FTSE-tracking ISA

garybarlowsbeard

I don't really understand how these work in terms mof the diffrences between what different institutuions offer, what you get as a return and what and how they charge fees. Basically I'd like to drip feed, say £200-£500pm into one but not sure which is the best. Can anyone give me a simple answer - "XYZ's is the best" or point me to a useful site for comparison?

Cheers in advance
GBB

dunstonh

Basically I'd like to drip feed, say £200-£500pm into one but not sure which is the best.

Paying that amount into a single sector fund is generally regarded as bad investing. You are putting your eggs all in one basket.

Can anyone give me a simple answer - "XYZ's is the best" or point me to a useful site for comparison?

No. There is no best. As mentioned, what you want to do is certainly not the best thing. It doesnt matter if its tracker or managed, single sector investing is bad. If you dont want to manage your own portfolio then you should use a portfolio fund/multi-manager fund. These are available in tracker and managed form and the selection can cover most risk scales.

A tracker will follow the index you are tracking but slightly underperform it due to charges. You invest in a tracker to give you mid table consistency in the short term with a view that over the long term, it will give top half performance.

badger09

garybarlowsbeard wrote: »

I don't really understand how these work in terms mof the diffrences between what different institutuions offer, what you get as a return and what and how they charge fees. Basically I'd like to drip feed, say £200-£500pm into one but not sure which is the best. Can anyone give me a simple answer - "XYZ's is the best" or point me to a useful site for comparison?

Cheers in advance
GBB

No one can give you the answer 'XYZ's is the best'

An S&S ISA is simply a tax efficient 'wrapper' for whatever investment you choose (or are allowed) to put in it.

Your starting point is to decide on your investment strategy - have a read around the Savings & Investment forum - especially at threads discussing Passive Investing, if that's the way you choose to go. Have a look at this site for easily digestible information.

http://monevator.com/category/investing/passive-investing-investing/

A FTSE tracker would not be ideal as your only investment - diversification is important .

Once you've decided on what you want to invest in, you can then research which provider is the cheapest. Again, the Savings forum has lots of threads, and there's also this site
http://www.comparefundplatforms.com/

I'm sure someone with more experience will be along shortly, but hope that give you some pointers, and apologies if you already know all this

garybarlowsbeard

Thanks guys but a few things:

1) Why would you assume this is my only investment?
2) I know what a S and S ISA is and want to use it for a ftse tracker.


I just wondered if anyone knew who charges the lowest fees for such an investment. I'm not looking for general advice about how to invest or manage my portfolio.

Ta
GBB

jimjames

garybarlowsbeard wrote: »

Thanks guys but a few things:

1) Why would you assume this is my only investment?
2) I know what a S and S ISA is and want to use it for a ftse tracker.


I just wondered if anyone knew who charges the lowest fees for such an investment. I'm not looking for general advice about how to invest or manage my portfolio.

Ta
GBB

2) I guess it was due to the thread title. As an ISA is just a wrapper there isn't really an index tracking ISA but an ISA can contain index tracking funds.

For a tracker the best is essentially the cheapest that tracks the index you are after. Which fund/platform that is depends on your investment value but for the kinds of numbers you mention it would probably be Cavendish fund supermarket and HSBC trackers.

redbuzzard

The FTSE is hardly a single sector fund. It is a single asset class.

But as a long term investment with regular contributions it seems pretty diverse to me, and I wouldn't be losing any sleep over not having bonds at the moment, or at all if I was a long way off retirement.

The best long term investments I've had have been L&G FTSE trackers filed and forgotten.

Most people will hold cash savings too, and should.

dunstonh

1) Why would you assume this is my only investment?

The way you framed your question indicated you are an inexperienced investor. The questions you asked are novice and not typically what you would expect with someone with other holdings. Also, you are asking where you should buy it. An existing experienced DIY investor would have a platform already.

The FTSE is hardly a single sector fund. It is a single asset class.

it is a single sector fund. UK equity.

The best long term investments I've had have been L&G FTSE trackers filed and forgotten.

UK equity has been one of the worst long term performing single sectors for a couple of decades. That doesnt mean you dont have it as part of a balanced portfolio.

I just wondered if anyone knew who charges the lowest fees for such an investment.

It depends on where you buy it and whether you want to be compliance with forthcoming rule changes or get a few months or so of old style charging before being moved to something different.

redbuzzard

dunstonh wrote: »

it is a single sector fund. UK equity.

Perhaps we are at cross purposes and you refer to IMA sectors.

A sector fund to me is one that invests in a specific industry or sector of the economy.

You had me worried for a moment, I thought perhaps usage had changed (maybe it has?) but a quick google finds no other definition, not on page 1 at any rate.

http://goo.gl/Yd9Jr

The FTSE by that definition covers all sectors, more or less.

Personally I would add some global cover as well, but the FTSE is pretty international in its exposure and lobbing a couple of hundred quid a month at it is hardly a major investment mistake providing it's not all you have in the world.

How much international equity exposure is generally considered reasonable in professional circles?

dunstonh

Perhaps we are at cross purposes and you refer to IMA sectors.

A sector fund to me is one that invests in a specific industry or sector of the economy.

Yes we are in that case. When investing in funds, sectors also mean the sector of the market you are investing in. e.g. UK equity, US equity, Property, Fixed interest etc. Asset allocation and sector allocation are very much intermingled nowadays depending on which investment universe you are you looking at.

How much international equity exposure is generally considered reasonable in professional circles?

Varies on risk profile. As purely an indicator, our lowest risk based profile has 9.1% overseas equity and 5.6% UK equity. Highest has 61.6% overseas equity and 38.4% UK equity. Middle (more or less as scale doesnt have an obvious middle) is 30.8% overseas equity and 19.2% UK equity.

Other actuarial produced sector allocations have similarly reduced UK equity over the last 5-7 years.

Personally I would add some global cover as well, but the FTSE is pretty international in its exposure and lobbing a couple of hundred quid a month at it is hardly a major investment mistake providing it's not all you have in the world.

The FTSE has lost more than 42% on two occasions in the last 14 years. That is way above the average consumer risk profile. So, that is the first concern with going single sector.

The FTSE100 for performance has been 18/23 over the last year, 16 out of 23 over last 5 years and 20/23 over last 10 years. (that is out of the 23 major equity indexes to April 2013).

So, it has a high downside potential and hasnt had a great upside performance relative to other options. The risk of single sector investing is evident when you look at Japan. It suffered the Tsunami and the markets underperformed in that period. How would the Thames flooding putting central London out of action for years cause the UK market to react?

Some people say that in a global economy it matters less. There is some element of fact in that. However, when you look at the regional/country differences in returns, you will see that there is a lot of difference. So, if you are willing to take on high risk by investing in one sector, would it really be the FTSE you would want?