Advice on my OEIC investment

Mr_Scrooge_4

Good evening All,

My first time on here so hopefully Im doing it right!

I am after some advice please....

I invested a sum of money in an OEIC (Open Ended Investment Company) back in February and was told by the financial adviser at Lloyds TSB that it would be of minimal risk but showed some previous statistics that suggested it was the way forward.

Since then the share value has fluctuated but mostly at a loss (especially after the 3.5% fee that I had to pay to get Lloyds to set this up), so now Im concerned that that this will continue and lose even more value. Especially with the current financial situation and I dont know if the Lloyds TSB /HBOS merge will have an impact.

I have recently spoken to the Adviser at LLoyds who reassures me that the money should stay put, and I should look at the long term investment that this was suggested for at 3 - 5 years. But Im concerned that things will not improve enough over the 5 years to recoup what I have lost and so I should cut my loses and get out now.

So, Im after an independant opinion - keep the money where it is or get out???

Any educationed advice would be greatly appriciated.

Kind regards

Ian

Just_landed

Hi Mr Scrooge I started 1 of mine OEICs that is in 1990 with the TSB bank the first one did well upto this tribe got in power then you might remember when prudence started raiding the pension funds by taxing at source even though mine are under a tax rapper ISA. example = £3000 in in 1990 in 2000 it was worth £8800 and today 23-09-08 it is worth £8022. The best it ever made was £9000 late 2000, enough said . I will not bore you with all of the others but I will tell you about the last one I took out with the TSB, saying the last one because that one was the first and last one that they charged me a fee to set up as well. In 1999 I invested £5240 inc the fee, as of today 23-09-2008 it is worth £4773.76. From that you can make your own mind up. Ever since then I put my ISA allowance each year into cash ISAs oka it is a steady interest rate but if you do your figures @ say 5% a year average you will see even the first one I took out would of made about the same
money.I also move the cash ISAs about to get the best interest rates. Goods Luck you will need it.:p

jem16

Mr_Scrooge wrote: »

Good evening All,

My first time on here so hopefully Im doing it right!

I am after some advice please....

I invested a sum of money in an OEIC (Open Ended Investment Company) back in February and was told by the financial adviser at Lloyds TSB that it would be of minimal risk but showed some previous statistics that suggested it was the way forward.

What was the name of the fund and how much was invested?

Since then the share value has fluctuated but mostly at a loss (especially after the 3.5% fee that I had to pay to get Lloyds to set this up), so now Im concerned that that this will continue and lose even more value. Especially with the current financial situation and I dont know if the Lloyds TSB /HBOS merge will have an impact.

The merger will have no impact on your fund. The 3.5% initial fee may or may not be average - depending on the amount you invested you may have been able to get it cheaper.

I have recently spoken to the Adviser at LLoyds who reassures me that the money should stay put, and I should look at the long term investment that this was suggested for at 3 - 5 years. But Im concerned that things will not improve enough over the 5 years to recoup what I have lost and so I should cut my loses and get out now.

An investment should be for a minimum of 5 years, preferably longer. This is to iron out the ups and downs of the markets so from that point the financial adviser is correct.

So, Im after an independant opinion - keep the money where it is or get out???

I'd say get it out but not for the reasons you quote.

6 months is not long enough for an investment and if you are feeling jittery now it seems more than likely that you have invested above your risk profile. The biggest part of the problem is that you have invested with a bank. Banks' investment products are limited and their advisers are not really advising, more selling.

You would be best to have this investment reviewed by an Independent Financial Adviser who would be able to move it, if necessary, to something more suitable.

purch

the financial adviser at Lloyds TSB

I can think of a lot of things the A in the title FA would stand for, :eek: ....but adviser is certainly not one of them

You have already been 'fleeced' of the 3.5% initial charge, even before the loss on the Investment.

To recoup that in a shortish timespan will be difficult without increasing your risk

dunstonh

So, Im after an independant opinion - keep the money where it is or get out???

So, why did you see a tied sales rep for Scottish Widows and not an independent financial adviser then?

and I should look at the long term investment that this was suggested for at 3 - 5 years.

5-10 you mean. 3-5 is too short. Investing is a minimum of 5 but better for 10+

But Im concerned that things will not improve enough over the 5 years to recoup what I have lost

Maybe, maybe not. However, you havent told us what investment were recommended. February may not have been a bad time to invest with hindsight depending on how the portfolio was built.

Investing involves taking risks with the money. That can be very low risk or very high risk and a whole range in between. The returns will vary and your value will zig-zag. That is quite normal. When you invest you have to assume that in a 5 year period you would expect to see a bad year, a nothing year and 3 good years. You dont know what order they will come in but you can bet there will be a bad year in there somewhere. That is normal.

