Protecting Investment Value

slinga

I have a largish investment in UT ISAs and now with the Fed possibly going to start tapering on QE in 2014 I want to switch my holdings to funds less likely to be effected by the reduction in QE.
I wanted to switch to Henderson Money Market fund but that's not available as an ISA.

Does anyone have any other suggestions of fund which either won't be effected by any taper or will only have smallish downsides.

I think tapering might produce downsides of 20+%

dunstonh

I think tapering might produce downsides of 20+%

Is that on top of the recent decline or inclusive?

Trying to time the market is usually futile. People leave too early or too late and go back in too early or too late and end up with returns that would have been better just punching through and rebalancing as normal.

If you are determined to stay in cash then use the cash account on your platform if it has one.

pip895

You cold take a look at some of the funds in the targeted absolute returns section and pick one - or better a few, that weren't affected by previous taper talk.
I cant help thinking that most of it should be factored in by now and that any dip could be shot lived - but I'm holding a few of these funds as insurance/ in place of bond funds.

slinga

dunstonh wrote: »

If you are determined to stay in cash then use the cash account on your platform if it has one.

Wouldn't a cash account mean I had to come out of the ISA??

Must admit I'm considering coming out of the ISA and then buying the Henderson MM fund outside the ISA but can't get my head around the fact that it would then take me 10 plus years to get the funds back inside ISAs.

pip895

If you are talking about moving ~100k out of an ISA just to put it in a cash fund I think it could be a big mistake. There are very safe funds available inside the isa. Never mind taking 10 yeas to get it back in - the rules might change and you might never get it back in.

dunstonh

Wouldn't a cash account mean I had to come out of the ISA??

Depends on the platform. Many platforms have the cash account per wrapper as well as an unwrapped cash account. Where there is a cash account within the wrapper, you can use this with the ISA. This is more common on the IFA platforms but it wont be long for the DIY platforms to follow suit if they have not done so already.

Must admit I'm considering coming out of the ISA and then buying the Henderson MM fund outside the ISA but can't get my head around the fact that it would then take me 10 plus years to get the funds back inside ISAs.

And with tax saving being about 1% p.a. on average, you would effectively lose 10% or so through tax. So, effectively creating a loss due to tax. Plus, with no income yields of 3-5% and instead getting 0.5% if you are lucky, you would actually lose more in this action than a typical market crash or correction.

slinga

pip895 wrote: »

There are very safe funds available inside the isa.

Care to name two or three???

Just for info.

pip895

Ok - picking three available on HL without spread or platform charge

1. Kames UK Equity Absolute Return (Accumulation) Trustnet risk score - 19
2. Ignis Absolute Return Government Bond (Accumulation) - 27
3. Henderson European Absolute Return - 37

Both the Kames & Ignis funds look to have negative correlation with equities & bonds the Henderson is one is one I have in my portfolio and has/is doing very well, with pretty low correlation to taper tantrums.

Totton

I wouldn't call any investment fund 'very safe' but possibly Ruffer may be worth looking at. I am using their Equity & General fund at the moment but there are a few choices alongside their Investment Trust if you prefer those. You can keep the S&S ISA in cash within the ISA provided you intend to invest it at some stage, generally HMRC don't chase this up so you'll most likely be okay if moving into cash within the a/c - I haven't had a problem doing so and usually my a/c does have a cash element awaiting an investment choice.

noclaf

My S&S ISA has taken a battering this last month but I will try to weather the storm rather than bail...bumpy ride ahead but costs of selling stocks is v prohibitive

slinga

pip895 wrote: »

Ok - picking three available on HL without spread or platform charge

1. Kames UK Equity Absolute Return (Accumulation) Trustnet risk score - 19
2. Ignis Absolute Return Government Bond (Accumulation) - 27
3. Henderson European Absolute Return - 37

Both the Kames & Ignis funds look to have negative correlation with equities & bonds the Henderson is one is one I have in my portfolio and has/is doing very well, with pretty low correlation to taper tantrums.

Thanks very much for that info.
I'm quite interested in the Kames and Henderson suggestions and will consider further over the weekend.