ISA Investment Funds Advice Please

el-dog

Can anyone advise either where to go for portfolio advice or offer any practical investment suggestions. Have £4000 to invest in Mini Share ISA this ISA year and another £11000 next year. My current holdings are:

Aberdeen Manged Portfolio (Balanced Managed) £4000
Fidelity European (Europe exc UK) £1000
Legg Mason US Equity (North America) £3000
JPMorgan Premier Equity Growth (UK All Companies) £4000

From my uneducated research I am considering the following additional funds for the additional £15k:

Invesco Perpetual European High Yield (Global Bonds) £2000
Artemis European Growth (Europe exc UK) £2000
Fund tbc but Japan Sector £2000
New Star Property (Property) £2000
New Star Sterling Bond (UK Corporate Bond) £2000
JPMorgan Natural Resources (Natuaral Resources) £3000
AXA FramlingtonUK Select (UK All Companies) £2000

I am after growth rather than income for about 3 years and take a cautious to moderate outlook on risk.

Any thoughts, opinions are most welcome even that I may be absolutely barking!

Thanks

El-Dog



FY and

dunstonh

Can anyone advise either where to go for portfolio advice or offer any practical investment suggestions.

Independent financial advisors. Ideally one specialising in portfolio management rather than a general service IFA.

One fund, maybe two on your proposed list could make my list. I am going to guess past performance influenced you a bit.

Apart from that, we aren't allowed to give investment advice on the forums like that. It's against board rules and the IFAs amongst us would also be in breach of FSA rules (as we need to give full disclosure first).

el-dog

Thanks dunstonh

Understand what you say about IFAs. Albeit a few years ago I suffered from some bad advice from an IFA and am a bit suspicious without a recommendation. How can you tell who/what is legit or not?

As for my selection; fund managers rating was the major determining factor followed by performance and volatility.

Thanks again

El-Dog

carnet

el-dog wrote:

I am considering the following additional funds for the additional £15k:

Invesco Perpetual European High Yield (Global Bonds)
New Star Sterling Bond (UK Corporate Bond)

I am after growth rather than income

Just a few general comments (as not allowed to be more specific here).

If you're looking for growth rather than income, why the two bond (fixed income) funds ?

If you want (as you should) to construct a well diversified portfolio, notice no UK Equity Income (which can also be used for growth via accum. units/shares where available and, in the main, outperform UK Growth funds) or Far East funds are mentioned either - although you are considering both a second European and UK All Cos. fund.

Afraid only one of the funds you mention would make it into my current portfolio as well .

dunstonh

Understand what you say about IFAs. Albeit a few years ago I suffered from some bad advice from an IFA and am a bit suspicious without a recommendation. How can you tell who/what is legit or not?

Anyone FSA authorised is legit. However, skill and experience is what you are looking for and that is often hard to measure unless you get it from word of mouth or have a benchmark to compare against.

As for my selection; fund managers rating was the major determining factor followed by performance and volatility.

At the end of the day, people can choose funds for different reasons and only time will tell who will get it right. Therefore sector allocation is generally considered the better approach. For example, 10 years ago, had you invested across the sectors and only had sector average returns, you would now have a greater value than picking the best performing fund at that time.

There is nothing wrong with your fund selection although a few in there are living on past glories. Hence why I felt that may have been an influence. Fund ratings are not always a good guide. A fund mananger can leave and the replacement can come in but the fund rating remain. Even though the new manager may have no record or even a relatively poor record.

Extractthecash

Just be sure to review what any IFA has to say in light of the commission they will receive. There are rumours that some IFAs are pushing more products that yield greater commissions. I'm sure this is the minority, but best to be safe.

Hope you don't take any offence donstonh, as I do agree that most IFAs are legit..

I do wonder however how it is possible to track all the funds available and how IFAs can be truly whole of market...

I'm not an IFA, but I generally invest directly in shares within my ISA allowance to avoid management charges.. only gives me exposure to UK equities, which I'll be the first to agree is not spreading my risk...

carnet

Extractthecash wrote:

I do wonder however how it is possible to track all the funds available and how IFAs can be truly whole of market......

You only have to track the 5% or so that are worth bothering about - plus check out any new ones of merit as they're launched ie with proven managers etc.

In fact, after a while, it's not even necessary to track the funds - just the (relatively few) decent managers in each sector .

I generally invest directly in shares

And that's easier ?

dunstonh

I do wonder however how it is possible to track all the funds available and how IFAs can be truly whole of market...

