Credit deflation and the reflation cycle to come (part 2)

[DoINeedOne]

38 minutes ago, RickyBacker said:

Very true. In Taiwan everyone rides scooters and there is a company called 'Gogoro' that has developed an electric scooter. Most petrol stations now also have a 'Gogoro' battery station on the forecourt. Owners pay a standard monthly fee and can change batteries any time they're running low on power. At the moment they are the only company (I believe) that offer this service. I can't see this model working with car batteries due to the size of the battery, and as you point out, there is no 'standard' battery.

 

29 minutes ago, AlfredTheLittle said:

It solves so many of the problems with EVs that I think it has to happen. It's either this or, as others have said, a huge fall in car ownership.

Posted this before but such a great idea but car batteries like you say is another story

 

[sancho panza]

3 hours ago, PrincessDrac said:

LINK to article.

Nice article.

Gold mining stocks Polymetal (LSE: POLY), Fresnillo (LSE: FRES) and Centamin (LSE: CEY) are among the worst performers on the London market in 2021 but I’m anticipating a comeback over the next year or so. 

Miners are as varied in performance this year as are the kinds of minerals they extract from the earth, and while I think the mismatch results from differing commodity price changes and company performances, gold mining stocks are by the far the laggards. 

Fresnillo was bottom of the FTSE 100 this week after falling 27% in the almost-six months to late June while Pretty Poly(metal) was eighth from bottom of the same benchmark despite falling only around 4.4%. Meanwhile, a 12.1% fall has left Centamin tenth from bottom of the FTSE 250.

All of this follows a period in which gold itself has fallen 6.37% to $1,778 per ounce and so, with the exception of Polymetal, these performances seem like an overreaction to a gold price that could soon bounce back in the direction of record highs seen above $2,000 in July 2020. 

Most compelling among reasons for a gold price recovery, I find, is central bank demand and what it potentially says about the expected direction of an often-negatively correlated U.S. Dollar. However, a seemingly downbeat outlook for the latter is also a reason on its own. 

Many central banks have grown reserve assets of late, and may have somewhat similar views on big questions like the Dollar and by implication, gold, though not all publish data as detailed as the Reserve Bank of Australia (RBA). The RBA grew FX reserves and total reserves by nearly 15% in March, with growth in those categories slowing markedly thereafter, while gold holdings have since increased at double-digit percentages, despite falling prices.

Nothing can be said for certain but this might reflect the expectation of rising gold prices from which I think Fresnillo and Centamin would benefit more than Polymetal, given the latter is less volatile than others. 

Russia’s Polymetal is better at mimicking gold prices, which are less volatile than many shares, potentially making it a lower-risk sector exposure, while Fresnillo is a ‘high cost producer’ and the lowest margin company in the sector whose shares tend to overreact more to movements in gold.

This makes it higher risk, but also potentially a higher reward: the shares have underperformed sector peers when falling more than 40% from above £13:00 last July, a period in which gold itself has fallen by only around 15%, but did also respond more strongly when prices were rallying last year. 

Fresnillo far outpaced gold and its peers in 2020, but I won’t be writing off Centamin as a dark horse contender for outperformance in any gold price recovery, given the debt-free company’s shares have been held back this year by one of many occasional production stoppages at its flagship mine.

Centamin also still has scope to offer a best-in-class 6% dividend yield – better explained here by G A Chester – along with magnified exposure to any gold price recovery, although it goes almost without saying that each of these shares could perform badly if gold prices fall further.

We bought a fair few calls in goldies like Barrick/Anglogold/Kinross last week.Also first ladder calls wise in Fres.

We luckily sold at 1250 or so backin Sept.Been keen to get that exposure back.

Here's Fres vs silver,MAG,POLY from 31/1/21 high

dont know what that black bar is doing across my chart

10 aug 20 high

from Mar 20 low

[sancho panza]

2 hours ago, Animal Spirits said:

Two UK Commercial Real Estate Funds Shut Permanently, Investors Trapped, as Sector-Wide Exodus Intensifies

https://wolfstreet.com/2021/06/26/two-uk-commercial-real-estate-funds-shut-permanently-investors-trapped-as-sector-wide-exodus-intensifies/

"Aegon AM has decided to take steps to close the funds and return the proceeds to investors as quickly as possible, in a fair and orderly manner"...Potentially big haircuts for those with money locked in.

