CTF discussion area

tyllwyd

My daughter has a stakeholder CTF with The Children's Mutual, and my understanding is that the money is in the Insight Foundation Growth Fund, which tracks the FTSE. Obviously, that means that in the last year things haven't gone so well.

I'm not 100% sure that this is the right fund, but have a look at this graph.
http://www.citywire.co.uk/adviser/fund-performance/fund-factsheet.aspx?FundID=10080
- it shows the problem with a fund that tracks the FTSE at the moment.


My daughter is OK because her money went into it in 2003, so she had a few years of pretty impressive growth before the recent troubles.

If you want to compare stakeholders, you need to find what fund the money is invested in, and go to somewhere like CityWire to find out how those funds are doing. I'm not a financial adviser, but I'm sure that anyone will tell you that the situation is pretty challenging at the moment, so the challenge in the short term is more about not losing money rather than making loads and loads.

If you want to stay with The Children's Mutual, you could look at the Baby Bond, not just the stakeholder, because then you do have a choice of a few different funds. Or you could find a cash child trust fund, where the potential for growth isn't as good, but it is more steady. Or you could try to wait it out and see if things turn around.

I've tried before now to find something like a comparison table for CTFs and not found anything much. I think especially since some invest in the stockmarket and some are cash, they aren't easy to compare directly. (And maybe the companies don't make much income from them, so the financial press isn't that interested.) I think when you said you needed to visit different providers individually and see what they offer, you probably aren't too far wrong.

Star

Confused by all the choice and the fact that there does not seem to be any way to compare how well the funds have been performing.

Does anybody have any experiance with Engage Mutual Assurance? As I see they are offering £50 cashback via Quidco and £25 boots vouchers with a DD set up.

tyllwyd

I've not had any experience with engage mutual assurance, but from what I can see their stakeholder tracks the FTSE 100.
http://www.engagemutual.com/ctf-new/Child-Trust-Fund-Investment.aspx

I couldn't find a graph for the fund, but in the short term I expect there would be the same type of issues as for the fund that The Children's Mutual offers - so it depends if you are happy with a stockmarket investment, and if you are happy with a fund that tracks the FTSE.

http://www.citywire.co.uk/Adviser/fund-performance/fund-factsheet.aspx?FundID=7191&NodeCode=Funds

I found an article from last year that mentions the engage mutual insurance fund (have a look in the table, several of the building societies seem to have used it). Obviously the growth figures this year will be a lot less impressive than those for last year.

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=416443&in_page_id=7


*All of this comes with a huge disclaimer saying I'm not a financial adviser!

baby_boomer

tyllwyd wrote: »

I've not had any experience with engage mutual assurance, but from what I can see their stakeholder tracks the FTSE 100.

Like loads of other stakeholders with 1.5% charges.

Unfortunately the charges are 1% higher than other tracker funds you could buy

So why not invest the CTF money in cash (the rates are still higher than ordinary children's accounts) and put other money into the stock market at better value rates?

MummyHol

My understanding of the CTF is really basic:

SHARES ACCOUNT = high risk, largest possible growth
STAKEHOLDER ACCOUNT = mid risk, possible growth
SAVINGS ACCOUNT = low risk, only interest

thats pretty much my whole knowledge :S

Does anyone know if the present economy problems and probable credit crunch could have an effect on any of these options (sorry of someones already asked these questions, i didn't have time to read the whole thread because my baby is teething )

EDIT: i've just had a look at the Barclays CTF account, which is a stakeholder account. It says ''to help lessen the risk, the Barclays account provides a unit price which is guaranteed not to fall below 80% of the highest level it ever reaches''. Does anyone know if this offer is good, or if anywhere offers a better protection??

wriggly

MummyHol wrote: »

My understanding of the CTF is really basic:

SHARES ACCOUNT = high risk, largest possible growth
STAKEHOLDER ACCOUNT = mid risk, possible growth
SAVINGS ACCOUNT = low risk, only interest

Shares and Stakeholder accounts have about the same risk and about the same potential for growth. Stakeholder accounts are generally simpler than Shares accounts. However, Shares accounts provide access to more varied investments. Savings CTFs are low risk in that you are very likely to get more than £250 back, but in inflation-adjusted terms, the cash you get back might be worth the equivalent of £250 today.

I'm looking at investing a CTF voucher now, and really can't see why anyone would consider options other than:
1) a high-interest cash CTF
2) the Abbey Stakeholder CTF - more diversified, hence lower risk than other Stakeholders
3) the F&C Shares CTF - can be cheaper than a Stakeholder

I hadn't seen the Barclays 80% guarantee - that may be reassuring for some, but over 18 years, a drop in equities of more than 20% would be considered a very unlikely scenario.

If the credit crunch leads to shares falling significantly, a good idea might be to invest in a cash CTF now, and transfer to shares later. But that sentence starts with a big "IF".

meester

wriggly wrote: »

Shares and Stakeholder accounts have about the same risk and about the same potential for growth. Stakeholder accounts are generally simpler than Shares accounts. However, Shares accounts provide access to more varied investments. ".

The stakeholder accounts are supposed to have a guarantee on charging. That is the difference compared to a share account. Unfortunately the charge level set is not exactly challenging, and many of the share accounts are cheaper, more flexible, etc.

wriggly

The stakeholder accounts also have lifestyling, where the investment is gradually turned into cash towards the latter part of the 18 year term. If someone is at all nervous about their ability to invest in shares, but believe they are a better investment than cash over 18 years, the Stakeholder CTF is the one to go for. But people need to stay calm when the value goes down or barely moves and remember it's a long term investment.

I do think the providers could lower their charges for Stakeholders CTFs that are just FTSE trackers - hey guys, 1.5% is the maximum charge, not the required charge!

And to my previous post, I could add
4) if you're planning to add lots of your own dosh to the account, some of the self-select brokers shares accounts.

pinkparrott

Hi, sorry but this my be a really stupid question, but we have a F & C shares CTF for our 2 year old son, we only put in the £250 voucher and another £100 but with the stock market being at a low at the moment , would this be a good time to put some more money in. I though that say £100 invested now would buy more shares than when the market is better so this would be a good time to invest?

or have i got it the complete wrong way around? sorry but i dont have a very good understanding of the stock market!

baby_boomer

It well might be.

On the other hand the effects of the credit crunch may have a secondary impact on company profits which has not been factored into prices.

No-one knows. But regular saving into the stock market - is a good way to reduce risks. And so your thinking is quite sensible. My best stock market investments have been made when "woe is me" was the mood of the day.

If you intend to continue making contributions then I'd be tempted to go for it. If this was a final contribution as money was tight then I'd be more wary.