Grateful For Advice

moneyfoolish

Like many other people, I have been driven into the Stock Market because of the current low interest rates. As a retiree, I had thought my days of stock market investments were over and all our savings were in Santander current accounts or Cash ISAs! However, because the interest rates are current so low and most of our fixed rate Cash ISAs are now maturing I moved some money into a Nutmeg S&S ISA in January. Post April, I will be investing in another S&S ISA. I could add to my current Nutmeg ISA (I split over 4 different risk classes but overall it works out as 73% Developed Equities, 12% Corporate Bonds, 9% Government Bonds Developed Markets, £% Emerging Markets and 2% Property & Infrastructure). Alternatively, I could invest in a Vanguard LifeStrategy Fund in which case I'd probably go for the 60% option. The other alternative I'm looking at is an investment in a few selected funds which leads me finally to my questions!
If I use this option, I will be using a web tool to select the funds. I've look at Trustnet and Morningstar. Are things like Fund Manager and whether Financial Advisors rate a particular fund really important? I can see the first could be although Fund Managers lose their touch sometimes. Being a cynic, I suspect Financial Advisors rate the funds from which they make most money so wouldn't take a great deal of notice of that. Is there any evidence that the "star" or "crown" ratings on these sites is very meaningful? Do people generally find these tools useful and, if so, do any of them stand out?

bigadaj

The information should be fairly independent, though not all funds subscribe and so details on those who don't is relatively scant.

I use trustnet but don't take too much notice of the crowns or star ratings. I do look at historic performance and largest holdings for the funds I hold or am interested in.

Probably most useful is the data across funds, such as asset allocation by asset class, geography etc, and also the relative returns and volatility and risk. It's pointed me towards balancing asset allocation and geographical investment, which I'm slowly addressing and also oddities on initial review, such as the range of funds can reduce risk even where they are in risky or volatile areas because you are simply spreading the risk more widely.

pip895

I use trustnet quite bit - I find the risk score (both for the individual funds and overall portfolio) very useful. I don't take much notice of the quality ratings, although I'm not unhappy if a fund I happen to pick has a good rating

dunstonh

I split over 4 different risk classes but overall it works out as 73% Developed Equities, 12% Corporate Bonds, 9% Government Bonds Developed Markets, £% Emerging Markets and 2% Property & Infrastructure

Thats a jump up the risk scale for someone that is only doing it because of perceived low interest rates.

Being a cynic, I suspect Financial Advisors rate the funds from which they make most money

How do you work that out? Advisers are paid the same irrespective of the funds recommended.

moneyfoolish

dunstonh wrote: »

Thats a jump up the risk scale for someone that is only doing it because of perceived low interest rates.


How do you work that out? Advisers are paid the same irrespective of the funds recommended.

1. I agree although I'm only investing 2.5% of my total savings at the moment. My natural instinct is to keep the vast majority of my savings totally safe and to be very adventurous with a small proportion instead of taking a lower risk with a larger proportion.

2. I'm probably being ignorant as I was assuming the recommendation rating was based on financial companies such as HL who I thought got bigger payments from some fund managers than others as opposed to individual advisors.

dunstonh

2. I'm probably being ignorant as I was assuming the recommendation rating was based on financial companies such as HL who I thought got bigger payments from some fund managers than others as opposed to individual advisors.

HL is a product provider that was (like all bundled platforms) paid an undisclosed commission that would vary depending on the fund. There have been many concerns that certain platforms promoted funds on the basis of what they were paid. This is one the of the reasons why the platform review requires platforms to move to explicit charging. Advisers on the other hand have not been able to be paid commission since January 2013 and even previous to that nearly 20 years, the amount the adviser received was disclosed. It was typically 0.5% across the board (exceptions apply). Unbundled/clean pricing platforms have been available longer in the IFA world than the DIY world.

grey_gym_sock

i wouldn't pay much (or perhaps any) attention to "ratings" for fund managers. i think morningstar's own research showed that their star ratings were useless as a way of predicting funds that would do well (but that picking funds with lower charges did work).