You can view the portfolio on this interactive map, exposed to retail and office space:

https://www.aegonam.com/en/strategies--funds/property/property-income-fund/

Makes you wonder who's buying UK banks in this environement.They were poorly capitalsied last year.I looka t what's coming and it's going to make 08 look like a cake walk losses wise in terms of inflation,fiscal deficits,employment levels based entirely on debt expansion both private and govt.

The people who own Amazon warehouses will be ok but for every other LL the barber beckons.

[JMD]

5 hours ago, ThoughtCriminal said:

If this country ever converts like for like to EVs, and if renewables doesnt turn into the biggest fucking disaster in this country's peacetime history, i will show my arse in the shop window of your choice. 

 

The days of everyone owning a car are over. The covid pantomime is about imposing a new world order (in the west) that they couldn't have got away with in a million years otherwise. 

 

Just look at the raw materials required for EVs. Then look at supply. Then the penny drops. 

I agree about future car ownership. Btw I'll take you up on your shop window 'ass'-ymetric bet?!                          I'm also still trying to work out in my mind what the the theme of the next p'lan'tomine will be!

[AWW]

Went to a party last night and got chatting to a guy who'd just qualified as a financial advisor. I asked him what his views were on some of our favourite subjects. The cycle turn. Housing. Equities. ESG. He didn't really have a view on any of it: "I'm just trained to choose a risk profile based on the person's age and risk appetite, then put them into the appropriate funds."

And people PAY for this advice!

[JMD]

5 hours ago, ThoughtCriminal said:

If this country ever converts like for like to EVs, and if renewables doesnt turn into the biggest fucking disaster in this country's peacetime history, i will show my arse in the shop window of your choice. 

 

The days of everyone owning a car are over. The covid pantomime is about imposing a new world order (in the west) that they couldn't have got away with in a million years otherwise. 

 

Just look at the raw materials required for EVs. Then look at supply. Then the penny drops

2 hours ago, planit said:

Bubble status

I am constantly updating my roadmap for market movements over the next few years so I can plan investment strategies. After reading a post further up about selling out of an ESG fund it prompted me to relook at the ESG side.

A quick outline of some asset statuses

Housing market - prices to high, they have been for a long time supported by government and low interest rates

Bonds - artificially low interest rates has pushed gov bonds too high and also the spread between gov and junk is too low. Games by governments have removed price discovery.

Tech/EV's - big investment cycle has caused a more conventional bubble, valuations are made compared to each other rather then fundamentals, risk is under priced.

 

ESG - this is the interesting one. A quick search on Google gives the following

This shows the bullshit, ESG - Environmental and Social Governance, is being marketed as a profit centre and investment strategy in it's own right. I am unsure how a company makes money out of social governance. For the purposes of this post we will take it to mean green investing.

I see this as different from the other bubbles listed above as people with a lot of money and resources, including the government are using it as a way to reduce guilt. It's very easy to convince oneself that there is an investment case whilst 'doing the right thing', it also allows you to write off losses as 'at least it was a good cause'.

People are also going to be making money as more people pile in, chasing a very small pool of decent assets. The whole sector is ripe for fraud, just make up a fund or a company based on nothing and market it. If cryptos can NFT's can be so successful with no substance, then think what ESG can do with a great cause, the whole world and governments behind it (and the woke religion). It could be like all the other bubbles above added together.

 

Fossil fuels.

I am a bull on this sector because of the reasons discussed to death on here but this sector is inter-related with the ESG one. Currently depressed by being on the wrong side of the ESG coin but they are also being mandated to be 40% green by 2030. This makes them big players in the ESG energy sector but only for quality ESG that can produce lots of energy (otherwise their investment doesn't help get closer to the 40% CO2 free target).

So the oil companies will be competing hard for a subsection of the ESG assets and these companies will have different value projections than the ESG investment companies.

Differing value projections

My theory here is that ESG investors believe in pink unicorns. They imagine a world with cheap, plentiful green energy. The oil companies are more pragmatic and they are projecting using more conventional tools which show an increase in energy costs and most likely an energy shortage pushing prices even higher. It is these differences that lead to BP 'overpaying' for the wind farm lease a few months ago. I hope this difference continues as it enables the oil companies to buy the assets they need without being affected too much by the ESG bubble.

