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

jamesd

jackie079, HL are only allowed to answer factual questions unless you are paying for advice from one of their IFAs. Then part of the payment goes to pay the insurance premiums in case there is a problem with the advice.

Here's a chart comparing their multi-manager funds with a very popular UK Equity Income fund, the INVESCO PERPETUAL High Income fund.

Looking at the chart and table below it you can see how the amount of the dip and amount of growth of the HL funds varies, with the more cautious ones having a shallower dip but also growing less.

Here's another chart with fewer of the funds and a longer time period that makes it easier to compare the INVESCO PERPETUAL fund with the HL funds that look most interesting. Same set, shorter time period so you can look at one of the drops.

From the second chart it looks as though the INVESCO PERPETUAL fund both grows more than the HL funds and may drop less at times.

Jackie079

Hi guys, thanks so much for your repies,I have recieved some info from H&L regarding mulit manager funds, and I think the Income and Growth portfolio they have looks ideal. James, with regard to the Invesco Perpetual fund, do you mean it woukld be better to invest soley in this fund ?thanksJackie

jamesd

Jackie079, it does seem to do quite well so if you want one fund to start with while you get comfortable it's not a bad choice at all.

Longer term using just one fund is a bad idea, even though this one has a good reputation. What you might look to do initially is pick a global growth fund to go with it.

Jackie079

Hi James,the fund i'm looking at does have Invesco in there @18.9%, when you say a Global Growth fund, do you mean any one in particular ? If i went with this Income and Growth portfolio, am I able to invest in a global growth fund that is not listed in this fund 'lne up' ?many thanksJackie

jamesd

Jackie079, well, I'm trying to encourage you to take a look yourself at say trustnet with its list of global growth funds in best 3 year performance order. I've used the customize this table button to show some columns that aren't normally there, like the riskgrade, low being better than high, in general. Well worth looking at the 2002 column to see how much each option fell in that year, so you know roughly how much these funds might fall - it's not a guarantee but you can see that falling 20% was normal and some fell by as much as 43%.

Yes, you can invest in funds that aren't in the lineup.

The HL Income and Growth portfolio is mostly UK based so that's why adding a global one can be useful.

Jackie079

Hi James,

of course, thanks, much appreciated. If I know I can add a global growth fund aswell, then that would be great,
thanks
Jackie

kiffmoore

Hello all

Over the last couple of weeks have been reading this excellent thread and others and gleaming info from trustnet/citywire/bestinvest/h-l etc.

I am going to invest my MINI S&S ISA for the first time this year with unit trusts through H-L.

I want to adopt a multifund investment but i am unsure whether as a new investor with the initial £4000 you would choose approx 4 initial funds with relative %s of each fund spread across my own risk level (eg uk equity income/uk corp. bond/global growth/uk smaller companies) or whether i should contact H-L and see if they will let me diversify much further and put smaller amounts in funds across 7-8 sectors to include europe/US/emerging markets etc.

Perhaps you would not think either of the above strategies are suitable!

Perhaps this would be too much to try and take on in the first year and i should try and be a little more conservative and build a portfolio more slowly?

I am very keen to do this as a DIY investor due to the initial small amount of money invested.

Any advice greatfully received

Keith

jamesd

When you sell a fund online with HL one of the options is to sell and buy others. If you bought a 1000 worth of a fund with no initial charge (discount = initial charge) you could follow that by selling 400 worth and buying 100 worth of four others. Or one at 200 and two at 100 each. Whatever you like.

So, I suggest picking the sector allocation that you want and working how much you need to invest in each sector, then working out how to get there with a few buys and sells.

Biggles14

Up until this year it has been uneconomical to invest in a share ISA unless you are a higher rate taxpayer. However, the Cash ISA limit being £3000 per annum has been a much better investment for basic rate taxpayers like myself. The £3000 per annum that you were allowed to put into a Stocks and Shares ISA is really to small an amount unless I suppose you are in a position to put this amout regularly into the fund. The problem with these funds however is that the Fund Manager want a regular cut in the form of fees of the amount invested whether or not you are showing a profit. If the stock market goes down as it has yesterday these management and annual charges can quickly eat away at your capital. Since the only benefit of a share ISA is that you protect any capital gain you might make (Which incidently is unlikely to exceed your personal capital gains tax allowance anyway on a £3000 investment unless you are very clever at picking rapid growth stocks) then I would suggest that you contact a Company like Hargreaves Landsdown and buy shares in cetificated form. You pay a small one off charge, Around 1.5%, they send you a Certificate, which you keep safe until you are ready to sell. If you hold for the long term you will collect dividends and pay no charges whatsoever.
Having said that, the changes coming into effect next year will mean that you can transfer some or all of your accumalated Cash ISA into a Share ISA. I dont know how this will work out for small investers like myself, but I think I will continue to keep my own Certificates rather than pay someone to collect my dividends and charge me for doing it when I can do it myself for free.

jamesd

Biggles14 wrote: »

These management and annual charges can quickly eat away at your capital.

It takes 22 years before you would have paid 30% of the money on fees of 1.7% or 8 years before you've paid 10%.

The value of my ISA investments went down by 2.5% between Thursday and Friday valuation points, 5.7% on the week. Much more interesting than the fees, which take 3-4 years to have that effect.

Dividend paying investments and fixed interest investments in a stocks and shares ISA don't give rise to tax liabilities, including not risking increasing the tax bracket via the dividends for which there's a nominal tax credit. Those effects are of value to basic rate tax payers.

Saving CGT isn't insignificant when you move your money between investments and are seeing good growth rates over the long term. Invesco Perpetual Income fund grew by about 19% a year over the last five years. Invest 7000 a year at that return and it takes just 5 years to exceed this year's CGT allowance if you were to move the money to another investment. After 15 years even moving 10% of your investments is enough to do that. 7000 a year is a lot but definitely possible at basic rate for some people. Particularly when people are using the ISA for mortgage repayment and retirement investing.

People who are regularly buying funds have no reason to worry about last week - who wants to pay more for things they are buying?

Lots of talk about growth so here are the one week drops I saw last week to show the other side of the picture:

• -7.6% A Latin American fund. Big surprise. Not.
• -5.9+% A UK equity income fund. Amusing rank.
• -5.9%
• -5.6%
• -5.4%
• -5.4%
• -5.2%
• -5.0%
• -4.8%
• -4.7%
• -4.5%
• +0.6% Yes, up. An emerging markets fund.

Nothing worrying there. Just the normal ups and downs of equity investing.