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Threadneadle UK Equity Income Fund - Cash it in?

Please help a complete novice!
In 1996 my wife and I got our first mortgage. It was an interest only with Threadneadle saving plan.

Very soon we realised that this wasn't for us and ditched it in favour of a repayment so only paid in to it over 2 years although I imagine the finacial advisor at the time made a pretty penny in selling it to us!

The savings are valued at about £5000. It never seems to grow that much although the last statement showed share value 59.40p 2010 and 65.8p 2011 - Change 10.77%.

We are stuck as to what we should do. We are considering using it to take £5000 off a £89000 mortgage.

However I have also read savings like this are long term and to leave it. I'm completely lost. Can any one explain what I've got and how to decide what to do in less than 5 points!?

and Thankyou to the more skillfull savers who spend the time on this forum helping others :T

Comments

  • qpop
    qpop Posts: 555 Forumite
    http://www.trustnet.com/Factsheets/FactSheet.aspx?fundCode=ESHII&univ=U

    It's a fairly succesful fund, and if you sold now you'd be crystallising heavy losses since the beginning of August.

    If it were me, I'd make a note to check the diary in a year and re-assess.

    As of 31st Oct 2010 (including the recent drops) the fund has made 86.5% return over ten years. (A compound return of ~6.4% a year) http://documents.financialexpress.net/literature/2576665.pdf

    If your mortgage was costing you more than that (and we hadn't just witnessed huge share sell-offs), it may be advisable to pay the mortgage off.
    I am an IFA, but nothing I say on this forum constitutes financial advice. Always draw your own conclusions and always do your own research.
  • Moneybox
    Moneybox Posts: 190 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Thankyou! Your explanation makes it a lot clearer, although I have got to admit looking at the link its just a lot of numbers!
  • Totton
    Totton Posts: 981 Forumite
    It's a fund that gets a good write up with the White List (Top Ranking), also ranks well over 5 years - http://www.trustnet.com/Investments/Perf.aspx?univ=O&Pf_Sector=O:UKEQINC&Pf_sortedColumn=Performance[Cur].P60m,NameFull&Pf_sortedDirection=DESC

    The best thing we ever did was pay off the mortgage, I'd be inclined to let the investment increase whilst mortgage rates are so low. Perhaps in 3 - 5 years the mortgage rate may make it a better time to cash in and pay off the debt. If the investment was say 25% of the debt and rates were high then I'd probably choose to pay off some debt.

    Regards,
    Mickey
  • mike88
    mike88 Posts: 573 Forumite
    Part of the Furniture 500 Posts Combo Breaker
    All funds in the equity income sector have flatlined/lost money in recent times but your fund is one of the better ones run by a well respected manager. I hold a substantial quantity. Should you cash in? Emphatically no unless you NEED to reduce your mortgage.

    If you are intending to get out of equities altogether now is not the time to sell. At least wait for a few months until the unit price recovers. Check prices on the web and do not wait for statements. However, I would hang on for as long a possible as this is a good fund that is likely to recover/prosper over time.

    Of course the decision is yours as you know your own circumstances better than anyone.
    Take my advice at your peril.
  • dunstonh
    dunstonh Posts: 117,982 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Current volatility is great news for long term regular contributions like this and pensions. This is where you make most of your money in the long term as the units you buy after a drop are the ones that go up the most in a recovery.

    One of the biggest mistakes people can make is to turn off the regular contributions when the going gets bad. Whilst experienced and more knowledgeable investors increase their amounts. Yes, in the short term it can look ugly but it is the long term you are looking at. Not now.

    Its only bad if you happened to be taking the money out now or in the next few years (you can phase your investment risk down in the years leading up to prevent that being an issue).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • talexuser
    talexuser Posts: 3,503 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    If it helps I moved into this fund last year from an underperforming one. It is not the best of class but over the longer term has performed well, justified it's charges and the manager has a good track record, and worth it if you want to diversify from other top income funds.
    The recent euro woes and credit problems are not a good time to panic sell. A fund like this needs a good 18 months or 2 years to prove itself before making rash decisions. It needs 5 years plus to show worthwhile returns. So keep an eye on the price every month or so but I would give it a chance and see what the entire market does until we get out of this mess.
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