Where to start with pensions

EdInvestor

No credit checks.

Have a look at this website which has quite a lot of useful info about suitable funds and is also a discount broker, which means you pay lower fees when you invest.

https://www.h-l.co.uk

mattih5

So looking at the Global Growth funds on the HL website, how do I know which is the best to go for? What should I be looking for? I know it is tempting to look at the previous performance and the charts but this in't something that should sway my decision to invest with them? Does the Trustnet site suggest ABBEY NATIONAL INTERNATIONAL is the best to go with because it is ranked 1 out of 193?

Are there specific things I should be looking for?

Also, I've noticed that on the HL site the charges look quite high. For example there is an initial charge of 4.50% with an initial saving of 4.50%, an annual charge of 1.15% with an annual saving of 0.08% which for some reason equates to a total expense of 1.78%. How has this figure been derived? Does this mean if I was to invest £1000 it would immediately cost me 1.78%. Also, there is no mention of being able to invest monthly, I don't really have the capital to invest £1000 (minimum it says on most) five times for five funds.

dunstonh

a TER of less than 2% in most asset classes is fine. The main sectors (UK, Europe, US, Japan etc) you should look for 1.75% or less.

Does this mean if I was to invest £1000 it would immediately cost me 1.78%

No, it means the annual charge, for virtually everthing, runds at 1.78%.

So looking at the Global Growth funds on the HL website, how do I know which is the best to go for?

I wouldnt go for any of them. Ok, there are a few good examples but they are still combination funds and not sector specific. i.e. UK Equity, European etc.

mattih5

dunstonh wrote:

I wouldnt go for any of them. Ok, there are a few good examples but they are still combination funds and not sector specific. i.e. UK Equity, European etc.

Dunstonh, where about is the best place to look - TRustnet?

dunstonh

for pensions and for free information, trustnet is fine. It does miss out a lot of funds (especially life and pensions) but you get what you pay for.

jamesd

Having the same fund manager shouldn't be an objective. If anything, varying them would be good to remove any systematic bias in one particular place's selections.

Global growth is OK if you have too few funds to get a reasonable spread of regions but with at least 5 you can select the regions yourself.

With HL you can do smaller amounts per fund than is possible on the web site by using their phone service. No extra charge.

EdInvestor

mattih5 wrote:

Dunstonh, where about is the best place to look - TRustnet?

https://www.citywire.co.uk/Funds/Home.aspx

Funds rated by category, pick funds which have top 10 performance over 1,3,5 and 10 years for consistency.

mattih5

Thanks,

With funds such as Invesco Perpetual Income Inc, Rathbone Income or Jupiter Income do these funds basically return 'dividends' on a annual or monthly basis - hence the name 'income'?

I'm probably going to contribute on a monthly basis to a core UK fund, but would like to automatically have my growth reinvested, thus benifitting from compounding and pound-cost-averaging.

What type of funds should i be looking at the achieve this?

dunstonh

Income is distributed either quarterly to half yearly in general. THe distributions will either be taken into account with the unit price if acc units or reinvested to buy more units with inc units.

why one fund? One fund investing is the old fashioned way of doing it and does lead to lower returns over the long term.

Also, looking at citywire tells you only what has been best in that period. Its usually because that sector was the right place to be at that time. Going forward, it will be another sectors turn. The UK has historically come out top sector about once every 5-7 years. Going forward it could well be less frequent. So, over a 20 year term, you may be lucky if you are in the best place two, maybe three years?

Within each sector you will have funds with different aims and risks. One fund may have taken the decision to be more cautious and not go for top ranking performance but go with consistency as a aim. Take a look at Legg Mason Japan as an example of a top rated fund becoming bottom rated very quickly.

EdInvestor

dunstonh wrote:

Income is distributed either quarterly to half yearly in general. THe distributions will either be taken into account with the unit price if acc units or reinvested to buy more units with inc units.

The "inc" version of an income fund will distribute the dividend payment to you, normally on a quartely basis.The "acc" (for accumulation) version of the fund will reinvest the dividends in the fund.

looking at citywire tells you only what has been best in that period. Its usually because that sector was the right place to be at that time.

Citywire rates the best funds in each sector separately over 1,3,5 and 10 years. It doesn't rate sectors against each other. Trustnet will give you a sector average performance if you want to compare them in this way.It's occasionaly of interest - eg to see how the different types of UK equity funds performed during the market crash of 2001-3.