Stocks and Shares ISA - Which funds?

mramra

I have setup a Stocks and Shares ISA with Hargreaves Lansdowne, and want to set up regular payments of £300 per month. I am investing for the long term (10 years plus).

The list of available funds is bewildering, and I'm not sure which ones to go for. I would say my attitude to risk is adventurous.

I would be most grateful for any recommendations or pointers.

Thanks in advance, mramra.

Lokolo

Try using some fund filter type things:

http://www.iii.co.uk/funds/fundfilter/?task=show_fund_filter
http://www.morningstar.co.uk/uk/fundscreener/default.aspx?lang=en-GB

lisyloo

I'll try and remember to come back tonight and list up recent recommendations from my advisor for "adventurous" portfolio, 10 years+.
It's through novia and not H&L but probably same funds are available.

Obviously if you pick up recommendations from here rather than from an advisor then you have no comeback, but happy to help.

dunstonh

I would say my attitude to risk is adventurous.

What is that in context? i.e. how much will you let the investment lose in value in percentage terms before you get cold feet?

mramra

dunstonh wrote: »

What is that in context? i.e. how much will you let the investment lose in value in percentage terms before you get cold feet?

That's a difficult question to answer. If an investment dropped significantly you could feel that you need to hold on until it recovers.

I currently have some money in the Invesco Perpetual High Income Fund. That investment dropped in value by 20% in 12 months but has now recovered by 10%. I didn't consider pulling out at any time as I was aware that the main reason was a wider downturn, not due to the fund itself.

To try to answer your question, if I invested in a fund which dropped 50% in relation to the FTSE100 (i.e. due to performance of the fund itself, not external factors) I would be getting worried.

dunstonh

OK, in which case you want to be avoiding funds of a medium/high risk (or higher) nature unless you factor in some downside protection by using lower risk funds to offset that higher risk. Adventurous funds have the potential to lose more than 50% in a 12 month period. Indeed, many did in the last year.

Also, you will have to monitor if you time is just 10 years. Not so much in the early years but you are going to have to be mindful that contributions from year 5 onwards have less than 5 years to be invested and there is the probability of you suffering another major market crash in there in 5-7 years (they can come whenever but on average its every 7 years. 8 financial crisis have occurred since 1956). If you get one near the beginning its good news. If you get one near the end or even anything after year 5, then it could be a disaster.

sibot74

dunstonh wrote: »

OK, in which case you want to be avoiding funds of a medium/high risk (or higher) nature unless you factor in some downside protection by using lower risk funds to offset that higher risk. Adventurous funds have the potential to lose more than 50% in a 12 month period. Indeed, many did in the last year.

Is this still valid if you consider that the OP was concerned with a 50% drop over and above any drop in a benchmark? I.E. he would be worried about a fund seriously underperforming the market, and not necessarily about the market as a whole taking a drop?

lisyloo

This is what we are doing but we are paying for on-going advice to actively manage this.
This is long term and adventurous.
Do your own research.

Aberdeen UTM Lrd Emerging Market A - 5%
Aegon Scottish Equitable plc High Yield Bond pn - 3.5%
Black Rock UK abs Alpha P Acc Acc - 6%
cash - 2%
Fidelity Moneybuilder income (gross) - 3.5%
Invesco Perpetual Corporate Bond Acc - 3.5%
Invesco Perpetual High Income Acc - 6.5%
Jupitert Unit Trust Managers Global Managed Inc - 5%
L&G Diversified Absolute Return R Acc - 6%
L&G International Index - 24%
L&G UK Index Ret Acc - 13%
L&G US Index Acc - 6%
M&G Recoery A Acc GBP - 6.5%
Octopus Asset Management CF Partner Abs Rtn B Acc - 6%
Old Mutual Corporate Bond A Acc - 3.5%

dunstonh

sibot74 wrote: »

Is this still valid if you consider that the OP was concerned with a 50% drop over and above any drop in a benchmark? I.E. he would be worried about a fund seriously underperforming the market, and not necessarily about the market as a whole taking a drop?

I know it reads like that in the post but I took it to mean that a 50% drop would cause concerns. For example, the FTSE100 dropped about 50% recently. To then have another 50% as margin to underperform that is rather a lot. You stop being adventurous with a tolerance like that and become speculative.

Can you clarify that mramra? Lets say your value was £20,000. How much would it have to fall in value before you got cold feet?

mramra

For clarification, I did mean a drop of 50% relative to FTSE100 i.e. assuming a stable benchmark.

If I had £20,000 invested in say 10 funds (£2,000 per fund). If an individual fund dropped to £1,000 (with a stable FTSE100) I would get cold feet.

Hope that makes sense. Although I am open to riskier funds, I would probably like some medium risk funds in the mix as well. The ten year timescale is a minmum, I don't anticipate needing the money for at least 15 years. With £300 per month to invest I will probably start with a choice of 6 funds at £50 per month each.

Thanks for all comments so far, much appreciated. :T

lisyloo

What about getting some professional advice?
We are paying 0.5% per annum to have our portfolio actively managed.
If someone else can do a better job than us then it's money well spent IMO.