Cash-like fund for S&S ISA?

Wobblydeb

Hi all, I want to find the best way of leaving cash in a S&S ISA.

I am looking for something (a fund?) where the original capital cannot, or is exceedingly unlikely, to fall. It should be able to be sold easily with low transaction costs, so that I can move into equities when opportunities present themselves.

Basically, is there a better alternative to just leaving the cash earning diddly-squat?

I understand that any return would be low as it would be very low risk, but low is still better than diddly-squat

ses6jwg

Corporate bonds, gilts (standard and index-linked), absolute return and high income (dividends offset capital losses over time) have traditionally been the port of call but they are still risky.

Wobblydeb

ses6jwg wrote: »

Corporate bonds, gilts (standard and index-linked), absolute return and high income (dividends offset capital losses over time) have traditionally been the port of call but they are still risky.

Is the risk that of price falls?

I had been thinking about absolute return given the possibility of a double dip recession.

Is there anything where market sentiment doesn't have a massive impact on price? :huh:

tradetime

Wobblydeb wrote: »

Is the risk that of price falls?

Pretty much yes, the price will go up and down, and if it was up when you moved into cash and is down when you want to move into stocks for example, then you will lose.

.

Wobblydeb wrote: »

Is there anything where market sentiment doesn't have a massive impact on price? :huh:

Anything traded on a market will be subject to "market sentiment"

dunstonh

I had been thinking about absolute return given the possibility of a double dip recession.

Just as volatile and perhaps more so in many cases.

Is there anything where market sentiment doesn't have a massive impact on price? :huh:

anything that isnt an investment. Even some cash deposits are influenced somewhat by that. long term fixed rates are often priced on expectation.

Rollinghome

Wobblydeb wrote: »

Is the risk that of price falls?

I had been thinking about absolute return given the possibility of a double dip recession.

Is there anything where market sentiment doesn't have a massive impact on price? :huh:

If you consider an absolute return fund then look at it carefully. Some have given anything but an absolute return and have disappeared as did many hedge funds. Anything but very short term the problem is the huge costs as a result of the 15-20% performance fees demanded often for returning less than the rate of inflation. Another problem is that it's difficult to know quite what they're doing with your money and so to assess the risk.

You could also look at some cautious/balanced managed funds which are absolute return funds in all but name but usually without the performance fees. Again choose well because some "cautious managed" funds lost spectacularly large chunks of money in 2008.

Porcupine

If it's risk free it's not allowed in a S&S ISA. I vaguely remember something about an investment only be allowed if there's at least a 5% risk of losing money.

But that could be a 5% risk of £1000 becoming £999.99, so there's still some room for manoeurve.

jamesd

Porcupine, there must be a real possibility of a 5% or greater capital loss, so a potential for £1000 becoming £950 is the minimum requirement for stocks and shares ISA eligibility.

echelon101

You could try Absolute Return funds, non specific managed funds that try to make a profit what ever the situation.

RayWolfe

echelon101 wrote: »

funds that try to make a profit what ever the situation.

I suspect that is the aim of all funds. Do you know of any that try to make a loss in certain circumstances? If you feel a fee of 15-25% (on top of 2.5% regardless) is OK just to exceed money market is good, then Absolute Return is the one for you.
I give it 2 years before AR becomes the next mis-selling event.

Wobblydeb

Some interesting thoughts on absolute return funds. At present it seems that cash is the best version of cash! Although I guess I could always hold it outside of the ISA, ready to transfer in when I want to buy equities.

Just didn't want to be faffing around with tax returns....