Virgin ISA going down - somebody help!

Yellowfin

Hi,
I've had a Stocks & Shares ISA with Virgin Money for 7 years and since August 2007 I have lost just over £3000 - about 20% lost on the value of my savings in 13 months. My immediate reaction is to pull as much out as possible and put it into a cash ISA or spread it over other savings accounts. But is there a cleverer approach?? Somebody please help - I am a novice at this (as you can tell !), can I stop this going down even more?!

dunstonh

about 20% lost on the value of my savings in 13 months.

Not unexpected given that Virgin mostly use FTSE trackers.

My immediate reaction is to pull as much out as possible

why?

But is there a cleverer approach??

Cleverer (is that a word?) or more knowledgeable?

I am a novice at this (as you can tell !),

Start at the beginning..... I am going to assume you are in one of their FTSE trackers... What made you purchase a medium/high risk investment fund with the potential to lose 50% in a given 12 month period? What has changed since then that now sees you worried about a drop that is only half that amount?

can I stop this going down even more?!

What about when it goes back up again? Options are to encash and crystallise the loss, leave it where it is or adjust the fund holdings to a risk level that matches your risk profile (as I fear that medium/high risk isnt what you wanted)

pem2

It is always easier to be wise in hindsight which most of these IFA's tend to be, but personally speaking as I am in the same boat with one of these poorly performing Virgin trackers (except that I've held mine since 97) is to sit on it and hope it does back up to something like I would have got in a high interest bank/bs deposit account. I'm not optimistic though.

dunstonh

It is always easier to be wise in hindsight which most of these IFA's tend to be

A FTSE tracker is medium/high risk. Always has been. The op purchased it around the time the FTSE dropped 43%. So, even with a little bit of research it would have been easy to see that the fund was volatile. No hindsight was needed. Not knowing what you are doing when you make such investments and investing above your risk profile does not require hindsight.

I am in the same boat with one of these poorly performing Virgin trackers

It is not really poor performing. It is performing in line with its aims and objectives and doing exactly what it is meant to do.

The problems here are:
1 - single fund investing is poor quality investing. You are putting all your eggs in one basket.
2 - The risk profile of medium/high doesnt sound like what the OP is after.

thespringfield

I have this product as well. I would sit on it and wait for another rise. It may take time and there may be further to fall first but I reckon it will rise again. We're going through a downturn in the economic cycle, a recession. It's just a normal cycle of the economy and things will pick up again eventually.

robnoblewarren

Yellowfin wrote: »

Hi,
My immediate reaction is to pull as much out as possible and put it into a cash ISA or spread it over other savings accounts. But is there a cleverer approach?

Let me first flag I am a financial adviser, but I am fee-only (means the firm never takes commission).

Don't think of your ISA like a car, but like a shopping bag. The best shopping bag ISA is a self invest ISA, almost no fees, no commission, very flexible. What you put in it is up to you. If you choose to invest in the UK share market, then I agree with the above posts, you'd expect 45% loss in a bad year and 75% in awful one. If you use the Virgin Tracker to invest in the UK market then you're saying that you do not think you can find any manager who can beat the index or are unlikely to, and I agree with that, so well done.

But the idea that you should invest in the UK at all at this time is questionable - read the latest IMF World Growth predictions for where they think the best growth will be. It is not the UK. I have to question your choice of global market.

Thespringfield says this is a normal recession and things will turn around in the UK. We don't think it is a normal recession - we think it is abnormal and will last for many years in the UK. It's not only financial instability you have to take into account; it's climate change and the use of political force (terrorism/state terrorism).

We would say move all your ISAs to one self invest ISA to reduce charges, and retain the slightly tax-favoured wrapper (the 'shopping bag'). We also say you can't be lazy any more about your choice of global market (what you put in the shopping bag), and if you're not prepared to put the work in to find out what, buy a Gilt which will mature when you want your money out. It will be safe, and tax free, and you can shrug off worries about Virgin and whether their balance sheet will last the recession.

We wrote an article about where to invest in a recession at http://independencewealth.eu/brief/article.asp?article=185.

thespringfield

robnoblewarren wrote: »

Thespringfield says this is a normal recession

I never said that it was a normal recession. I said that a recession is a normal part of an economic cycle.

But if you wish to get technical then perhaps one should consider what happens during a typical recession and compare it with what is happening now:

• falling demand for products/services - 'new car sales fall 21%'
• cuts in output - ' UK Honda and Nissan factories cut production'
• rising unemployment - 'BT to shed 10,000 jobs by March'
• few job opportunities - 'UK jobs market figures show impact of first phase of credit crunch'
• gloomy expectations - 'Gregg's cuts profits forecast'
• low levels of capacity utilisation - 'ArcellorMittal to cut capacity utilisation br 65%'
• falling levels of investment - 'Foreign investment dries up'
• many businesses making losses - 'FTSE's biggest fall since Black Monday'
• some businesses closing down - 'Last Rosebys stores close down'

Above are the normal things which happen, based on the recessions of the last century. Initial recovery is usually slow as you suggest and the UK is a developed economy so obviously we will not see the levels of overall growth which we see in many overseas developing countries which have more scope for growth.

You say that 'we' (whoever that is) think that the recession will last for many years. Might I suggest that you are being over pessimistic there? Most analysts I am listening to are saying that it will be over a lot sooner than that.

Your comment about growth in overseas markets is fair enough, but investing overseas does not come without risk. For example, the fiasco surrounding the BP-TNK venture to name but one.

The Virgin ISA FTSE tracker and Bond and Gilt fund allows one to invest as little as £1 per month in each portion. Other fund managers tend to demand at least £50 per month or a £500 lump some, which is not suitable for everyone.

Based on my sources and with dividends reinvested, to 15 August '08 the Virgin tracker had risen 153.27% since launch in 1995 and 55.91% over five years. For the small amount required to service the investment, I'd say this fund is pretty good for those on a small income looking to start out on stocks/shares in a less exposed fashion than buying shares directly. I also feel it is a good way to diversify one's more expansive portfolio.

I am not giving out advice however I believe that the Virgin FTSE tracker will recover and show positive gains relative to the input of investment to this date. That is why I and presumably many others are still paying into this fund that is worth more than £1.2 billion.