ISA Investment Funds Advice Please

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Originally Posted by dunstonh
As for IFAs, the majority will do an above average job.


QUOTE=cheerfulcat]Would you like to rethink that, dh? [/QUOTE]

Are you suggesting he amends majority or above or average
or all three

moneytroll

jmcm wrote:

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

could i comment that if you buy funds from fidelity directly, it usually costs more than if you did it through a broker, like Hargreaves, or an IFA, as it now turns out (according to dh)
I looked into some Invesco funds and they are just too huge (usually over 1 billion. i think i read somewhere that statistically a smaller fund is more flexible and will perform better, but don't take my word for it).
With more adventurous funds, you have to be careful and take a longterm view as they are very volatile (if in different countries then they are influenced by political changes, massive currency fluctuations which could erase your profits etc, but you probably know that all already).
If you invest into something like Aberdeen Emerging Markets, it should already cover those sectors and has the flexibility to switch to another if things start going wrong (from what I gathered).
Good luck to you too!

dunstonh

could i comment that if you buy funds from fidelity directly, it usually costs more than if you did it through a broker, like Hargreaves, or an IFA, as it now turns out (according to dh)

Doing it with Fidelity directly is no different than doing it through an IFA that takes no initial commission. In this case, Fidelity are keeping the 0.5% annual trail commision to themselves.

Some portals use Fidelity as a white label. For example, Smile use Fidelity but charge more than many IFAs yet provide no advice at all. Yet they market it as a low cost option!

EdInvestor

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.....

It may be possible - but how many IFAs will actually do this? And how can a normal member of the investing public monitor what the advisor does, to see he is paying the lowest charges possible? The answer is he can't without going to a discount IFA and comparing deals.

So why not go to the discount IFA directly in the first place? After all it's publicly part of their business model to save you money.

dunstonh

It may be possible - but how many IFAs will actually do this? And how can a normal member of the investing public monitor what the advisor does, to see he is paying the lowest charges possible? The answer is he can't without going to a discount IFA and comparing deals.

It's hard to say how many and impossible to find out. Personally, over half my ISAs for the ISA season will be done on no initial commission and the rest will have no more than 1% initial.

So why not go to the discount IFA directly in the first place? After all it's publicly part of their business model to save you money.

You don't get advice. You don't get consumer protection if wrong product/funds/ provider selected. If you dont need any of that, then fair enough. However, it is only fair to point out that companies like Cavendish can be beaten by some advice IFAs if the IFA in question wants to.

moneytroll

dunstonh wrote:

You don't get advice. You don't get consumer protection if wrong product/funds/ provider selected. If you dont need any of that, then fair enough. However, it is only fair to point out that companies like Cavendish can be beaten by some advice IFAs if the IFA in question wants to.

How does 'consumer protection' work in this instance? In practice, if a selected fund performed well for the last past few years and then suddenly went downhill (ie because the fund manager became incompetent), would you then be able to get a refund? - Surely, there's no way to prove that you were ill-advices as a consumer.
Btw, are 'good IFAs' actually personally in touch with fundmanagers to monitor the situation? Or is it a more like a buy-and-forget approach?

el-dog

As a newcomer to this site I am gobsmacked at the amount and quality of discussion in the thread - thanks to all.

However, as a slight aside, being a relatively inexperienced investor (actually delete relatively!), I'm curious why no-one has suggested Fund of Funds to provide some diversification and take away some of the risk. Looking at a couple of the reputable houses (ie H&L) the fees look remarkably attractive - is there a catch??

El-Dog

dunstonh

How does 'consumer protection' work in this instance? In practice, if a selected fund performed well for the last past few years and then suddenly went downhill (ie because the fund manager became incompetent), would you then be able to get a refund?

If the IFA hasn't verified that the funds recommended match your attitude to risk and has sufficiently recorded how they obtained your attitude to risk then yes, the IFA is potentially liable.

Btw, are 'good IFAs' actually personally in touch with fundmanagers to monitor the situation? Or is it a more like a buy-and-forget approach?

You get seminars and meetings with fund managers or someone on the fund management team. However, third party independent research tends to be a better source. Fund managers want to promote the good things about their fund so you have to take the information with that in mind.

If you have an IFA doing portfolio management, its not buy and forget. The "new model" basis works on portfolio management. The "old model" tends to be a bit more do and forget.

moneytroll

el-dog wrote:

However, as a slight aside, being a relatively inexperienced investor (actually delete relatively!), I'm curious why no-one has suggested Fund of Funds to provide some diversification and take away some of the risk. Looking at a couple of the reputable houses (ie H&L) the fees look remarkably attractive - is there a catch??
El-Dog

Someone from a wealth-management company explained to me once that while funds-of-funds are currently in fashion, they are not as efficient as it might seem. If you look at statistics, most funds will underperform a given sector's benchmark. So investing into a fund-of-funds is basically investing into an index tracker, but with slightly higher charges. As the charges are even lower for an index tracker (Motley Fool site will tell you all about them) you'll do better in the long-run with the tracker (due to lower charges).
But I personally don't like them; they are good as long as the economy is doing well. Once it doesn't, they will do much worse than a 'well-chosen' fund which should have the capability to do better than a tracker.
Now, the insanity begins when it comes to choosing a fund and trying to get the 'right' balance... :eek:

If one has a sum of more than 250k to invest, people tend to look into hedge funds.

el-dog

If one has a sum of more than 250k to invest, people tend to look into hedge funds.

If only!

El-Dog