The legal minimum is actually quite poor. Take 3 products and compare those and the best of those three can be recommended. However, that rule goes back to the old days before computers came into play.

Today, you get software doing much of the work. You put in a range of criteria and it chucks out the providers that meet the requirements. For example, I just click on research for pensions and it starts off with 197 products available. So, I think it is fair to say that research of 197 products is very much whole of market. Sure there will be a few providers missing, such as those that do not send the required information to the research companies, but a search of 197 pension contracts from an IFA has got to be more comprehensive than a search anyone else can do. A click on funds, shows 4074 available for research. Again, unlikely to be 100% comprehensive but its about as good as you are going to get.

There are rumours that some IFAs are pushing more products that yield greater commissions.

These sort of comments appear in the media from time to time but past investigations have shown that there is no wholesale mis-selling based on commission bias. This means some are almost certainly doing it but it isnt widespread.

There are an ever increasing number of advisors moving to the new model basis. The industry is really getting split in two betwen new model and old model.

The new model agrees a fixed up front fee with 0.5% p.a fund based for ongoing servicing, review etc. This is regardless of the product sold. The fee is tyically 1%-2%. So a commission product of 5% plus 0.5%pa. would get 4% rebated to the client with 1% kept to cover fee (this also avoids VAT which would be payable if cheque was issued to cover fee).

The old model tends to focus on full upfront commissions. Typically these would be 5-7% with no ongoing.

The larger salesforces seem to be sticking with the old model. Probably because they cannot afford to switch to the new model Whilst smaller, more modern firms are switching to the new model.

FSA stats show that the current commission average taken on investments is 2.8% plus 0.5% p.a. If you look at 4% plus 0.5% being the maximum, then its fair to say that more IFAs offer discount terms than those that do not.

Extractthecash

Agreed fund based renumeration on portfolios over the long term gives goal congruence with IFAs clients...

moneytroll

I am new to this so please excuse if some of the issues have already been covered.
For the past 2 weeks I also have been scratching my head in despair regarding overwhelming choices of funds out there...
What occurred to me from your post though, el-dog, is that you are looking to invest for 3 years: that seems a rather short amount of time (especially for equity based investments). Best results are achieved (apparently) over 10-15 years.
Also I am not sure whether factors such as managers, fund ratings, past performances are the right ones when it comes to fund choices. From what I believe, you have to be convinced by fundamentals (ie, the overall situation of the market and where it might be heading). Though I may be wrong on this.
I have browsed through tons of funds, but that doesn't help if one doesn't understand the criterias for making a specific choices (again, I am also new to this and feel there's no end to the research that can be done).

I am in a similar situation as you (though looking for longer term investment), and so far I have chosen the following funds:

Artemis Special Situations (better alternative to Fidelity's SS)
JP Natural Resources (in my opinion, when equity is generally heading south, which is likely to happen, commodities cushion those falls to some extent)
Aberdeen Emerging Markets (though charges are higher than for other funds)
New Star European Growth

But I am still not 100% sure whether it is 'the best' choice. (As long as I believe it is the best choice, that's good enough.)

whiteflag_3

moneytroll wrote:

I am new to this so please excuse if some of the issues have already been covered.
For the past 2 weeks I also have been scratching my head in despair regarding overwhelming choices of funds out there...
What occurred to me from your post though, el-dog, is that you are looking to invest for 3 years: that seems a rather short amount of time (especially for equity based investments). Best results are achieved (apparently) over 10-15 years.
Also I am not sure whether factors such as managers, fund ratings, past performances are the right ones when it comes to fund choices. From what I believe, you have to be convinced by fundamentals (ie, the overall situation of the market and where it might be heading). Though I may be wrong on this.
I have browsed through tons of funds, but that doesn't help if one doesn't understand the criterias for making a specific choices (again, I am also new to this and feel there's no end to the research that can be done).

I am in a similar situation as you (though looking for longer term investment), and so far I have chosen the following funds:

Artemis Special Situations (better alternative to Fidelity's SS)
JP Natural Resources (in my opinion, when equity is generally heading south, which is likely to happen, commodities cushion those falls to some extent)
Aberdeen Emerging Markets (though charges are higher than for other funds)
New Star European Growth

But I am still not 100% sure whether it is 'the best' choice. (As long as I believe it is the best choice, that's good enough.)

At least all of you who do your own research have the comfort of knowing that as you picked your own funds youll only have yourself to blame if things go pear shaped!