 

ESG Bubble Innovation

So the ESG people might be drawn to a similar type of asset to the tech bubble - fast growing, high risk long shots and technology that can change the world. There will be billions chucked at lost causes, the amount involved will be eye-watering. But there should also be some lovely new technology that comes out of it. This technology could generate power, reuse power, store power, capture carbon, make hydrogen out of waste plastic etc etc. Nearly all of it won't be worth the development money put in or the valuation during the cycle. But as the cycle develops this tech will suddenly be available at a fair price once that is known. It is my hope that this will hep society and other asset companies including the oil companies that can buy the IP or asset at a fair price.

 

Making money on both sides

As you can see, I hope the oil companies can make money from every stage of this cycle and end up in 2030 as diversified Energy giants that keep planes running whether it's kerosene or hydrogen. They will efficiently manage and sit in the middle of the whole energy cycle. They might sit in the middle of the power grid buying electric out of peoples car batteries to make up for a lack of wind.

But I also don't really want to sit out of a gigantic ESG bubble. I believe money will be thrown in all directions so it probably doesn't matter what I invest in early in the cycle. ESG bond holders could lose it all, they are the ones providing incredibly low cost finance for high risk projects so bond funds are obviously out. 

I am thinking of picking a few ESG funds so does anyone have comments on the above and any ways to play this bubble that are more interesting?

 

 

 

Haven't looked at ESG funds for long while, but I remember the best looking ones (to me anyway) were ones investing in water/waste management, which I thought was a good/valuable theme to be in. I had these on my shortlist - Impax environmental, Fidelity sustainable water and waste. Not meant as a recommendation, I personally never bought them.                                                                                                               I think your post is correct. And ESG is a truly frightening concept, I like to think it stands for 'extraneous synergistic garbage', or Unicorn Farts for short!!

[arrow]

This article pretty much sums up my views on ev interchangeable batteries.

Seven years ago — an eon in EV development years — battery swapping was all the rage. An Israeli company, Better Place, was the biggest news in electric vehicle development, its CEO, Shai Agassi, promising five-minute battery swaps when one-hour hookups were the best the recharging industry could manage. The demonstrations were simply astounding: A car would pull into a battery swap bay, its lithium ions completely depleted. Hydraulics would churn, conveyors would whirl and, just as fast as you could fill up an F-150 with high-test, one fully charged EV was zero-emissioning its way home. The future seemed so bright that even Tesla got into the craze, opening its first — and, as it turns out, its only — battery swapping station in Harris Ranch, Calif. in 2013.

Unfortunately, Agassi turned out to be more opportunist than visionary and Better Place went bankrupt. Elon Musk, meanwhile, figured out that a network of superchargers would be a whole lot cheaper than building a nationwide chain of expensive battery swapping stations at US$3 million a bay. The idea of battery exchanges fell off the electric vehicle roadmap, found only in the darkest regions of the most idealistic — that should be read impractical — of Reddit comment chains.

Except that a small Chinese automaker called Nio recently announced that it had just completed its 500,000th battery swap. A relatively unknown purveyor of semi-luxurious EVs, Nio has no less than 143 battery-swapping stations in 58 different cities, which have been going strong for about three years. Battery exchanges take as little as three minutes, are fully automated — you don’t have to leave your car — and are automatically billed à la Uber. Indeed, Nio has come up with a novel battery-as-a-service, pay-as-you-go scheme (similar, in fact, to what Better Place proposed oh-so-many years ago) in which you buy your car battery-less — saving as much as US $10,000 on the initial purchase price — and subscribe to the lithium ions. The more you swap batteries, the more you pay, Car and Driver claiming that renting a 70 kWh battery with six swaps a month will cost about US$150.

Elegant, isn’t it? As is the almost balletic grace of the actual battery swap. Take a look at the video Nio posted to YouTube; the decoupling of the hinges, the lowering of the depleted carcass and then the almost acrobatic exchange of refreshed battery is the kind of synchronization only afforded by some of the most sophisticated “repair” technology the world has ever seen.

And therein lies the first of the roadblocks to widespread battery-swapping. It’s one thing for all that automation to function in the best of conditions, but how long would such delicate machinery operate trouble-free in the severe conditions we see in Canada? Will it work in Fort McMurray, where temperatures get so cold fan belts snap on start-up? How about in St. Jerome, Que., where the combination of the sand and salt put on roads in the winter can gum up the internals of a car faster than you can say “Ford Taurus rust bucket”?

