CTF - please could somebody review my thinking

Reaper

Time to take out a CTF myself.

I had always thought I would do a non-stakeholder shares option but now the Children's Mutual has dropped out of the market I can't find any others I like. Some look cheap to start with until you see the RIY figures then they don't look so hot.

Then I thought for the easy life maybe a stakeholder would do. However all but one company seem to invest exclusively in the UK - too many eggs in one fragile basket for my liking the way things are.

The only exception I found was Family Investments as they use trackers covering many regions.

So the questions are:

1) Have I overlooked any non-stakeholders that let me invest cheaply in quality funds?
2) Have I overlooked any good stakeholders investing beyond the UK?

dunstonh

F&C had a CTF using their ITs. (how many initials in that little bit!). I dont know if they have pulled out yet but it may be worth a look.

Reaper

That was one of the ones I looked at but was rather put off by some high Bid/Offer spreads which on the worst of the funds available to the CTF was 13%! Also I saw a pre-crash article saying at the time of writing many of their funds were at the bottom of the league tables.

However my skim reading may have been unfair on them so tomorrow I will go back over it and work out which of their funds would be of the most interest to me, how they have performed and what all the charges are.

dunstonh

I don't know their pricing as I just recall reading an article saying they did them with ITs. However, that bid/offer seems very big. Maybe they dont want the business and price to put you off!

Reaper

Right I've done my research and below are what I think are the best options in each category. Add the usual disclaimers about these being my opinions not financial advice blady blah...


Stakeholder with UK only tracker
The Winner: F&C with their FTSE All Share Tracker (Web site, Key features PDF)
Why? Lower charges than everybody else. TER of 0.35% + 0.7% plan charge which is less than the 1.5% everybody else charges. The effect on a growth of 7% over 10 years would be to reduce it to 5.9%. I don't think you will find cheaper.

Stakeholder with worldwide trackers
The Winner: Family Investments
Why? Rather than just being a purely UK tracker they use worldwide trackers covering the UK, Europe, Asia Pacific, and USA.
Charges are the usual 1.5%

Non-stakeholder shares CTF:
The winner: F&C CTF Shares account, investing in the F&C Investment Trust. (Web site, Key features PDF)
The fund invests in UK & Global.
Various charges, but the effect they have on 7% growth is to reduce it to 6.3% on regular savings.
In total there are 13 different funds to choose from but some of the others are very expensive. e.g Managed Portfolio Trust's growth would see that 7% growth reduced to 3.8% by the charges!!
Note you can switch to their stakeholder version at any time - something to consider at age 13 if you want to make use of the "Lifestyling" that is always applied to stakeholder plans (a gradual shift over to safe investments).

Note investing with F&C outside a CTFs is even cheaper but that's no good if you have a government voucher to spend plus I believe CTFs can be converted to ISAs when they mature.

If anyone has other ideas about the best in each category or wants to add to it (eg an Ethical funds category) then post away.

funkyfin2000

Reaper - I am very interested in your options there.

Looking I think the F&C Stakeholder is still the best for cheapness and investment potential.

Could anyone explain what the benfits over worldwide tracker or uk tracker is (apart from the UK one being cheaper?)

Cheers

Rich

dunstonh

Could anyone explain what the benfits over worldwide tracker or uk tracker is (apart from the UK one being cheaper?)

higher risk, greater investment growth potential and further diversification.

funkyfin2000

Thanks dunston.
I was thinking lower risk as eggs not in one basket with just UK based.

anyone else have any suggestions on good performing stakeholder accounts? Looks like Reaper has picked out the best there from what I can see at present.

Just about to invest my childs £250 plus another £250.

Reaper

funkyfin2000 wrote: »

Could anyone explain what the benfits over worldwide tracker or uk tracker is (apart from the UK one being cheaper?)

Diversification, in a word. If you think the UK economy is in for a rocky time ahead you might not want a UK only tracker which follows our economic fortunes too closely. You might prefer your trackers to follow the progress of a spread of countries around the world.

If you think the UK ecomony will fare no worse than anybody else then the F&C UK tracker is the cheaper option.

funkyfin2000

Thanks all - Thanks duly given, very helpful and prompt response.

One other quick question but may do new post as well for this.

I will probably go for a stakeholder using the CTF voucher.....but since they get that 18 blah blah blah

I would also like to invest £15 a month or so in to an account for them at 21 as well.

Any recommendations what I should do for this smallish amount. I would like to keep control of this then up until then.

Thank you for all your help

Rich

Reaper

I set up a child investment outside the CTF too. The one I chose was through Baille Gifford which you can find me discussing in this thread.

The only problem is the minimum amount is £25pm or a £100 lump sum which may be too much for you.