Virgin Shares ISA (FTSE Tracker) - right time to start one?

jem16

ClarkeyBoy1987 wrote: »

I think it says in the Virgin t's and c's that I am not allowed to subscribe to another ISA for a year. I will send Virgin a message to clarify this, or read up on the t's and c's myself.

You can only subscribe to one ISA at a time - i.e. pay funds into.

You can transfer as often as you like - it's not subscribing. Once transferred you can then pay into the new ISA.

However make sure you initiate a transfer with the new subscriber. You can't simply withdraw the money and pay into a new ISA.

ClarkeyBoy1987

So what happens if you have money in your old ISA? I mean (without having looked at my accounts for like a month) I am sure I had money in my old ISA with HSBC (paying me about 12p a year or something naff like that) but it hasn't been transferred to the new Tracker ISA. Only the £100 I said I wanted to put in has been transferred across.

jem16

ClarkeyBoy1987 wrote: »

So what happens if you have money in your old ISA? I mean (without having looked at my accounts for like a month) I am sure I had money in my old ISA with HSBC (paying me about 12p a year or something naff like that) but it hasn't been transferred to the new Tracker ISA. Only the £100 I said I wanted to put in has been transferred across.

Was the HSBC one a cash ISA? - sounds like it the way you talk about paying you about 12p a year. What tax year did you last pay money into it?

With ISAs you have a £10,200 allowance, up to £5100 of which can be held in a cash ISA. Whatever you put into a cash ISA you can then use the remaining allowance in a S&S ISA - this is what your Virgin ISA is.

So basically you can subscribe to 2 ISAs each tax year - one S&S and the other cash. Previous cash/S&S ISAs for different tax years don't matter either.

Plus of course you also have the option of cancelling it within 30 days and getting a better provider - remember you would only get back the current value so if it goes down you would get less back.

blinko

but realistically its only 1% more for amanaged fund but it could generate 2% more in return,

am i missing something here ?
eg antony bolton at fidelity

xrjtg

blinko wrote: »

am i missing something here ?

Not really. You just accept that they might not do enough to earn their fee (or might even underperform whatever index you're comparing against).

blinko

i guess if they beat the index by 1% and there charges are 1% more than a tracker its break even..

Rollinghome

blinko wrote: »

i guess if they beat the index by 1% and there charges are 1% more than a tracker its break even..

It is. But then they can't all beat the index, they can't all be better than average. The majority of shares are owned by institutions such as unit trust companies and pension funds. If one beats the index then another has to underperform to compensate. Because there are fees and commissions paid out the net result is that the majority of funds underperform the indices. Even tracker funds will underperform the indices by whatever the management charges are.

If you could know which funds would out perform over the next few years that would be fine but that's very, very difficult even though there are lots of advisers being paid generous commission to sell the funds who will try to convince you otherwise with convincing tales. That's why the unit trust companies pay them most commission to sell their most expensive funds but pay little or no commission for selling tracker funds. The fact is that due to costs and commissions, the majority of unit trusts sold underperform the indices and funds that have done well in the past will often go on to underperform in future years.

That's why there are thousands of unit trusts to choose from and more being introduced every year so that those that happen to do well can be heavily marketed or quietly disappeared when the trend changes. It's a very old numbers game.

And that's why the investment managers drive Mercs and their customers drive Fiestas.

dunstonh

blinko wrote: »

i guess if they beat the index by 1% and there charges are 1% more than a tracker its break even..

Remember that this is the Virgin Tracker and is not dissimilar in price to a managed fund. Given the choice of a Virgin tracker fund or a managed fund you would take the managed fund every time.

With the trackers you are aiming for benchmark performance at the lowest cost. With a managed fund, you aim for outperformance of the benchmark at a higher cost but accept it may not always do that.

Virgin's tracker suit neither option.

blinko

agreed dunstoth if its a virgin tracker thats quite expensive, im in a few funds and the most expensive ones are around 2% in expenses but i hope that will be offset by the gains, but even still if it goes up by net 4% i will stil be happy as the savings accounts are giving me 2% !!

but yeah everyone learns from scratch and mse is a great source of information, maybe in the future OP speak to dunstoh as he is a professional IFA or post on here and we can helpyou out

Rollinghome

dunstonh wrote: »

Remember that this is the Virgin Tracker and is not dissimilar in price to a managed fund. Given the choice of a Virgin tracker fund or a managed fund you would take the managed fund every time.

Depending of course which managed fund rather than "every time".

Even the overpriced Virgin UK Index Tracker managed to beat the majority of managed funds in the UK All Companies sector - coming in at position 100 out of 316 over 5 years.

An illustration of just how bad so many managed funds are.