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    • ElizabethJane
    • By ElizabethJane 4th Oct 17, 5:06 PM
    • 24Posts
    • 7Thanks
    ElizabethJane
    My New ISA S/S - But Which Fund?
    • #1
    • 4th Oct 17, 5:06 PM
    My New ISA S/S - But Which Fund? 4th Oct 17 at 5:06 PM
    I am currently trying to decide on whether to add to my current Fundsmith ISA (i invested directly with Fundsmith not through a platform) where my total investment of £65k and grown to £110k over 5 years. It is very tempting to stay with a fund which has worked so well.

    I am 63yrs now and have a decent pension which will be augmented by the state pension in two years. My ISA is not for regular income but for the occasional big spend, ie car, holiday, new roof. I don't foresee these extra costs in the next few years and do not intend to draw down from my ISA until I am 70yrs. So have a healthy 7 years to go - so hopefully 7 x £20k.

    For me the big question is - stay with Fundsmith (all share investments) or diversify to something like Vanguard and emerging markets may be - and be a little more adventurous? I have had quite a few IFA paid advisors over the last 10 years and find they tell me the time on my own watch, for a price.

    So any guidance gratefully accepted and I'll continue doing my due diligence before I make the decision.
Page 1
    • Audaxer
    • By Audaxer 4th Oct 17, 5:23 PM
    • 480 Posts
    • 204 Thanks
    Audaxer
    • #2
    • 4th Oct 17, 5:23 PM
    • #2
    • 4th Oct 17, 5:23 PM
    Continuing to invest more in just one 100% equity fund seems very high risk. Although you have had good growth over the past 5 years, would you cope with a 50% or more fall in the event of an equity crash?
    • Alexland
    • By Alexland 4th Oct 17, 9:11 PM
    • 443 Posts
    • 261 Thanks
    Alexland
    • #3
    • 4th Oct 17, 9:11 PM
    • #3
    • 4th Oct 17, 9:11 PM
    Fundsmith has done very well recently but will it continue? Worth considering the below analysis:

    https://pensioncraft.com/review-of-fundsmith-equity-fund/

    Personally I would do VLS60 which is less concentrated and more diversified.

    Have you considered drip feeding the money into a SIPP still invested in your fund choice until 75 for the tax and potential estate planning benefits?
    • ElizabethJane
    • By ElizabethJane 5th Oct 17, 12:47 AM
    • 24 Posts
    • 7 Thanks
    ElizabethJane
    • #4
    • 5th Oct 17, 12:47 AM
    • #4
    • 5th Oct 17, 12:47 AM
    Thanks for the link to the Fundsmith review - I'll read that with interest. Yes I am currently drip feeding into a SIPP - sorry forgot to say in my introduction. I'm of course now restricted to a maximum of £4k per annum as I am already in a income draw down pension.

    I must look more into the VLS60 fund.
    • bostonerimus
    • By bostonerimus 5th Oct 17, 1:19 AM
    • 967 Posts
    • 494 Thanks
    bostonerimus
    • #5
    • 5th Oct 17, 1:19 AM
    • #5
    • 5th Oct 17, 1:19 AM
    As you say you don't need the ISA for income I think you can justify taking some risk to get a high return. If you like Fundsmith then why not stick with it? If you want to "bank" some of the great gains you've made in the last few years you could look at a bond fund or a multi-asset fund like VLS60 which has 40% bonds...Of course all this assumes you have a sufficient cash emergency fund for you to sleep well at night.
    Misanthrope in search of similar for mutual loathing
    • AnotherJoe
    • By AnotherJoe 5th Oct 17, 7:23 AM
    • 7,383 Posts
    • 7,914 Thanks
    AnotherJoe
    • #6
    • 5th Oct 17, 7:23 AM
    • #6
    • 5th Oct 17, 7:23 AM
    I have fundsmith also, but it's part of a much wider portfolio, I would suggest you look further afield with an alternative fund. Start by deciding what area, then choose the fund. There's a massive dichotomy between vls60 and emerging markets for example.
    • coyrls
    • By coyrls 5th Oct 17, 11:00 AM
    • 882 Posts
    • 910 Thanks
    coyrls
    • #7
    • 5th Oct 17, 11:00 AM
    • #7
    • 5th Oct 17, 11:00 AM
    I had a Fundsmith ISA direct with Fundsmith from the days when the fund wasn’t available on platforms but once the fund became widely available, I transferred my Fundsmith holdings to my S&S ISA platform. I would suggest that you do the same, as that will make it easier to manage your Fundsmith holding as part of a wider portfolio. As others have suggested, it would probably be wise to create a more diversified portfolio with Fundsmith as one of your funds.
    • ElizabethJane
    • By ElizabethJane 5th Oct 17, 12:24 PM
    • 24 Posts
    • 7 Thanks
    ElizabethJane
    • #8
    • 5th Oct 17, 12:24 PM
    Got Cash
    • #8
    • 5th Oct 17, 12:24 PM
    Yep got me emergency cashfund but trying to keep it lean and mean as it's just losing money in that b***y current account. With the talk of increasing consumer debt, the huge uncertainties of the future of the UK economy, and interest rates showing every sign of beginning their climb back to 'normality', I think diversification is the right strategy. I'm increasingly nervous of having such a lot in one ISA account.

