How risky is a Balanced Investment Fund? Details to follow.

dmt77

Hi, could anyone please shed any light on the dangers of investments in the current climate.

A bereaved family member currently has £80,000. invested in a Halifax Balanced Investment Fund. Whilst it has been doing well up until now, it is important that the balance does not fluctuate downwards too much.

She is considering moving the balance to a standard savings a/c in order to presumably incurr less risk, and also use her ISA entitlement.

This post has been prompted by the ongoing global and European financial mess and its potential threat? to personal banking.

Any advice or information would be greatly appreciated by this confused layman.

crittertog

Is it this one? (only match on TrustNet)

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=H9B&univ=N

Totton

Very risky to have 100% in just one fund, definitely use the annual ISA allowance as once the year is over you won't be able to retrospectively use that entitlement. If this is the only money then definitely get it out of the fund by either splitting between cash and investments to a % that feels comfortable and then ensure that you split any investment amount between at least 2 or 3 vehicles to lessen risk.

The old saying 'at least your age in bonds' has some value but you could probably amend that to 'cash and bonds' in view of our longer life expectancy. It's all about risk really and your post suggests that not a lot of risk is desired, hence more in cash is probably what would feel comfortable but remember that inflation is eating away at cash savings nowadays and probably for some time yet.

All the best,
Mickey

dunstonh

How risky is a Balanced Investment Fund?

Balanced doesnt indicate risk. You can have some "cautious" balanced managed funds and some higher risk ones. You have to look at them individually.

A bereaved family member currently has £80,000. invested in a Halifax Balanced Investment Fund.

That fund I believe is only available in the life assurance universe. (so no ISA and not a unit trust/oeic). First question to consider is the tax efficiency of it. Where is the ISA? What makes the life assurance wrapper better than unit trust/OEICs in this case? If nothing, then is it a mis-sale?

Whilst it has been doing well up until now

For Halifax standards, It isnt too bad. However, it is at the higher end of the risk scale for funds in its sector.

She is considering moving the balance to a standard savings a/c in order to presumably incurr less risk, and also use her ISA entitlement.

Thats a very big jump around on the risk scale. What about the options in between? What about the risks that come with cash (replacing investment risk with inflation risk and possibly shortfall risk depending on objectives). Risk is not on/off. It is a whole sliding scale. At the moment, the current fund is medium/high risk. On a crude 1-10 scale, it would be up around 6. Cash is 1. Hence my comments about things in between.

Also, if it is a life assurance investment bond then she has to be wary of any potential chargeable gain she has. Especially if she is close to £20k a year income and/or any of the next tax brackets or in receipt of means tested benefits (such as pension credit).

The fund itself is a diverse portfolio fund and whilst Totton is correct when applied to single sector investments, this fund handles the diversification within the fund. So, its not all eggs in one basket.

However, the investment itself can almost certainly be improved upon and with discussion, it may well be that alternatives exist that offer better value, risk tolerance and growth potential.