So, here we have your first bad year and straight away you are concerned. Yet, you should have been prepared for it. Its a pain when you get the bad year early on and not after 2 or 3 good years but it was always coming. However, my concern here is that you probably havent seen much of a drop at all but are worrying already.

Mr_Scrooge_4

Thank you all for input so far.

Answers to questions:

The fund is called a Momentum Income Portfolio Shareclass A Accumulation.

In this was £23,000 minus the 3.5% set fee.

Current value is £21,236.03 with a single share value of 110.70.

I also had another £7,000 in a shares ISA that has the same single share value. Value now is £6,485.37.

I was told that 3 - 5 years was ideal, but definately didnt discuss 10 years.

As to why I didnt seek advice from an IFA - I dont really know. Mistake on my part it seems. I was happy with what the Lloyds FA had to say and the statstics looked good although I knew that I could base the future on what had happened over previous years and I accepted that there would be an element of risk.

However, I didnt expect not to see any gain what so ever in the first year. Every month bar 1 has been at a loss.

I will arrange to see an IFA now (learnt my lesson on that one) but should I be as concerned as I am?

Does anyone see brighter days ahead for my invested money where it is???

greenface

Thats not bad in the torrid times we have had this year.

the gods will be here soon "i will bow out quickly"

dunstonh

The fund is called a Momentum Income Portfolio Shareclass A Accumulation.

Single fund investing. Typical tied agent recommendation.

I was told that 3 - 5 years was ideal, but definately didnt discuss 10 years.

That would be a miss-sale. 5 years is the industry standard minimum (unless structured products used).

As to why I didnt seek advice from an IFA - I dont really know. Mistake on my part it seems. I was happy with what the Lloyds FA had to say and the statstics looked good although I knew that I could base the future on what had happened over previous years and I accepted that there would be an element of risk.

The stats couldnt really looked good. the fund only launched in august 2004. The current fund manager only took control in March 2006. It hasnt made barely anything since it launched. 11.3% before initial charge. Lloyds havent classified the fund either so there is no benchmark for them to put it up against.

The fund is defensive with 15.1% equity and 84.90% fixed interest and reinvests into other scottish widows funds (making it a fund of funds).

However, I didnt expect not to see any gain what so ever in the first year. Every month bar 1 has been at a loss.

There is no way to time when the gains or losses will be.

I will arrange to see an IFA now (learnt my lesson on that one) but should I be as concerned as I am?

The investment is poor quality but I think before you do anything you need to learn more about investments and how they work. Then you can decide if its right for you or not. At the moment, I would say not but that may be down to lack of understanding and you reviewing the investment too often.

Mr_Scrooge_4

Good evening,

A lack of understanding - Id agree with that. I wasnt expecting to be in this situation as this was the lowest risk fund that was offered by Lloyds TSB.

I was shown / discussed figures that showed an average growth of 8% per year, and when I went to see him a couple of weeks ago he still forcasted a 5% increase for the rest of the year despite the current financial situtation.

He too told me that I am checking the account to often - but its hard not to! When you know that you are losing money from the start it is difficult not to look in the hope that things have picked up. He scheduled me for a review in January.

I dont mind taking a risk (I knew at the start that would be the case). But now I have taken the risk and am losing I want reassurance / advice as to what to do.

Will be seeing an IFA in the hope that they can be of assistance. Anyone recommend a decent one in Reading?!? : )

dunstonh

I was shown / discussed figures that showed an average growth of 8% per year, and when I went to see him a couple of weeks ago he still forcasted a 5% increase for the rest of the year despite the current financial situtation.

The 4, 6 & 8% illustration are examples only. A fund with 20% a year potential shows those as does a fund with no potential. They are the standard industry rates and do not reflect individual funds.

I dont mind taking a risk (I knew at the start that would be the case). But now I have taken the risk and am losing I want reassurance / advice as to what to do.

I think once you understand it more, you will feel more comfortable with it. Hopefully, if you get a good IFA they will spend the time to help teach you the basics. Remember that its risk and potential reward that needs to be balanced. Taking a risk in a fund that has limited potential is pointless. That is probably where you are at the moment.

LongTermLurker

Mr_Scrooge wrote: »

Will be seeing an IFA in the hope that they can be of assistance. Anyone recommend a decent one in Reading?!? : )

No one here can recommend you one - go to https://www.unbiased.co.uk and you can register there - they will give you the addresses of a few (3?) IFAs in your area.

edit - oops - wrong website!!