Imagine, for a moment, a 10-year-old plug-in beater that hasn’t had its battery swapped — because, as EV proponents keep telling us, everyone charges at home — since the last Conservative government. The corrosion on the high-voltage connectors alone will be problematic, never mind the reluctance of bolts and fasteners long frozen into place. It’s a recipe for disaster. What works in a controlled environment — many of Nio’s customers are taxi drivers with narrowly defined routes — does not necessarily translate well into a universal application with harsh conditions and intermittent usage.

However, though problematic, an inhospitable environment is not the most serious impediment to widespread battery exchanging. Instead, the main issue is that age-old bugaboo of mass production, logistics — more specifically the impossibility of creating a universal battery standard for all automakers. For battery exchanging to completely replace gas stations — and, of course, recharging portals — as the refueling system of the future, it must be able to accommodate all cars from Ford to Ferrari. For that to happen, all the batteries needing a swap-out would have to virtually identical. Otherwise, all that precisely choreographed automation simply can’t work. If the battery don’t fit, you must a-quit (driving).

The chances of said commonality are all but zero. Oh, the president of Nio, Lihong Qin, imagines a world where automakers will voluntarily switch to his company’s particular battery design, telling Automotive News Europe that “we believe it should be other carmakers who should be coming to us, rather than us go to them.” Delusional hubris aside, Nio has no choice in proposing radical solutions; it’s a bit player in China’s EV market, selling barely 10,000 units a quarter. Desperate for any edge, no matter how improbable, it needs to differentiate itself.

But, practically speaking, what would compel any established automaker to join Nio’s revolution? Tesla’s main technological advantage over other automakers, for instance, is the precise management of its batteries’ individual cells — load balancing, temperature, etc. — that allows the company to boast a greater range than its competitors. Why, then, would Elon Musk want to share his battery technology with other manufacturers? And no way are Tesla owners going to accept a “trade-in” from supposedly lesser competitors. Indeed, considering how vociferously the Teslarati disparage other EVs, it would be corporate suicide for the company to accommodate batteries other than its own into its cars.

Indeed, the concept of one universal battery maker supplying the entire automotive industry is laughable. Occasionally, individual automakers might cooperate on the development of a transmission, and one automaker may sell another an engine. But go to your local Canadian Tire store and check out how many different brake pads it needs to stock to cover just the most popular cars. Ditto spark plugs. With range — and therefore batteries — becoming the prime differentiator between EVs, automakers will almost assuredly resist any attempt at commonality. And even if, as Bloomberg recently reported, the Chinese government can ‘encourage’ its domestic automakers to cooperate on a universal battery, the chances the rest of the world will agree on one universal battery that fits all cars is virtually nil.

This is what killed Better Place, whose business model was predicated on individual automakers continuing to manufacture their own cars, but Agassi et al supplying batteries to the entire industry. Automakers immediately recognized this as the Microsoft model, wherein the shell — in that case, the computer — quickly became commoditized, while access to the software, supplied on a subscription basis, created the world’s richest man. Doing the same with batteries would have been corporate suicide.

As to what the future holds for battery swapping, the Nio model may yet work for fringe manufacturers seeking specific niches. But the concept of a roadside station big enough to swap out — and recharge — all the Ford truck batteries that might be needed on a busy Labour Day weekend boggles the mind. And a single facility that could exchange the myriad batteries of all the different vehicles that might need swapping simultaneously is simply too gargantuan to even contemplate.

So, what we’re left with is an elegant concept that could possibly find traction in niche circumstances. But, as a universal solution of how to take the electric revolution to the next level, it’s a bust.

[DurhamBorn]

23 minutes ago, AWW said:

Went to a party last night and got chatting to a guy who'd just qualified as a financial advisor. I asked him what his views were on some of our favourite subjects. The cycle turn. Housing. Equities. ESG. He didn't really have a view on any of it: "I'm just trained to choose a risk profile based on the person's age and risk appetite, then put them into the appropriate funds."

And people PAY for this advice!

30s 80/20 fund,40s 60/40 fund,50s 40/60 fund thats 2.1% a year fees thankyou and a 1 hour yearly meeting with a coffee where we tell you you made 5% ,not telling you what 2.1% a year compounding fees is doing to your wealth.

