Choosing funds to invest in...

mike_s_price

Right, my first post and on a subject that I am quite new to.

I am looking at investing on a regular basis (i.e. monthly) and preferably within an ISA. Managed funds hold an obvious attractivness and reduced risk when compared to selecting stocks myself.

As I am in my early 30's I can afford at this point in my life to take higher risk investments (as well as maintaining some more cautiously managed funds and cash as necessary), knowing that if it doesn't go well I still have plenty of time to save later on in my lifetime. Based upon this I am currently looking at investing in emerging markets (or any other suggestions that people may have?).

So here is the main question: "What techniques or how do you select the best funds?" I know that it is based upon the track record of a particular fund manager, so is there a way to find out which are some of the most successful over the past five to ten years, even when they have moved between funds?

Thanks in advance!

Mike P

BLB53

Mike,
First of all, I would look at investment trusts rather than funds as they will work out cheaper in the long run.
Have a look on trustnet for performance over 5 years and make your selections, then open an ISA account with an online broker like Interactive Investor and start your portfolio.
Another good source of info is Motley Fool, particularly the discussion boards.

Good luck!

Ark_Welder

You could try having a look on Trustnet, just as a starting point.

http://www.trustnet.com/Managers/Home.aspx

Linton

First step I believe is to chose a broad range of sectors in which to invest, and the % of your portfolio which each should occupy.

You can then use trustnet to help find the most appropriate funds (or investment trusts).

In this way you will get a balanced set of funds rather than a random mixture each of which seemed to be a good idea at the time.

Totton

Linton wrote: »

First step I believe is to chose a broad range of sectors in which to invest, and the % of your portfolio which each should occupy.

You can then use trustnet to help find the most appropriate funds (or investment trusts).

In this way you will get a balanced set of funds rather than a random mixture each of which seemed to be a good idea at the time.

Excellent advice, start off with understanding what you want from the portfolio and set an appropriate asset-allocation. To get some ideas find a multi-manager fund or Investment Trust and take a look at their asset allocations, find one similar to your needs and consider using the allocation as a basis for your own purchases.

Here is a link to the Jupiter Merlin fact sheets although perhaps not the best just now but these are from a respected multi manager outfit. http://www.jupiteronline.co.uk/PI/Our_Products/Funds_of_Funds/

Best of luck,
Mickey

Totton

mike_s_price wrote: »

So here is the main question: "What techniques or how do you select the best funds?" I know that it is based upon the track record of a particular fund manager, so is there a way to find out which are some of the most successful over the past five to ten years, even when they have moved between funds?

Thanks in advance!

Mike P

Hi Mike,
Personally I go for mostly Investment Trusts and stick to those that have good performance, a long serving manager or a well known manager recently taking over the trust and fit into my asset allocation for the portfolio. To research funds and managers I use a few different sites, predominantly these are -

Morningstar UK
Trustnet
Hargreaves Lansdown

All three offer different options for research whilst Morningstar and Trustnet also offer excellent portfolio screens where you can run some trial portfolios to test out your strategies etc.

Another site worth a look is Citywire, who also run a top manager list/system.

If you are going to look at Investment Trusts then a 'must visit' site is the AIC stats pages at http://www.aicstats.co.uk/

I also visit regularly the sites of Jupiter, Artemis and of course the Motley Fool which has the best Investment Trusts forum I've come across to date.

If I can recommend one book to you it would be Smarter Investing: Simpler Decisions for Better Results which at less than £15 may very well pay for itself several times over. Of course there are many other equally as good book choices and no doubt useful web-resources, I just don't have time to read them all :-)

Hope that helps,
Mickey

jimjames

mike_s_price wrote: »

Managed funds hold an obvious attractivness and reduced risk when compared to selecting stocks myself.

Another option if you are just starting out is to use tracker funds. It then takes out the element of the manager selecting wrong shares and you also get very low charges as it is all done by machine without the human intervention of choosing a share. Once you have more experience you could then look at diversifying into different sectors and funds but have a base to work with.

I'd also echo the comments on investment trusts but maybe those are worth considering once you have more experience.

deadpeasant

As a newcomer to investing I dutifully read Tim Hale and was persuaded that trackers were the way to go. The problem is that tracking developed markets only makes sense in a world of growth. I think Tim Hale calls it 'trusting in capitalism'.

HSBC launched their trackers on 01/11/2000. According to Trustnet's charting tool, here are some cumulative performances since then:

HSBC FTSE All Share Index Ret Acc 20.38% (1.71% annualised)
HSBC American Index Ret Acc -18.22% (-1.82% annualised)
HSBC European Index Ret Acc 7.24% (0.64% annualised)
HSBC Japan Index Ret Acc -26.51% (-2.77% annualised)
HSBC Pacific Index Ret Acc 128.03% (7.81% annualised)



Over 11 years, this performance is utterly dismal. Only the Pacific tracker did OK by being heavily exposed to emerging Asia. Prospects continue to be bleak.

Investing is for the long term. But how many more years will it be before developed markets offer better long-term growth than savings accounts? Is there not some real possibility that in 14 years' time holders of a basket of trackers will look back on a quarter century of zero growth?

Jake'sGran

I mostly use Trustnet for research. They don't sell anything but their site contains a lot of information about individual fund managers and best performing Unit Trusts/OEICS. You will be able to see which funds are in the top 5-10 of their field. The best I have bought in the last 18 months was one of the Asia funds from First State. I bought this fund from Hargreaves Lansdown and there was no Initial Charge but you need to keep your eye on the annual charges of any fund you like the look of.

Hargreaves Lansdown discount a small amount of the trail commission they receive from fund managers. Please note also that brokers like HL will, sometime later this year, have to show exactly what their annual charges on funds are.

deadpeasant

On Hargreaves Lansdown, watch out for a little footnote '1' on some funds (e.g. M&G index-linked bond) which tells you that they add an extra 0.5% a year charge inside their ISA but not in the ordinary non-ISA account. So, strangely enough, if you're a basic-rate taxpayer it can be cheaper to hold some funds outside an ISA than in one. (I imagine most of HL's customers are well-off, as their materials more or less take it for granted that you're a higher-rate taxpayer.)

The great thing about HL (aside from the user-friendliness of their platform) is that fund dealing is free. I've recently been taking profits from my gilt funds and using them to buy cut-price equity funds. All this would have incurred charges if I'd been dealing in investment trusts (which generally have lower charges than funds), but fund-switching is free and easy on HL.

RobStaffs

Most of my ISA funds are with H_L..I started off pretty naeively by buying in lump sums taking my lead from H_L Wealth 150 list.Also I went for cautious and balanced managed funds and a couple of active managemed products.Over time,via this forum I broadened my knowledge via some of the sites that are already mentioned in order to rank the funds and the managers.Still with H_L as I find their interface really easy to follow..I am going for a bit more risk now to change the risk balance of my portfolio..

ps forgot to mention I now buy using monthly payments to spread the risk