Advice needed on fund supermarkets for S+S ISAs

Eponym

Hi all

First time poster, long-time reader.

First, a little background:

I am 24, living at home and employed on a relatively low wage (just over £16,500 before tax).

I am saving for a houe deposit, for which I am using cash ISAs. These are maxed out until the next tax year.

I also have two S+S ISAs. These are for the long-term, probably till retirement unless I need them beforehand, but I don't anticipate needing to. These started with small lump sums of £500 each.

They are:

2009/10 tax year: Jupiter China accumulation
2010/11 tax year: Fidelity MoneyBuilder UK Index Fund

Both of these are held with the company concerned, not with a fund supermarket. I know that's foolish, but I know better now!

I want to open another S+S ISA for the upcoming tax year. It will probably be another emerging markets fund, as I have time for it to even out any volatility.

I'm currently thinking either the Jupiter or Fidelity India funds or a general emerging markets fund, probably Aberdeen Emerging Markets or First State Emerging Market Leaders. Thoughts on those options are welcome!

My main question, though, is to do with fund supermarkets. Obviously I want to reduce the amount of charges I pay so I don't want to open my new ISA directly with the fund manager this time. From what I have read, Hargreaves Lansdown is probably the best bet. I can't afford their minimum lump sum payments but I want to do it by monthly investment this time anyway.

So here are my questions:

• Based on the above information, would Hargreaves Lansdown be the best bet for me? What about transferring my Jupiter fund to Fidelity's FundsNetwork and opening my new ISA with them as well?
• If I opened one of HL's Vantage ISAs and paid monthly, do I have to keep paying in the minimum (£50 a month) until I close the ISA? What happens if I can't afford it any more? After all, most of my money is staying in cash for a house deposit. Is there a minimum term? I can't find any information on this.
• Should I also transfer my Fidelity and Jupiter ISAs to HL? If I did that, would they and whatever I choose after 6th April and in future tax years all be in the same ISA, so I could pay into any of them in one year?

I think that's it. Hopefully it all makes sense and huge thanks in advance for any opinions.

If you need more info please let me know.

jimjames

You can easily transfer old ISAs to HL without problems.

You are not obliged to pay by DD each month and can stop if you want.

With HL all your ISAs become one and there is no distinction between different years money. Obviously you can still only pay in the maximum of £10200 this year but it sounds like that won't be an issue for you.

I would caution that 50/50 split of UK vs emerging market is a pretty high risk portfolio even over the timescale given, even more so if more funds are added to the high risk elements.

Jake'sGran

I am impressed with what you have done so far. You will need to ask HL about the monthly payments. I have only ever paid lump sums.

I have the First State Asian Pacific Leaders fund and if you go for something like this there will be no initial charge via HL. I believe there is another company which also discount all the initial charge but I can't remember the name. Maybe someone else will come along and say who it is.

The only advantage I can see to transfer the other funds to HL at this stage is that you will get a small amount of the annual commission from the fund managers. If you would like to see how these funds are doing compared to others in the same sector you can check on Trustnet or someone similar.
I have just been checking a couple I fancy.

psychic_teabag

Jake'sGran wrote: »

I believe there is another company which also discount all the initial charge but I can't remember the name. Maybe someone else will come along and say who it is.

There's a table here listing various brokers and the discounts they offer :
http://www.candidmoney.com/actionplans/actionplan3.aspx

Eponym

Thank you for your thoughts.

jimjames: thank you for your post. It's enormously helpful. Re. "I would caution that 50/50 split of UK vs emerging market is a pretty high risk portfolio even over the timescale given, even more so if more funds are added to the high risk elements."

Very true. I am comfortable with this for now as a) these are small amounts of money to which I will not need access (barring a catastrophe) and which I can afford to lose, and b) I plan to diversify more over the next few years, but I am trying to get the high risk/high growth funds as early as possible to give them more time to even out. I will definitely get some lower risk funds and in other sectors over the next few years.

psychic teabag: I looked at the Candid Money link, thank you. It seems from that that Clubfinance would be a good option (highest initial charge rebate) but I haven't heard anyone recommending them, while HL are very widely used. Does anyone use Clubfinance?

Any further thoughts would be welcome!

