does anyone have any insights into this situation and can suggest the best approach? Is it perhaps best to wind the whole thing up completely and transfer to some other form of investment that retains the ISA wrapper but is income-based?

Thanks for any advice

Spiderbill

Alaric
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Joined: November 5th, 2016, 9:05 am

Re: Switching from accumulation to income

Postby Alaric » November 29th, 2016, 2:05 pm

spiderbill wrote:Does anyone have any insights into this situation and can suggest the best approach? Is it perhaps best to wind the whole thing up completely and transfer to some other form of investment that retains the ISA wrapper but is income-based?


I think you need to establish whether the fund(s) in which you are invested have Income units as well as Accumulation units. If so, then you just ask Scottish Widows to switch from one unit type to the other. If there aren't Income units or Scottish Widows makes it next to impossible to withdraw cash, then set up a new ISA with one of the "platform" providers and ask them to switch the Scottish Widows fund to your new ISA. Once it's on the new platform, you can do what you wish with it. Almost every asset manager offers a FTSE 100 or All Share Tracker, so you are spoilt for choice if that's your preferred investment.

spiderbill
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Posts: 54
Joined: November 4th, 2016, 9:12 am

Re: Switching from accumulation to income

Postby spiderbill » November 29th, 2016, 2:33 pm

Thanks Alaric

Had a feeling that might well be what could be required eventually. I opened a new ISA with TDDirect last April so I could use that, though with them about to be taken over by Interactive Investor I rather wanted to see how that would pan out, particularly regarding fees, before committing too much more to that account, as I also have a cash ISA I was looking to switch into shares as well.

So it might be a case of waiting till after 6th April next year before committing myself. In the meantime I'll ask again at SW to see if there is an income equivalent.

On a general note are you inclined to avoid OEICs in favour of trackers? They do seem more difficult to get a handle on but maybe that's just me.

much obliged

Spiderbill


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