Ok then - How do I choose a S&S ISA!

jamesd

That sounds fair enough. Personally I'm interested in lower values for some specialist funds, like BRIC or Russia-specific. Putting 1000 into two of those in my initial looking ended up making 8 of the top 10 companies Russian... and Gazprom in the UK was one of the other two. That was a bit more Russian than I wanted. So I cut back on those to balance out the risk and concentration a bit. Used the Morningstar tool to check this.

brasso

Very interesting thread that's taught me a bit more, so thanks everyone.

One thing I've noticed with my own investments is that geographical diversification alone doesn't guarantee a spread of risk. The funds in my ISA and SIPP represent all the main markets: North and South America, Europe, Asia, BRIC etc. yet they all seem to have followed each other up and down over the past couple of years. Looking at my Excel graphs, some of my ten funds have done better than others, of course, but in terms of upward and downward movements, they follow each other very closely indeed. I presume that this is because a big dip in one market has a knock-on effect into other markets and other industries that are dependent, or at least related. Also, with the average fund made up of so many different equity investments, there is likely to be reasonable homogeneity between funds.

So my point (for the benefit of new investors) is that for true diversification, you have to look beyond just geography, and think about industry sectors, asset classes, risk ratings, and all sorts of other variables. I don't mean to state the obvious, but looking at my own investments and the trends so far, I've recently concluded that I've over-simplified what's meant by true diversification. As mentioned, the average fund is made up of so many small investments, that each fund is itself actually quite a good example of diversification. So there's something to be said for choosing a smaller number of different funds, and instead diversifying in other ways.

carnet

One thing I've noticed with my own investments is that geographical diversification alone doesn't guarantee a spread of risk.

With ever increasing globilisation, markets are becoming ever more correlated - to such an extent now that it has crossed my mind occasionaly that a geographical spread may actually be pointless. In fact one or two global fund managers are now investing on a "theme" basis and disregarding geography.

for true diversification, you have to look beyond just geography, and think about industry sectors, asset classes, risk ratings, and all sorts of other variables.

For true diversification, different asset classes are, IMHO, the only consideration. For example, I just don't trust equities (any of 'em) right now and have moved into physical commodities and b&m German (and a little other overseas) property.

brasso

What's "b&m German"?

Ian_W

Bricks and mortar?

jamesd

ie. physical property, not funds holding property company shares. A place to be if you don't think that the current bull markets in many areas will continue much longer.

If you did think that it will go on a lot longer, growth-oriented funds in small and medium companies in the bull market areas are where you'd be more likely to be, with at least a nod towards the larger ones in case they are next. Geographic selection favoring whichever region seems likely to grow most, or perhaps most reliably.

stphnstevey

Just a note to let you know that I did actually invest using the H&L ISA. Funnily enough I got a general marketing email from them a week after recommending a fund that I had just invested in - which made me feel alot more confident in my choice.

I might not have diversified to the enth degree or gone with a traditional risk portfolio, but I was happy with the risk vs reward ratio and now will just wait and see.

I am not one to watch the fund price every month and track it in an excel spreadsheet, my nerves wouldn't take it, I will review it once a year and take action as needed.

I have also altered the funds my pension is invested in after feeling fairly confident in understanding the basics.

Time will tell!:p

PS - Thanks to all of you for your advice and patience

brasso

stphnstevey wrote: »

I am not one to watch the fund price every month and track it in an excel spreadsheet, my nerves wouldn't take it, I will review it once a year and take action as needed.

Every month? :eek:

"I will review it once a year " :eek:

Some of us religiously attend our spreadsheets every evening. And some of us have got so fed up with it, and with market volatility, that some of us have just sold everything!

When I buy back in, I'm going for a "buy and forget" high yield portfolio.

Edited to say: Sorry, I meant to say "good luck", I'm sure you've made a good decision for you. If you can buy and forget, that's by far the best approach. If, like me, you get a bit obsessive about checking these things, it's probably best to stay away from the emerging markets and other more volatile investments.

debbie42

brasso wrote: »

When I buy back in, I'm going for a "buy and forget" high yield portfolio.

That might be the theory (I've recently started a HYP), but if you're anything like me, you'll still check your portfolio a few times a day :rolleyes:

stphnstevey

I have internet access to my pension valuation and I was previously looking at that only on a yearly basis, so hopefully will do this with my ISA as well.