Does anyone have any comments on which funds to invest in next year? I like the sound of an India specific-fund (there's little point me getting a BRIC as I have a China-specific fund already) but I don't know if I'd be better off getting a general emerging markets fund, even though I already have China exposure.

Thrugelmir

Always worth have some general funds as a core base of a portfolio. Let the fund managers decide which areas and companies to invest in (i.e. geographically etc ).

Eponym

Thank you. Does anyone have any further thoughts?

sympatex

I've opened my first S&S ISA with Natwest Brokerline, they have quite a high charge initially per trade £25 compared to 10-15 for the recommended ones on this site. I found that keeping all my banking together more convenient and i wouldn't be making many trades a year, maybe 4.

Hopefully my 5,100 will grow by 5% which would be more than i'd get in a cash ISA even after trade costs.

However like you, i just need to find the funds to invest in, thinking of a split 25% UK, 25% far east, 25% emerging 25% gilts/bonds.

This probably equates as quite high risk so the more adventurous ones i might go tracker.

Eponym

Hi again folks

Sorry to resurrect my old thread but as discussed in the OP I have now moved my ISAs to HL. I have had it moved as cash because I wanted to change the Jupiter fund and I know the HSBC FTSE trackers are cheaper than the Fidelity trackers, so I intended to open one of those instead.

I will replace the Jupiter China fund with an emerging markets, probably Aberdeen Emerging Markets.

I thought about changing the tracker to something a bit more adventurous with higher potential for growth and it occured to me that I could get Invesco Perpetual High Income (accumulation units) instead. (I realise managed funds are completely different to trackers, but what I'm after here is solid long-term growth - I'm not wedded to the idea of having a tracker).

However, the Invesco Perpetual invests somewhere around 13% into tobacco companies, and I'm a bit dubious about that for ethical reasons. I have no real objection to doing it through a tracker, but there's a difference (probably only in my mind) between investing in companies like that through a tracker, which has to buy everything on the index, and through a fund which chooses it's investments.

(By the way, I am making no judgements on other people's investment decisions!)

I am not completely against the IP fund but would like to explore alternatives.

As stated further upthread, I'm looking for long-term growth and don't mind something a bit risky as it's such a long horizon and I will be adding more defensive investments further down the line. That said, if possible I would prefer something a bit more stable than the Aberdeen fund is likely to be.

I hope that all makes sense!

I may go with the HSBC All Share tracker as originally planned or something like M&G Recovery, but I'd appreciate any suggestions for other options! I am at work at the moment and the internet filter blocks lots of financial websites (fortunately not this one) and I've looked on Trustnet and Morningstar but unless I'm being dense - which I probably am, I'm not as investment savvy as a lot you - I can't find a list of growth funds to allow me to compare them.

Does anyone have any thoughts?

Jegersmart

Well done - you seem to be making some sensible decisions for yourself and your circumstances. Your choices in funds in the EM world are good in my view - although I do like India as a long termer personally - I use FS Indian Subcontinent.

With regards to UK it is difficult to say what would bebest - Marlborough Special SItuations has delivered profit aplenty in the past much more so than a tracker - and as I posted elsewhere if you invested in a FTSE100 Tracker a year ago, the last week would have wiped out your gain! Another more diversified fund (geographically) is the Invesco Global Smaller Cos or if you like the "ethical" approach - perhaps take a look at the "Ecclesiastical Amity" range?

Good luck!

Ark_Welder

You can get a list of ethical funds from Trustnet (when you have access...!): http://www.trustnet.com/Investments/Perf.aspx?ctr=QS&univ=O&Pf_AssetClass=I:ETHL

This is a list of different asset classes (equities, bonds, both) so there may be something of interest there. Perhaps you need to have a think about what you want (and don't want!) from your funds: i.e. will you be happy if your managed fund underperforms an index for a period? Longer term they may outperform, but there may be other times when they do not. Do you just want exposure to the UK and EMs or would something more international be preferable? Perhaps a hard call on that one at the moment.

Either the Aberdeen or First State fund should be lower risk than a China fund because they do spread your money across more economies. So whilst you might get a bumpy ride with them your longer term return could be worth it. What proportion of your funds are going into the EM fund? Perhaps you could adjust that balance if you are concerned about the ride.