CTFs, am I doing it wrong?

cooper_d · 24 August 2016 at 11:17PM

Hi guys,

It's a tiny investment I know, but it's important to us.

We have three children -8,5&1

The 8 and the 5 got CTF vouchers when born, so we opened CTFs which seemed best to us at the time: F&C investments Stakeholder FTSE All Share Trackers.

To be honest, I don't fully understand how these work, but we put in £10 per month into each account.

Anyhoo, the older account is now at £1900 and made a profit of 92p last year after fees. (£12.35 fees vs. £13.27 inc in value of investments).

However the younger account, which now has £690 in it, made a loss of £1.50.

So am I doing it wrong? If feels like I would be better off just putting the money in an ordinary account or switching to a JISA. Are these stakeholder accounts really just for big savers, not just £10/month.

Advice and suggestions gratefully received.

[Deleted User] · 25 August 2016 at 8:14PM

Wow. I just came to MSE to look for answers to pretty much exactly the same question (less than 24 hours after your post). Ours too are 8 and 5 although the sums in each FTSE All Share Tracker CTF are about £7k and £2k. The returns haven't been bad over the years but we got stung by the charges this year as, being 100% invested, they had to sell holdings to take their commission. Like you, I took my eye off the ball and just let this investment roll.

A transfer away from F&C into a Junior ISA somewhere else seems appropriate. In my case, I'm happy to stay invested log term in funds - just as long as they are low cost. So I too would welcome any tips from others in response to your question!

cooper_d · 13 September 2016 at 4:21PM

Bump.

Still haven't got my head round this. Any suggestions?

xylophone · 13 September 2016 at 4:55PM

The JISA is more flexible than the old CTF and you can transfer out of CTF into JISA - you would need to contact your new provider.

However, £10 is a tiny monthly contribution to a stocks and shares investment and charges could have a disproportionate impact.

https://www.gov.uk/junior-individual-savings-accounts/overview

http://www.money.co.uk/savings-accounts/junior-isas.htm

You would compare JISAs and choose the one you want to switch to – remembering to check that the provider you choose accepts transfers in.

Contact the provider that you want to open an account. A Transfer Form etc will be provided.

You then wait for the completion of the transfer.

Coventry BS pay 3.25% on a cash JISA and accept transfers in.

cooper_d · 13 September 2016 at 7:12PM

Thanks! Reply appreciated.

I suspected £10/month was far to little to little for stocks and shares. I wish we had been told this at the time of starting the accounts.

I have cut some outgoings recently (paid of a balance transfer CC and my student loan). So I could increase the amount going to the CTF
, but I'm not sure I want to continue the gamble.

I'll look into switching to a jisa.

Reaper · 14 September 2016 at 10:37AM

cooper_d wrote: »

Anyhoo, the older account is now at £1900 and made a profit of 92p last year after fees. (£12.35 fees vs. £13.27 inc in value of investments).

Are you sure you got your figures right? I was under the impression they charge 1.5% of the fund value, and 1.5% of £1900 would be £28.50

Personally I am a fan of the stocks and shares version of CTFs/JISAs as by definition it is a long term investment and over the long term the stock markets tends to outperform cash.

However particularly with small investments it is important to check the charges as they can be disproportionately large. Also some providers have minimum contributions.

MadMat · 14 September 2016 at 11:20AM

Lowest minimum contribution I could find when looking for S/S JISA for my kids was £25/month with HL.

Annual charge is 0.45%

Mat

jimjames · 14 September 2016 at 12:25PM

cooper_d wrote: »

Thanks! Reply appreciated.

I suspected £10/month was far to little to little for stocks and shares. I wish we had been told this at the time of starting the accounts.

I'd recommend checking the charges. If they are a % rather than fixed then the amount doesn't matter and £10 isn't too little. Obviously if the charges are fixed at £50 per year for example then yes it would be completely disproportionate.

Mogley · 14 September 2016 at 12:59PM

Similar situation to OP and neversay. I've had CTF's for my 10 and 7 year old with Legal and General and left them alone paying £10/month. New baby this year and was looking at JISA's for her. Checked the charges on CTF compared to JISA and they are 1.5% compared to 0.56% for similar index tracker fund within L&G JISA funds.

CTF performance after charges was ok but not great. The government contribution was the main winner!!
10yr old: Total Paid £1220* starting May 2006. Value £2074 Aug 2016.
7yr old: Total Paid £760* starting May 2010. Value £1297 Aug 2016.
(*total paid does not include governments £250)

I have just opened a S&S JISA for all my children and transferred the CTFs across to benefit from the lower charges, flexibility of funds and it's still for the long term! I do now have to pay a minimum of £30/month per JISA.

puk999 · 14 September 2016 at 2:42PM

I have two children that had CTFs. I transferred them from Family Investments to JISAs with Charles Stanley Direct (CSD) instead.

They also have £10/month into each account from their granny. CSD's regular monthly payment is £50/month, so I do two manual debit card transactions of £10. CSD also require a minimum £100 fund top-up, so I just accumulate in cash until over £100.

A bit cumbersome perhaps, but the platform fee is only 0.25%, fund transactions are free. They offer the Fidelity Index World Fund Acc W-class which is only 0.15% OCF. A nice cheap way for them to invest in the worldwide stock market.

cooper_d · 28 September 2016 at 9:09PM

Thanks everyone, this has been really helpful.

I've decided to stick with S&Ss, but switch to a Jnr isa with lower charges and increase my contributions to ~£30/month/child.

But I'm finding it really hard to compare S&S Jnr isa products. I'm finding it hard to understand all the various charges.

In fact I can't even work out what the charges are on my existing F&C CTFs, so as I know what I have to beat.

The 'Key Investor Information' that I found in my bumpf, says 5% entry charge and 0.36% Ongoing charges. But no exit charge and no performance charge. However I can't seem to square this with the figures on my last annual statement (photo attached) where the Managment Fees seem to be about 0.68%. ????

https://drive.google.com/file/d/0B4w0_uYo1iEtd2otSTJFN1pyeG8/view?usp=sharing

I have been looking at S&S Jnr isas, particularly H&L and CSD. But there doesn't seem to be any nice comparison sites that compare charges clearly.

All comments appreciated!

CTFs, am I doing it wrong?

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