ISA Investment Funds Advice Please

moneytroll

whiteflag wrote:

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!

Particularly in this instance, in regards to whom to trust your savings, it is best to do some research yourself in any case (in addition to having a good IFA). Though speaking from personal experience, I found that finding a decent IFA who's efficient and hard-working (and not only commission-obsessed) seems harder than finding a wife (and I am not even married)

moneytroll

In any case, to come back to the topic, in my opinion (this is a comment and not advice) I am not sure whether it's a good idea to have so many different funds (particularly if some are covering the same sector!) You only increase the chance of a manager screwing up on stock-picking etc within a fund. If a particular sector isn't doing well or is too volatile, then not even the best fund manager will be able to help.
So i thought a well diversified portfolio (with most of your investments UK-based) is probably best. But only time will tell.. (and not an IFA)

EdInvestor

I generally invest directly in shares...

And that's easier ?


Actually, in my experience, once you have determined your investment strategy, it is much easier

Particularly if you pick an easy strategy like high yield.

You don't have to worry about whether fund managers have moved jobs, or fund manager charges, or advisors' commision or what the fund is invested in today (compared with yesterday) or how to choose out of the 4000 (!) funds out there.

Once you've decided according to the criteria on the list, you just buy your shares and forget.

You don't even have to worry about things like ISAs if you're a basic rate taxpayer..

[OK, it's wise bear in mind that you have a capital gains tax allowance of 8,500 a year, so if you get near that, you might need to sell and rebuy a bit, but that's hardly a real problem....;) ]

moneytroll

EdInvestor wrote:

I generally invest directly in shares...

[OK, it's wise bear in mind that you have a capital gains tax allowance of 8,500 a year, so if you get near that, you might need to sell and rebuy a bit, but that's hardly a real problem....;) ]

I thought that's very important?! If you invest 7k each year, soon CGT becomes a very important issue!

Also it is extremely difficult for a novice to start with stock-picking rather than buying into a fund; the odds are, it will probably go wrong very badly (it's a full-time job and an extra worry, whereas paying a fund manager a relatively low commission takes a load off you). Whereas paying an IFA... I am not sure (no offence to anybody), unless the IFA can go beyond all that (and some of them probably can, but how do you spot one?)

dunstonh

I am not sure whether it's a good idea to have so many different funds (particularly if some are covering the same sector!) You only increase the chance of a manager screwing up on stock-picking etc within a fund. If a particular sector isn't doing well or is too volatile, then not even the best fund manager will be able to help.
So i thought a well diversified portfolio (with most of your investments UK-based) is probably best. But only time will tell.. (and not an IFA)

The other way of looking at that is if you invest in one fund and that is the one that gets "screwed up", then all your capital is at risk.

Also, just because a fund is in the same sector, doesn't mean it has the same investment objectives. One could be large cap, the other small cap or focus on income etc.

whereas paying a fund manager a relatively low commission takes a load off you). Whereas paying an IFA... I am not sure (no offence to anybody), unless the IFA can go beyond all that (and some of them probably can, but how do you spot one?)

Not sure what you mean by paying a fund manager a low commission. As for IFAs, the majority will do an above average job. Some will go further and like any occupation, you will get some that will do less. It isn't difficult to find the good ones.

cheerfulcat

dunstonh wrote:

As for IFAs, the majority will do an above average job.

Would you like to rethink that, dh?

moneytroll

dunstonh wrote:

As for IFAs, the majority will do an above average job.

I am not sure that's possible (mathematically).. But I see what you mean. Maybe it's just my personal experiences and pre-conceptions about IFAs (and of the people I know who used them. And, in fact, of some IFAs themselves, whom I know socially.)
Hopefully one day I will strike lucky. Though I feel going to an IFA is like going to a gp; you tell them you have a soar-throat and they tell you to drink water.. (common sense)

What criterias do you guys use to identify a suitable fund? This is what I don't understand; there are outside influences which makes it no easier for an IFA than for an individual to predict whether a certain fund will perform well or not. (Of course, statistical data will be used, but since it's always quoted that past performances don't guarantee future performances I don't see how this is useful).

As to charges, you mean it will be cheaper to use an IFA than, say, Hargreaves Lansdown?

moneytroll

Also, does anybody know where to get charts which show a fund's performance from more than 5 years ago? (not that it will help much, but there seems to be some kind of annoying limit in most sites I came across).
thanks in advance

dunstonh

Hopefully one day I will strike lucky. Though I feel going to an IFA is like going to a gp; you tell them you have a soar-throat and they tell you to drink water.. (common sense)

Actually that is a very good way of looking at it. Many IFAs are just like GPs. They are good for the every day things and will do a good job in that respect. However, if you want something a little better, you go to a specialist. A GP doesn't do brain surgery.

I don't do mortgage business by choice. I focus almost totally on investment/pension business. I have two IFAs that focus on mortgages, general and protection but I do all their investment class stuff. They do what they are good at and I do what I am good it. I know for a fact they are useless at investments but my mortgage side isnt up to much.

As to charges, you mean it will be cheaper to use an IFA than, say, Hargreaves Lansdown?

I did some research recently against Cavendish pricing and found that on like for like terms, in many areas, I could get a better deal on the product than Cavendish. That means there are at least 5000 more IFAs out there that can as well as that is how many are with the same network as me. Many of the other networks would get similar deals. If that improvement in product pricing or more often, the increase in commission is put back into the plan to enhance terms, then it is possible for a low cost IFA with an advice product to equal terms in some areas. It certainly will be with SIPPs from April.

An IFA is not one class of advisor. You could see a specialist in an area, you could see one that was a tied agent last month and has just got their IFA licence and is lost as to what to do. You could see one close to retirement who doesn't use computers (yes they exist!). Then you have advisors who only get 30% of the commission with the employer keeping the rest. You arent likely to get a good deal out of them compared to one getting 100% of the commission. You may have a new IFA who has no income stream or another IFA who has an income steam meaning they dont rely on initial commissions but focus on the 0.5% annual. You get salesforce IFAs with that salesforce mentality. Then you have local IFAs who rely on reputation and standing. You have owner/partner/director IFAs needing to keep the business clean and healthy and employed IFAs who switch employers every few years.

All very different business models, different attitudes, different skills, experience, situations. All calling themselves IFA.

Also, does anybody know where to get charts which show a fund's performance from more than 5 years ago? (not that it will help much, but there seems to be some kind of annoying limit in most sites I came across).

Does it matter? Most top performers of 5 years ago arent top performers today. The best you can do is get the sector allocation right and pick established fund houses that live off their reputation. Morningstar.co.uk is a good place for information. Probably better than trustnet. I have the £100pm version but I think the consumer version still gives a fair bit of info.

jmcm

I'm a beginner so no expert but I've done very well over two years with-

Safe-ish-

INVESCO PERPETUAL High Income (seems to be considered widely as a steady , safe bet)

More Risky but Flying-

JPM Natural Resources Fund (good as long as energy costs are high and the Far East grows)

First State Asia Pacific Leaders (basically non Japan, Far East so flavour of the month but needs watching in case China and India stumble!)

and more recently spotted this one-

INVESCO PERPETUAL Latin American Fd ( in many top tens for performance but not widely talked about in the everyday press)

I invest through the Fidelity Funds market which seems to give good deals on costs and transfers.

Good luck!