It will be interesting when these 40/60 funds start to lose a couple of % a year + fees and then +4 or 5% drawdown.Thats why there is a very real risk people empty their pensions over 10 years.

 

[Funn3r]

On 26/06/2021 at 10:17, MvR said:

I wonder how cars parked on the road will charge?  Most residential streets without drives are chock full of parked cars. There would need to be a charging point for every space...

My phone has "wireless charging" meaning that I don't have to plug in a wire. I put it flat on a round thing and it goes ka-bing and says it's charging. How come cars don't have this? Things buried in the road.

[goldbug9999]

1 minute ago, Funn3r said:

My phone has "wireless charging" meaning that I don't have to plug in a wire. I put it flat on a round thing and it goes ka-bing and says it's charging. How come cars don't have this? Things buried in the road.

Because its incredibly inefficient especially for a) high power rating and b) any non-trivial physical separation (power transfer efficiency is an inverse cube function of distance) . It also only works with AC so it would need AC-DC conversion in the car.

[Funn3r]

8 minutes ago, goldbug9999 said:

Because its incredibly inefficient especially for a) high power rating and b) any non-trivial physical separation (power transfer efficiency is an inverse cube function of distance) . It also only works with AC so it would need AC-DC conversion in the car.

I don't really do physics nshit... you mean it works for phones because they lie flat on the thingy but not for cars because wheels keep it off the ground? There could be a thing like Thunderbird 2 where it lowers the middle down to the road.

[goldbug9999]

11 minutes ago, Funn3r said:

I don't really do physics nshit... you mean it works for phones because they lie flat on the thingy but not for cars because wheels keep it off the ground? There could be a thing like Thunderbird 2 where it lowers the middle down to the road.

Even if you could solve the proximity problem the efficiency would be poor, your effective "MPG" would be probably half a wired connection if not worse. Phones and electric toothbrushes etc being low powered devices can eat the cost of the inefficiency.

[Animal Spirits]

1 hour ago, sancho panza said:

Makes you wonder who's buying UK banks in this environement.They were poorly capitalsied last year.I looka t what's coming and it's going to make 08 look like a cake walk losses wise in terms of inflation,fiscal deficits,employment levels based entirely on debt expansion both private and govt.

The people who own Amazon warehouses will be ok but for every other LL the barber beckons.

The repricing and liquidations havent really got going yet either. Monetary policy has forced market participants to chase yield and own instruments where the underlying credit risk of the asset is not accurately reflected in it's price or yield.

Below investment grade bond index effective yield is a bit above 4% at the moment.

You can see how quickly things blow out when the overnight markets seize up. Very quickly only the most liquid instruments will be accepted in repo (T Bills etc). Then market participants are presumably forced to raise funds by liquidating other positions and then all heck breaks loose as Wolf Richter likes to put it.

They have the option to transact with the Fed in one of its loan facilities which might send the wrong signal to other participants and theres your banking system seized up. Would like to know who is still using these facilities assuming they've been turned away in repo...!

 

 

[Animal Spirits]

53 minutes ago, DurhamBorn said:

30s 80/20 fund,40s 60/40 fund,50s 40/60 fund thats 2.1% a year fees thankyou and a 1 hour yearly meeting with a coffee where we tell you you made 5% ,not telling you what 2.1% a year compounding fees is doing to your wealth.

It will be interesting when these 40/60 funds start to lose a couple of % a year + fees and then +4 or 5% drawdown.Thats why there is a very real risk people empty their pensions over 10 years.

 

The process generally seems to be just fill in a survey about your attitude to risk based on several factors such as age/employement status and proposed retirement date etc which then matches up with the fund risk number and voila...you have been advised.

[DurhamBorn]

13 minutes ago, Animal Spirits said:

The process generally seems to be just fill in a survey about your attitude to risk based on several factors such as age/employement status and proposed retirement date etc which then matches up with the fund risk number and voila...you have been advised.

To be fair for people who have zero understanding of investing and come into a lot of money,inheritance,pension lump sum etc IFAs mostly do a decent job.When i did my pension transfer the funds they came up with were quite balanced,but the ongoing fees all in were 2.1% thats a hugely high fee that even in a good decade would of took a third of the profits nearly.They pretty much put you in Vanguard funds with the odd extra bond,Europe,US equity fund etc but they nearly all use the 40/60 type set ups.Most people wont question things if the value is going up 5% a year,but a slow grind down that looks likely for that mix will shock a lot of people.

