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

si1503

stphnstevey wrote: »

I know you won't like this and probaly argue the matter, but it's hard to think you have an unbiased view on managed funds as a financial adviser. However, you have shared your experience in depth on these forums, so lets just agree to disagree on this particular point.

Totally blind statement.

When it comes to trackers; why match the performance of the markets, when you can outperform the performance of the markets?

The right fund manager can ensure you are in the right places at the right time to make the most of stock market growth/income when the markets are rising, and through correct management limit portfolio losses when the market falls, hence I feel they are the preferred route to investment, aside from investing in shares directly yourself, but to get the best possible returns from direct investment you need to be researching the markets daily IMO, and in a reasonable level of detail, which very few of us (including myself) have the time to do properly.

jamesd

si1503 given dunstonh explaining his remuneration - percentage of value regardless of fund type - dunstonh seems to have made it clear that the incentive is to do well. Also not much incentive to take too high a risk level, even ignoring compliance requirements, because ongoing payments are a significant part of the total remuneration so dunstonh has to keep the customers year on year, not just take the initial commission and then ignore. It's a pretty consumer-friendly model for ongoing advice.

pamaris

Personally, I would like to know a bit more about sector allocation. I have used this site to select funds based on the performance of the fund managers:

http://www.citywire.co.uk/CFI/Home.aspx

Additionally, I used this tool for my sector allocation:

http://www.citywire.co.uk/RFW/Home.aspx

Although, it is extremely basic. What it came up with for me (under 40, adventurous investment style) is:


Larger UK Shares 35%
UK Bonds 20%
International Shares 25%
Smaller UK Shares 10%
Cash 5%
Property 5%

Then when you click on the sectors, you get a list of the top performing managers within those sectors.

(To someone savvy and experienced,) Do those allocations sound reasonable? Although the search criteria and results are very simplistic, are they a good guideline?

debbie42

I just had to try it.

I don't think my investing style could ever be perceived as "cautious" and I'd rather be described as "adventurous" than "moderate"

I'm not sure what this means in terms of approach to risk, though?

The difference between the two profiles wasn't so great anyway, when I checked.

My profile was moderate/adventurous:
Larger Shares 30/35
UK Bonds 35/30
International Shares 15/20
Small UK 5/5
Cash 10/5
Property 5/5

I was a bit puzzled by the "property" bit. Is this intended to be the actual equity one has invested in property, e.g. my house? I'd have thought few people would have, say, 5K in a house, yet invest 95K elsewhere?

If I take my house out of the equation, my current profile is something like this:
larger shares 13%
european shares 7%
small shares 15%
cash in s&s ISA 15% (recently transferred from tracker)
UK bonds nil
cash 50%

A wee bit different!

dunstonh

I'm not impressed with that sector allocation. The typical sector allocation would take into account:
cash
UK fixed interest
international fixed interest (often ignored)
UK Property
UK Equity
European
N America
Japan
Far East Exc Japan
Emerging Markets
Global Specialist

stphnstevey

I think I have come to the conclusion that either:

a) Nobody knows what their doing
b) Nobody wants to share their strategy
c) Everybody just uses their best guess

when picking funds!

If there were no hard and fast rules, I thought there might be rough rules of thumb to stick to.

Shame

Ohh well! Las Vegas Casino table (sorry Stock Market) it is then!

debbie42

stphnstevey wrote: »

If there were no hard and fast rules, I thought there might be rough rules of thumb to stick to.

I'd have thought it depended very much on individual circumstances. The choice available seems way too much to be able to generalize in any meaningful way?

dunstonh

It's about individual risk, aims, timescale, how much monitoring you intend to do (yes that has an impact on what you should do) and opinion.

There are different strategies and each will have it's merits but there is no single sure fire way to make money. If there was, there would just be one strategy. There are a lot of ways to go wrong though and we are quite good at pointing those out.

torridon_2

stphnstevey wrote: »

I think I have come to the conclusion that either:

a) Nobody knows what their doing
b) Nobody wants to share their strategy
c) Everybody just uses their best guess

I don't think that there is any "right" strategy. You need to work out what is right for you. Other people can give you ideas but at the end of the day it is your money and you have to make the decision.
Earlier on in the year I was at a similar stage to you and have decided to go with a mixed approach. I have transferred an ISA and PEP I had into H&L and set up a sector allocated fund approach. For this year I have set up an ISA with Selftrade and am buying shares on a HYP (high yield portfolio) basis. These seem to be the same type of shares that a lot of the income funds invest in.
I don't know what will turn out to be best but I am in this for the long-term. Next I may try investing in smaller cap shares once I have increased my knowledge/picked up enough courage (with a relatively small amount of money).
What I am doing suits my "risk profile". I have worked out that I am reasonably happy to risk what spare capital I have i.e. invest in the stock market in a variey of ways. On the other hand I don't do debt, in any form, that is above my risk profile.

carnet

When I first accumulated enough capital to warrant learning about investment I bought all the available finance magazines which had any info on IT’s and UT’s (no OEICS in those days). I then studied, studied, studied the performance stats - which gave me a good grounding in what was actually available, the (currently) most/least successful sectors/ funds/managers and management houses etc. etc. It is surprising what can be learned from studying statistics – this was long before the internet, which has made these things much, much easier in many ways but has, IMHO, also made them much more confusing through the sheer volume of information available to private investors today.

It seems to me that many people are looking for, and expect to find, a quick fix for their investment affairs. In my experience these simply do not exist (at least if you want to DIY – and even then…). The most valuable investing lessons I’ve learned have come through the mistakes I’ve made – and I’ve learnt a LOT of valuable lessons over the years ! The art is in learning these lessons as cheaply as possible. Successful investment isn’t a matter of luck – the more effort, study and research you are prepared to put into it, the “luckier” you will be - some 22 years on I still take the stats to bed.

As has been pointed out in this thread and elsewhere on these forums, there are an infinite number of investment strategies and one which may suit one investor may well not (and probably won’t) suit another. An individual has to first work out for themselves what they want to achieve given such variables as age, time-scale, attitude to risk, present/ likely future circumstances/ amount available to invest, effort they are prepared to put into it etc etc. It also helps greatly (although admittedly this comes more easily with experience) if one forms one’s own opinion in such matters as; where we currently are in the economic cycle, most promising asset classes, sectors going forward etc. etc..

If 10 economists can’t agree on these matters and have 11 opinions why would anyone want to base their investment strategy (ie their own money) on anyone else’s ? All you can do is learn as much as you can (again, with experience, you are able to filter out much of the “noise” and learn how to differentiate the tiny fraction of valuable info from all the rest of the mere “opinions”) about what investment instruments are actually available to you as a private investor together with their relative merits, etc. – and then choose those which you think will be the most rewarding - and you feel you will be comfortable living with personally.

However, you should always maintain a flexible attitude and be prepared to take any necessary steps in the light of changing conditions.