A single fund of funds for all investments?

Andy1663

Hi - a first post, so hope its OK.

I've spent many hours recently investigating funds for a SIPP (for about £10,000) and an ISA (for about £4,000). I feel I'm going slightly mad trying to consider all the options, and its taking up far too much time!

I think that my ideal would be a one-stop-shop, which I can then leave and forget (I don't really want to do an annual review for fear I'll start spending further hours of research).

My questions are:
Is a fund of funds the best option?
Should I pick more than one fund of funds?
And how can I estimate the long term stability of the management team/company (say 3 years +), so that I don't have to think about switching them too often?

I realise recommennations can't be given, but to give an idea of my thinking, I'd thought of putting the SIPP into Jupiter Merlin Growth (although I'd ideally like a broader fund that included things like property) and the ISA into Midas Balanced Income fund (lower risk in case I need to access it in less than 10 years). But I'd happily consider any option that meant I could put this to bed!

Thanks

dunstonh

Is a fund of funds the best option?

No.

Should I pick more than one fund of funds?

Not really. You are basically doing what you want to avoid if you do that.

And how can I estimate the long term stability of the management team/company (say 3 years +), so that I don't have to think about switching them too often?

You cant (realistically) and with a fund of funds the manager should be doing that.

Fund of funds are the option to use when you dont want to do much work and you dont want an investment manager or investment specialist IFA to do it. They are not the best option but the best lazy option.

If it came to a choice of FTSE100 tracker of Jupiter Merlin xxx portfolio, then I would go with the Jupiter Merlin fund every time. However, if it came to a choice between a sector allocated portfolio set to your risk profile with automatic rebalancing, I would go with that every day.

Andy1663

dunstonh,

Thanks for the very rapid reply (I've read many of your other ones on the site - very helpful indeed!)

I'd be happy to get a specialist IFA, but shouldn't a good FoF do the 'sector allocated portfolio... with automatic rebalancing' for me anyway, and so all I need to do is pick a FoF that operates at my risk level?

Does 'automatic rebalancing' happen annually when you meet with the IFA - or automatically?!

thanks again.

cheerfulcat

Andy, you could have a look at investment trusts. A global growth trust will contain a balanced portfolio of investments, covering most asset classes and sectors. It should give a better return than a FoF ( partly due to lower charges ). Incademy has more information, as does the AIC.

EdInvestor

This site might help in selecting a posse of funds ( say 5 for the SIPP and 2 for the ISA).

It rates the best ones by sector.

If you pick funds that are top 10 performers consistently over 1,3,5 and 10 years, it's more likely they will continue to perform - but not guaranteed of course.

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

dunstonh

I'd be happy to get a specialist IFA, but shouldn't a good FoF do the 'sector allocated portfolio... with automatic rebalancing' for me anyway, and so all I need to do is pick a FoF that operates at my risk level?

It would rebalance but the cost of FoFs is usually higher and I cant think of a single FoF off the top of my head that gives full sector allocation. They do a good job but not as complete as I would want it.

Does 'automatic rebalancing' happen annually when you meet with the IFA - or automatically?!

It depends on the IFA. A bog standard IFA isnt going to do much, if anything after the initial recommendation. An NMA IFA, on your value, would load an annual date for review and discuss it with you.

It is also possible with some contracts to load in an automatic rebalance at no extra cost and with no fund switch charge.

So, in answer to your question it is both depending on the adviser and depending on the contract.

Andy1663

cheerfulcat - thanks for the suggestion about investment trusts, which sound good if they give wider coverage and better return. I'm wary of the extra research required, but...

Is there anywhere that would give a list of top suggestions and some analysis like the HL site does for OEICs + how do you buy them?


dunstonh - very helpful, thanks. A few further queries if I may...

What sectors do FoF's tend be be weak in - property, or other things too?

Apologies, but what is an 'NMA' IFA - and how do I find one? Do I face a similar range of abilities as I would with FoF managers - and if so, is there any way of finding out which are particularly good (such as yourself!)

You say IFAs are usually cheaper - could you give a ball-park figure?

What do you think about investment trusts?

Thanks again for all the help

Andy1663

Edinvestor

Thanks for the citywire info. I'm afraid I've already spent many hours drawing up endless portfolio options having searched citywire, trustnet, HL, bestinvest etc - and I realise I'd just like someone more expert than me to make the decision. I'm assuming that a top performing FoF manager will make better decisions than me - and I'd happily pay the modest extra cost not to worry about it any longer.

dunstonh seems to be suggesting that a specialist IFA may be the better option.

Thanks

cheerfulcat

Andy1663 wrote:

cheerfulcat - thanks for the suggestion about investment trusts, which sound good if they give wider coverage and better return. I'm wary of the extra research required, but...

Is there anywhere that would give a list of top suggestions and some analysis like the HL site does for OEICs?

Hi, Andy,

It's only the global growth trusts which will give you wide coverage and there aren't that many of them. The list is here. AFAIK no-one does a comparison like the HL one; ITs are companies, and the shares are traded on the market so the price is determined by buyers and sellers more than by the underlying value. The AIC site provides details of each IT, and Trustnet has a section for ITs here. You can sort them by NAV performance, discount, yield and so on by clicking the arrows at the top of the relevant column.

I prefer ITs to unit trusts for several reasons. First, being traded as companies means that the shares can be bought or sold in real time. Second, because they are priced as much on sentiment as any company, they can be bought at ( sometimes significant ) discounts to NAV. Third, the charges tend to be lower. And finally, the fact that they can be geared means that they can give better returns than comparable UTs ( though of course it also means that they can lose more money! ).

Alliance Trust, British Empire Securities and RIT are all worth a look ( this is not advice! As always, DYOR...) There is a dedicated Motley Fool board for ITs and UTs, with a couple of really knowledgable posters; have a read there, as well. I have given the link with the posts sorted by recs, to save you slogging through the board, so make sure that you check the dates!

Andy1663

Cheerfulcat - great stuff - and I see I'm going to have another couple of solid evenings in front of the computer! Thanks for the tip about global trusts, and one or two ideas of where to start for my ideal of a single investment option (dunstonh's suggestion of a specialist IFA apart) .

Thanks,

Andy

RayWolfe

An addition to Cheerfulcat's comments about ITs, you can with many of then invest via their savings schemes which often charge nil or low rates (less than you would pay through a broker). You will, of course, have to factor in stamp duty.