[Animal Spirits]

11 minutes ago, DurhamBorn said:

To be fair for people who have zero understanding of investing and come into a lot of money,inheritance,pension lump sum etc IFAs mostly do a decent job.When i did my pension transfer the funds they came up with were quite balanced,but the ongoing fees all in were 2.1% thats a hugely high fee that even in a good decade would of took a third of the profits nearly.They pretty much put you in Vanguard funds with the odd extra bond,Europe,US equity fund etc but they nearly all use the 40/60 type set ups.Most people wont question things if the value is going up 5% a year,but a slow grind down that looks likely for that mix will shock a lot of people.

True, they have to implement some sort of standardised process that makes it understandable.

[Animal Spirits]

1 hour ago, Animal Spirits said:

 

 

Edit: Forgot to mention in the previous post that most of the current balance of loans is Paycheck Protection Program Liquidity Facility as indicated in the table. This is non recourse loans to financial institutions for small businesses.

[Hancock]

Sunak and his mates are looking at other ways to syphon private pensions -
https://www.telegraph.co.uk/business/2021/06/27/sunak-weighs-investing-pensions-start-ups-drive-recovery/

[Harley]

11 hours ago, ThoughtCriminal said:

If this country ever converts like for like to EVs, and if renewables doesnt turn into the biggest fucking disaster in this country's peacetime history, i will show my arse in the shop window of your choice. 

Amsterdam?

[macca]

On 25/06/2021 at 15:06, Hardhat said:

I just want PMs to run!

Actually been selling out / taking profits from quite a few positions (anything over 100% up) lately to de-risk myself a bit.

Anecdotally though work (construction) is going mad at the moment. Everyone sorting out their premises anticipating return to work in offices.

my office is being converted into flats.. working from home only now or redundant 

[macca]

On 25/06/2021 at 11:18, HousePriceMania said:

https://www.bbc.co.uk/news/uk-57600757

 

UK deaths outnumber births for first time in 40 years

2019 non EU immigration at record highs..

if we don't have more kids they will import people

[Lightscribe]

17 hours ago, AWW said:

Went to a party last night and got chatting to a guy who'd just qualified as a financial advisor. I asked him what his views were on some of our favourite subjects. The cycle turn. Housing. Equities. ESG. He didn't really have a view on any of it: "I'm just trained to choose oa risk profile based on the person's age and risk appetite, then put them into the appropriate funds."

K people PAY for this advice!

And that’s exactly it, just one step up from Martin Lewis. IFAs advise on the here and now based on current conditions and FIRE investors do exactly the same.

One look on the FT comments will confirm that again. We are facing the biggest economic upheaval in our lifetimes (maybe history) and everyone seems oblivious.

I sometimes wonder if the NPC meme is real (having no critical thinking voice in your head) 

[leonardratso]

i love looking at my pension projections and readng heres what it could be worth when you retire.

Its a fucking farce, like anyone could live on that when it happens (if...)  and they assume youll buy some shit annuity that gives you basically shag all. Not worth the pdf its printed on.

[Chewing Grass]

Went back 12 months to see what I was paying in direct interest to 'the bank' each month and it was £217, then looked what it was last month £151. By the end of the Summer I'm going to get that down to £80 and by the dawn of 2022 hopefully £35.

That is all taxed money so is effectively worth £255 to me at the lower rate.

[DurhamBorn]

1 hour ago, leonardratso said:

i love looking at my pension projections and readng heres what it could be worth when you retire.

Its a fucking farce, like anyone could live on that when it happens (if...)  and they assume youll buy some shit annuity that gives you basically shag all. Not worth the pdf its printed on.

Where i worked the lads on the line are on good money around £31k a year before overtime.One lad had 10 years in and was paying full into the pension with their matched savings.It was worth £45k.The choice of funds was terrible,about four.35 years there on that he would be looking at under £200k.Nice amount with a full state pension,but difficult to go much more than a couple of years early especially with no understanding of investing.Likely most will go into drawdown and go to a local IFA so then the 2% fees on the fund and they would target 5% after fees and in an inflation period probably fail badly.I used to leave and go back and one reason was so i could transfer out into my SIPP.Another crazy rule to protect the idiots where you cant transfer if a member.