IFA Recommendations - Comments

nxdmsandkaskdjaqd

A cautious couple, who are about to retire in 3 years time, with £50K in ISA’s, has just been advised by an IFA to purchase the following funds. The portfolio mix is about 80/20 (equities/interest). Appreciate any comments on the mix (positive or negative).

Artemis Income R Inc
CF Walker Crips Equity Income Acc
First State Global Listed Infrastructure A
First State Global Listed Infrastructure A GBP
Invesco Perp High Income Inc
M&G Optimal Income A
Neptune Income A Inc
Newton Global Higher Income
Threadneedle UK Equity Income Ret

The fund percentages are approx 7.5% to 15%.

grey_gym_sock

what's the projected income from those investments? does that, together with their projected pensions, give what they'd like to spend in retirement?

hopefully they will have a long retirement, so the real value of their retirement income (allowing for inflation) is important. the income from this investment, since it's mostly in equities, is likely to rise in real terms over time (though it could dip in bad years). some pensions (e.g. the state pension) are indexed so they should approximately retain their real value. other pensions are fixed (so-many GBP per year), so they will fall in real terms. so look at the mix of retirement income. if a large part of it is fixed, then spending it all may not be sustainable. however, that may be OK because some ppl plan to spend more money (e.g. expensive holidays) in early retirement than in later retirement.

if it adds up in terms of target income and sustainable income, then funds similar to those suggested are reasonable. so long as they are made aware that the value of their investments can be volatile, and they will not panic and sell out if their investments have fallen.

i don't know enough about most of the specific funds (as opposed to their general type) to comment usefully.

talexuser

I and family members have the Artemis, Perpetual, Threadneedle, M&G so not that bad selection so far. Unfortunately we also have some Neptune which is on my monitor/switch list when the opportunity arises unless it improves, so would question that choice (it has been recommended by a lot of intermediaries over the past few years when performing relatively well).

bigadaj

Seems a reasonable strategy with the yields now on offer. One issue might be that with so many uk equity income Funds then the net effect may be to have high percentage of holdings in a small number of companies as all the funds may have similar investments.

nxdmsandkaskdjaqd

grey_gym_sock wrote: »

what's the projected income from those investments? does that, together with their projected pensions, give what they'd like to spend in retirement?

The projected income return is around 4.7%. The money in the funds are not required as part of their retirement plans, so is therefore surplus. So these investments are for the long term.

Thanks

dunstonh

investing is about opinion. If you asked 100 people what investments they would use then you would get 100 different answers. As long as there is a strategy and reason for each that makes sense and it fits your risk profile then there isnt really an issue.

doubleJackD

nxdmsandkaskdjaqd wrote: »

A cautious couple, who are about to retire in 3 years time, with £50K in ISA’s, has just been advised by an IFA to purchase the following funds. The portfolio mix is about 80/20 (equities/interest). Appreciate any comments on the mix (positive or negative).

Artemis Income R Inc
CF Walker Crips Equity Income Acc
First State Global Listed Infrastructure A
First State Global Listed Infrastructure A GBP
Invesco Perp High Income Inc
M&G Optimal Income A
Neptune Income A Inc
Newton Global Higher Income
Threadneedle UK Equity Income Ret

The fund percentages are approx 7.5% to 15%.

perhaps this couple should consider some trackers? there is some strong evidence that trackers outperform active funds.

i wish the couple well in their future retirement!

grey_gym_sock

doubleJackD wrote: »

perhaps this couple should consider some trackers? there is some strong evidence that trackers outperform active funds.

that would true for generalist equity funds, but the suggested funds are mainly in equity income. there may be good reasons for choosing equity income - i'd argue it's lower risk that generalist equities. and trackers are a much more debatable concept for equity income.

however, and with the same intention of reducing costs without harming performance, perhaps they should consider some investment trusts with a decent yield (e.g. City of London, Murray International).

jamesd

The mix looks sensible. Good to see that the IFA avoided gilts and high quality corporate bonds that are somewhere in bubble territory at the moment.

maryjanell79

Those look like good choices but for a large sum of money I would maybe spread it across a larger portfolio to minimize risk.....but then everyone has their own way of investing :-) Go with your gut.

Perelandra

Just out of interest, most of them appear to be Income funds. This one, though, certainly looks like it's an accumulation fund:

CF Walker Crips Equity Income Acc

(one or two of the others might be accumulation as well).

What's the strategy for mixing Income and Accum. funds?