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  • FIRST POST
    • movilogo
    • By movilogo 9th Jan 18, 3:21 PM
    • 2,304Posts
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    movilogo
    Fund - invest more in existing or buy new?
    • #1
    • 9th Jan 18, 3:21 PM
    Fund - invest more in existing or buy new? 9th Jan 18 at 3:21 PM
    When there are 2 funds with similar composition and return, does it make sense to invest £2x into just one of these or invest in each £x amount?

    Assume, OCF is same for both. Sector holding/regions are all mostly same.
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
Page 1
    • bostonerimus
    • By bostonerimus 9th Jan 18, 3:25 PM
    • 1,419 Posts
    • 836 Thanks
    bostonerimus
    • #2
    • 9th Jan 18, 3:25 PM
    • #2
    • 9th Jan 18, 3:25 PM
    My question is why do you own two such similar funds.
    Misanthrope in search of similar for mutual loathing
    • movilogo
    • By movilogo 9th Jan 18, 3:49 PM
    • 2,304 Posts
    • 1,554 Thanks
    movilogo
    • #3
    • 9th Jan 18, 3:49 PM
    • #3
    • 9th Jan 18, 3:49 PM
    I don't - I own only one and hence asked the question.
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
    • Eco Miser
    • By Eco Miser 9th Jan 18, 4:12 PM
    • 3,320 Posts
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    Eco Miser
    • #4
    • 9th Jan 18, 4:12 PM
    • #4
    • 9th Jan 18, 4:12 PM
    If x is a massive amount, then using two funds could make sense on a not putting all eggs in one basket basis, otherwise it's just adding complications, and if they're active funds, the combined results are likely to be closer to a tracker, for the higher cost of active.
    Eco Miser
    Saving money for well over half a century
    • EdSwippet
    • By EdSwippet 9th Jan 18, 5:39 PM
    • 652 Posts
    • 619 Thanks
    EdSwippet
    • #5
    • 9th Jan 18, 5:39 PM
    • #5
    • 9th Jan 18, 5:39 PM
    My question is why do you own two such similar funds.
    Originally posted by bostonerimus
    Although this may not be the OP's case, there can be weird UK tax reasons in unsheltered accounts for holding different funds that invest in identical underlying assets.

    For example, if you have a decent unrealised gain in a fund holding, what would ordinarily be fairly tax-neutral operations can combine with the UK's forced 'average cost basis' rules to nevertheless create a capital gain. Suppose you own £100k of a fund for which you paid £50k, add £10k, realise the next day that you meant to buy something else and so sell £10k at the exact same unit price. Here you generate £4,545 of unwanted and potentially taxable capital gain (the annual CGT allowance may neuter this, but not if gains elsewhere push you over). As a general rule, once a holding has a sizeable unrealised gain it is useful to find equivalents for it rather than keep on adding to it.

    This would not be a problem in the US because there you have the choice of FIFO, LIFO, tax lots, and so on, but we don't in the UK. Although on the plus side, we do have an annual CGT allowance that US investors don't get. Also of course, not a problem in SIPPs and ISAs.
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