Maxi Isa Query

helen_l_winter

In June 2005 my father set up a maxi ISA of £7000 with CIS in each of his kids names (three ISA's in total). The ISA'a are all stocks and shares - CIS CORPORATE BOND INCOME TRUST. He has subsequently read in the WHICH? magazine that the CIS Mini ISA's have consistently underperformed and are near the bottom of the performance league tables. So he now wants us to transfer our MAXIs to a better performer.

Before I start researching into better interest rates and transfer fees etc. etc. how reliable is WHICH? as a financial source of information and does anybody know how CIS Maxi ISA's are performing as opposed to the Cash ISA's.

I have rung CIS and spoken to them and they say their ISA's are performing well and sent me some pretty graphs showing how it is out performing others. I also know though that statistics can be manipulated to give a particular view. So how much stock should I put I this CIS info?

dunstonh

how reliable is WHICH? as a financial source of information and does anybody know how CIS Maxi ISA's are performing as opposed to the Cash ISA's.

Which is not a reliable source of financial information. Remember that 10 years ago, Which were recommending endowments as best buys. Their analysis of funds tends to be based purely on past performance. Volatility and risk within sectors doesnt seem to come into it with them.

That said, banks and insurances companies (particulary tied companies) tend to have poor performing funds generally (some exceptions). The CIS are not known for their quality.

You cannot compare CASH ISAs with Equity ISAs. They are two different things.

I have rung CIS and spoken to them and they say their ISA's are performing well and sent me some pretty graphs showing how it is out performing others. I also know though that statistics can be manipulated to give a particular view. So how much stock should I put I this CIS info?

None at all. All they have to do is find a brand name provider doing worse than them and they suddenly look good. What funds does your father have?

Transferring ISAs usually involves no cost from the provider you are leaving unless the specifically have an exit charge. This can be confirmed by them.

Debt_Free_Chick

helen_l_winter wrote:

The ISA'a are all stocks and shares - CIS CORPORATE BOND INCOME TRUST.

The Corporate Bond Income Unit Trust does NOT invest in stocks & shares. It invests in company debt. When a company wants to borrow it raises money by selling bonds. A bond is simply a loan agreement - in return for lending the money, the investor gets paid interest on the loan. So, CIS have bought a number of these bonds and the loan interest gets added to the unit trust, in the ISA. Further details here

He has subsequently read in the WHICH? magazine that the CIS Mini ISA's have consistently underperformed and are near the bottom of the performance league tables. So he now wants us to transfer our MAXIs to a better performer.

It think you need to clear which particular funds Which refer to. From your post, it could be the Mini Cash ISA that's underperformed. Remember, that the ISA is just the tax wrapper - you need to look at the actual investments inside the ISA and then look at the performance of those.

Neither Trustnet nor S&P have details on the performance of this fund, but the FT does. On this page click on the Performance tab and then towards the bottom of the page where it says "compare with" select "sector" UK Corporate Bond (IMA) and then "timeframe" 3 years. This compares the performance of the CIS fund with the average of all other similar bond funds in the UK.

It's actually done fairly well. In 2004 it produced a return of 7.19, whereas the average UK bond fund produced 5.67% and in 2005 the CIS return was 7.44%, with the average 7.06%.

I have rung CIS and spoken to them and they say their ISA's are performing well and sent me some pretty graphs showing how it is out performing others. I also know though that statistics can be manipulated to give a particular view. So how much stock should I put I this CIS info?

Presumably, these graphs backup what the FT research shows. The performance figures should be pretty similar.

Your remaining issue is to decide whether you want to invest in a bond fund, or an equity fund.

HTH

helen_l_winter

dunstonh wrote:

What funds does your father have?

Nobody seems to know. I have been through all the blurb that was sent with the information packs, ISA contract etc and the only mention of a fund by name is the CIS UK FTSE4Good Tracker Trust (no initial charge for buying units).

I have rung them to try to find out but the eight year old on the other end of the line had a scratch in her record and kept repeating I'm sorry int doesn't say on the computor screen. Someone is supposed to be ringing me back - still waiting. Will attempt to ring them again later today.

Debt-Free-Chick said that it was a Corporate Bond and not Stocks and Shares even though it clearly is stated as Stocks and Shares - Corporate Bond on their confirmation letter. So if a corporate bond isn't stocks and shares and ISA transfers have to be like for like, can I only move it to another corporate bond????

cheerfulcat

Hi, helen,

There's a bit of confusion here. A "stocks and shares" or "maxi" ISA can be invested in equity ( shares ) or debt ( bonds ). ISA transfers may be made between the two; it's cash and S&S ISAs that have to be kept separate.

HTH

Cheerfulcat

helen_l_winter

Thankyou CheerfulCat

If that is the case then I am seriously considering transferring it. :rolleyes:

Debt_Free_Chick

helen_l_winter wrote:

Debt-Free-Chick said that it was a Corporate Bond and not Stocks and Shares even though it clearly is stated as Stocks and Shares - Corporate Bond on their confirmation letter.

Their letter doesn't make sense. Unless the investments in the ISA are split, between stocks & shares (FTSE tracker) and a corporate bond fund.

cheerfulcat

Their letter doesn't make sense. Unless the investments in the ISA are split, between stocks & shares (FTSE tracker) and a corporate bond fund.

Seems pretty clear to me; it's a unit trust invested in corporate bonds, held within a " stocks and shares " ISA.

Debt_Free_Chick

cheerfulcat wrote:

Seems pretty clear to me; it's a unit trust invested in corporate bonds, held within a " stocks and shares " ISA.

Of course! Sorry, I was being incredibly thick there

I just hope the OP understands that her father's stocks & shares ISA is not in a fund that invests in stocks & shares!

You're spot on and thanks for the clarification :beer:

Sometimes, yer just can't see th' wood fer th' trees!