    All giving me good food for thought - whoops - Fundsmith's price gone up again today!
    • ElizabethJane
    • By ElizabethJane 5th Oct 17, 12:30 PM
    • 24 Posts
    • 7 Thanks
    ElizabethJane
    • #9
    • 5th Oct 17, 12:30 PM
    Doesn't this mean higher charges
    • #9
    • 5th Oct 17, 12:30 PM
    Yes i note the flexibility holding ISA funds within a platform gives you but doesn't it just increase the charges? At least with a directly held ISA there's just one management charge. My SIPP and other investments are in an HL account. Are the costs of transferring and then maintain the funds pretty well the same? I guess you must have done this computation?
    • Eco Miser
    • By Eco Miser 5th Oct 17, 2:28 PM
    • 3,081 Posts
    • 2,848 Thanks
    Eco Miser
    The single management charge for a directly held fund may be more than the sum of fund charge and platform charge on an independent platform.
    With Iweb, if I neither buy nor sell anything, there is no platform charge. (£25 to join, £5 transaction fee, SIPPS up to £180 annual admin charge)
    Eco Miser
    Saving money for well over half a century
    • coyrls
    • By coyrls 5th Oct 17, 4:16 PM
    • 882 Posts
    • 910 Thanks
    coyrls
    Yes i note the flexibility holding ISA funds within a platform gives you but doesn't it just increase the charges? At least with a directly held ISA there's just one management charge. My SIPP and other investments are in an HL account. Are the costs of transferring and then maintain the funds pretty well the same? I guess you must have done this computation?
    Originally posted by ElizabethJane
    The Fund class offered on the Fundsmith ISA platform is the T class, the class offered on most general platforms is the I class. According to Fundsmiths annual report, in 2016 the OCF for the T class was 1.06% and for the I class 0.96%, a difference of 0.1%, so on £110,000 the cost of holding Fundsmith on the Fundsmith platform is £110. The cost of holding Fundsmith in an ISA on the Halifax Share Dealing platform would be £12.50 a year plus £12.50 for each trade, so on Halifax Share Dealing, you could hold £110,000 of Fundsmith and make 7 trades a year and it would still be cheaper than holding Fundsmith on the Fundsmith platform.

    When I moved from Fundsmith it was before the RDR and so I was able to transfer the “dirty” T fund in specie and get a rebate on the T class on the new platform. My fund was later converted to the I class. If you try to move in specie there may be a problem if the receiving platform won’t do the conversion from T to I.
    • bigadaj
    • By bigadaj 6th Oct 17, 3:47 AM
    • 10,309 Posts
    • 6,605 Thanks
    bigadaj
    The single management charge for a directly held fund may be more than the sum of fund charge and platform charge on an independent platform.
    With Iweb, if I neither buy nor sell anything, there is no platform charge. (£25 to join, £5 transaction fee, SIPPS up to £180 annual admin charge)
    Originally posted by Eco Miser
    I'd say a direct holding of a fund is probably, if not almost certainly, more expensive than through a non advised intermediary.
    • lpgm
    • By lpgm 6th Oct 17, 10:49 AM
    • 198 Posts
    • 97 Thanks
    lpgm
    All giving me good food for thought - whoops - Fundsmith's price gone up again today!
    Originally posted by ElizabethJane
    The pound's going down again, so many fund prices are going up at the moment.
    • ElizabethJane
    • By ElizabethJane 6th Oct 17, 1:24 PM
    • 24 Posts
    • 7 Thanks
    ElizabethJane
    Very helpful
    Think you've answer my question - it seems a no brainer.

    A trifle annoyed that whilst I've been deliberating this week Fundsmith has gone up 10p! But i can see now that it's probably to do with the slide in the pound rather than an increase in the underlying asset.
    Last edited by ElizabethJane; 06-10-2017 at 1:25 PM. Reason: adding info
    • Alexland
    • By Alexland 6th Oct 17, 9:38 PM
    • 443 Posts
    • 261 Thanks
    Alexland
    Yup my VLS and Blackrock trackers have also had a good rise. Don't use the value of sterling to decide your future path. The question is if you want to to remain concentrated and take sector risk or if you want to diversify and get average (but not less than average) market returns.
    Last edited by Alexland; 06-10-2017 at 9:40 PM.
    • stephenadarglas
    • By stephenadarglas 7th Oct 17, 10:24 AM
    • 31 Posts
    • 3 Thanks
    stephenadarglas
    People sometimes complain about holidays costing more when the pound drops however I use the extra profit for when this happens as spending money on holidays - roundabouts and swings I suppose.
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