Isa -Shares

Colincbayley

I am looking at investing in share ISA's. I would like to invest the max. allowed this year and next for myself and my wife.

Having had a look at the HL website, there seem to be over 2000+ different ISA's available.

How do I choose between which sectors to invest in and also between fund managers?
My thoughts are to choose 4 funds between us, problem is which ones!

Any recommendations?
:beer:

jimjames

Lots of questions before anyone would be able to suggest anything meaningful but ultimately the choice is yours - as you can see HL offer a huge range of funds in their ISA - bear in mind it is the fund within the ISA wrapper that you are buying, the fund itself isn't an ISA.

Have you got other investments already?
What is your attitude to risk?
What time period do you want to invest for?

Depending on these answers different funds within the ISA may be suitable. I started out my ISA with index tracking funds to build up a core portfolio. HSBC offer some of the best value ones with very low charges in the HL ISA wrapper. If you are looking for a geographical spread they have index trackers for most market areas but remember even in the UK market 65% of companies derive their income from overseas.

Colincbayley

jimjames wrote: »

Lots of questions before anyone would be able to suggest anything meaningful but ultimately the choice is yours - as you can see HL offer a huge range of funds in their ISA - bear in mind it is the fund within the ISA wrapper that you are buying, the fund itself isn't an ISA.

Have you got other investments already? ( Yes, cash reserves, and a large property portfolio. Pension pot is fully funded )
What is your attitude to risk? ( Med - Edging towards high )
What time period do you want to invest for? ( Min 5 years, more than likely 20yrs plus )

Depending on these answers different funds within the ISA may be suitable. I started out my ISA with index tracking funds to build up a core portfolio. HSBC offer some of the best value ones with very low charges in the HL ISA wrapper. If you are looking for a geographical spread they have index trackers for most market areas but remember even in the UK market 65% of companies derive their income from overseas.

Thanks for your input.
I don't really know where I want to invest or what in. I think I am just trying to diversify away from property and cash in order to spread my risk, and with any luck make a decent return over the long term.

pqrdef

Look for funds that are defined by their objectives, where the manager has freedom to operate in pursuit of that objective and isn't restricted as to what he can buy. If you buy a UK equity fund and UK equities take a dive, that's your fault not the manager's, he's stuck with holding UK equities whether he likes it or not.

Some managers have more freedom than others. Some only hold shares. Others can hold bonds or cash. Some invest in other funds, so they take on the problem of allocating money between sectors and asset classes rather than picking shares. The racier funds will go short and buy derivatives, though they don't seem to have done wondefully well at it.

Colincbayley

pqrdef wrote: »

Look for funds that are defined by their objectives, where the manager has freedom to operate in pursuit of that objective and isn't restricted as to what he can buy. If you buy a UK equity fund and UK equities take a dive, that's your fault not the manager's, he's stuck with holding UK equities whether he likes it or not.

Some managers have more freedom than others. Some only hold shares. Others can hold bonds or cash. Some invest in other funds, so they take on the problem of allocating money between sectors and asset classes rather than picking shares. The racier funds will go short and buy derivatives, though they don't seem to have done wondefully well at it.

Thanks.

However, that is the problem, with well over 2000+ plus funds, how do you know which one's are the better bet, without reading all of the info that comes with each and every fund?

Don't get me wrong, I'mnot be lazy, I just need somewhere to start.
Who are the good fund mangers?

RobertR

Trustnet is a good place to start.

http://www.trustnet.com/

An account with H-L also allows you to set up a virtual portfolio which you can monitor before actualy investing any money.

pqrdef

Colincbayley wrote: »

Who are the good fund mangers?

For next year? We don't know yet. Every dog has its day. A fund manager will have a good run when his personal style is a good match for current market conditions. But the careers of fund managers, like those of politicians, usually end in failure.

Read around and hope that something clicks, speaks your language, makes you want to buy it (but don't get too attached to it). But beware propaganda and casual journalism. For reading matter try the BestInvest site.

And watch the charges, because there's no known correlation between charges and performance, beyond the fact that the charges eat away at your money.

jimjames

Colincbayley wrote: »

Don't get me wrong, I'mnot be lazy, I just need somewhere to start.
Who are the good fund mangers?

Thats one reason why trackers are so popular. You are not reliant on star fund manager to get performance, the majority of managers do not outperform the index over the long term. Index trackers are also much cheaper than managed funds - lowest approx 0.27% annual charge compared to around 1.7% in a managed fund. It might not seem like much but compounded over the long term it really makes a difference.

I use HSBC FTSE All share and HSBC FTSE 250 trackers for the UK market, the FTSE250 gives exposure to medium size companies that have more growth potential and the All Share to the wider market (FTSE100 is very similar) You could then top this up with some exposure to emerging markets if you are happy with the risk. A fund like Aberdeen Emerging Markets is well regarded.

dunstonh

However, that is the problem, with well over 2000+ plus funds, how do you know which one's are the better bet, without reading all of the info that comes with each and every fund?

You decide what risk profile and investment strategy you wish to use and select the funds to meet that strategy based on research or strategy. Or accept that fact that if you dont want advice and dont want to be an active or knowledgeable investor that you pick a portfolio fund that controls the investments within it for you.

Common mistakes by newbie investors are to invest above their risk profile and to "fashion invest". i.e. picking investments/products which are fashionable but quite possibly late in their cycle. They end up with a higher risk unbalanced portfolio which could be prone to up to 90% losses.

jimjames

Something I read from some research by Vanguard that may be of interest
http://www.fool.co.uk/news/investing/investing-strategy/2010/11/12/a-chilling-lesson-from-dead-investment-funds.aspx

it turns out that over five years, only about 25% of actively-managed UK equity funds investing in large companies did better than the FTSE 350. And put another way, it's even more stark a conclusion. Three quarters of them didn't outperform the FTSE 350

In fact, a top‑performing fund over the five-year period to the end of 2004 was almost as likely to end up in the bottom 20% per cent band over next five years as it was to staying in the top band.

Colincbayley

jimjames wrote: »

Something I read from some research by Vanguard that may be of interest
http://www.fool.co.uk/news/investing/investing-strategy/2010/11/12/a-chilling-lesson-from-dead-investment-funds.aspx

it turns out that over five years, only about 25% of actively-managed UK equity funds investing in large companies did better than the FTSE 350. And put another way, it's even more stark a conclusion. Three quarters of them didn't outperform the FTSE 350

In fact, a top‑performing fund over the five-year period to the end of 2004 was almost as likely to end up in the bottom 20% per cent band over next five years as it was to staying in the top band.

Thanks for that. Very interesting reading.:T