Some advice please (Index Tracker vs. Fund of Funds vs. Certs)

Ximian

Hi everyone,

I'm looking for some advice please. I still have my £4000 ISA allowance to invest for this year and have been researching a few options:

Fidelity Index Tracker
Fidelity "Funds of Funds"
NS&I Index-linked Savings Certificates

Regarding the Index tracker, is there another provider that I should consider besides Fidelity? Is Legal and General better or worse than Fidelity (performance, customer care, service)?

Is there an alternative product that I should consider besides the one's mentioned above?

I also had a look at the Fidelity European Fund and while the management costs may be higher, the returns look very good over a 5 year period.

My attitude towards risk is low, and I'm looking to invest a lump sum rather than a regular sum.

Thanks!

Aegis

Without knowing anything about the funds in question, I'd have to echo the advice I've seen here before and suggest that with £4000, you should be looking at at least 4 different funds in different areas to ensure that a single correction or crash of the wrong market won't cause you all sorts of trouble with all of your invested money.

Other than that, I'd also suggest looking into some low risk managed funds as well as trackers. Some of them are very low risk, and stand a good chance of outperforming trackers of the same market.

dunstonh

Regarding the Index tracker, is there another provider that I should consider besides Fidelity? Is Legal and General better or worse than Fidelity (performance, customer care, service)?

If you are talking FTSE100 or FTSE all share trackers then you are talking limited performance on all of them. So, it doesnt really matter which you choose.

I also had a look at the Fidelity European Fund and while the management costs may be higher, the returns look very good over a 5 year period.

It doesnt matter what its done in the last 5 years. It hasnt had the same manager for that 5 year period. Plus, I dont know fund research data you have but this fund has been in decline for a few years now and has gone from being a good fund under previous management (and early management of Tim McCarron) to being bottom quartile fund. I suggest you review your research again.

My attitude towards risk is low, and I'm looking to invest a lump sum rather than a regular sum.

So, why you are looking at FTSE trackers (medium/high) and Fidelity European (med/high)?

There are also better FoF's than Fidelity's offerings.

Jonbvn

I assume you understand that NS&I Index-linked Savings Certificates are not part of an ISA? I.e. You can hold them and ISA's.

IMHO, ILSC's should form part of your portfolio, only after you have maxed-out your ISA's. Provided you are investing for the longer term, an S&S ISA should comfortably outperfrom ILSC's.

Ximian

Thanks for the advice all, much appreciated.

dunstonh: I got the Fidelity European Fund performance figures from Fidelity, in a free information pack

I'm not sure what other types of investments I should be looking into, I'd appreciate if you could recommend some Fund of Fund providers and products.

Jonbvn: yes, sorry I never made it that clear. I looked at the NS&I info due to tax free interest over a mid term.

plonkee

Quote:
Regarding the Index tracker, is there another provider that I should consider besides Fidelity? Is Legal and General better or worse than Fidelity (performance, customer care, service)?
If you are talking FTSE100 or FTSE all share trackers then you are talking limited performance on all of them. So, it doesnt really matter which you choose.

Actually thats not true. If you are comparing tracker funds that track the same index from reputable companies, then the best one will be the cheapest one. Fidelity's moneybuilder uk index is the cheapest one that I have found.

And yeah, if you've got £4000, you don't want it all in one fund ideally (you can do different sorts of trackers though).

amcluesent

A simple tracker done as an Exchange Traded Fund (ETF) is an option. iShares FTSE 100 (ISF) did me well since 2003. But I've cashed out now...