Investment Funds £100 a month or split?

5erge

I'm looking at putting away £100 a month into long term investment funds, mainly with Invesco perpetual.

My idea was rather than invest £100 in one fund, split it into 3 - two funds with good peformance IP High Income etc... then 1 new fund, perhaps Neil Woodford's Equity Income fund, especially as he managed the IP High Income fund with excellent returns.

This way I'm not putting all my eggs in one basket.

Cheers

D

Lokolo

Yes that's fine, some have a minimum though, this ranges from £25-50, so make sure its possible.

Also you should look at what the funds invest in, if you invest in similar funds there could be a lot of crossover, making it entirely pointless. Trustnet and Morningstar usually have a portfolio scanner which does this for you.

jimjames

I'd make sure you are with a fund platform not direct to IP as it will work out far more expensive going direct plus fund platform will allow you to move between funds from different managers much more easily.

bowlhead99

Agree with Lokolo, you should look at the crossover between your different funds. Frankly if you are investing in an income fund from one manager and then another income fund from the ex manager of the first fund that has the same sort of focus, you're diluting the "stock picking" ability that you're paying for and just holding more and more similar companies.

Eventually if you held all manager's funds you'd have very average performance but be paying fees for lots of specialists instead of virtually no fees for an index tracker for that sector. Of course a decent tracker for your sector of choice might not be available, but you probably see the point.

When you only have £50 per fund per month it will take some time to build enough of an investment where the exact portfolio composition makes a monster difference to returns. But presuming you're going to hold more than one fund, which is no bad thing, you should make them a bit different from each other. So you could do £x in a UK fund with a focus on income-paying equities and bonds, and £y in another much more global fund (UK is a relatively small part of the total global market). Just picking funds which in recent years had "good performance" is not a great plan as economies change over time - you should just aim for broad exposure to lots of different things, because nobody knows what will go up (or go down less!) next!

Then when you end up with a total pot that's weighted quite differently to the original x:y ratio as a result of relative performance differences, you can sell out of a bit of one and put more in the other.

However although doing £50:50 or £40:60 might work, it is really not worth bothering with 25:25:25:25 or 10:20:30:40 because the returns on your <£50pm investments will take a long time to become evident and you won't be interested in the results enough to bother doing proper rebalancing. And that's if the providers even let you put small monthly amounts in. In theory you could just do £100pm in a different fund each month to have 12 funds that only get one contribution a year, but it's way too much faffing about when you can buy one or two global multi asset funds and be done with it

kangoora

Invesco PP and the CF Woodford funds are remarkably similar. Maybe not so remarkable as the current manager of Inv PP is mainly carrying on what Woodford did, with some changes to reflect his new 'style'.

So your eggs are going into similar baskets in the case of the two funds you mention.

Invesco IP

Assets in Top 10 Holdings 45.83

Name Sector Country % of Assets
British American Tobacco PLC 205 United Kingdom 5.51
AstraZeneca PLC 206 United Kingdom 5.50
Roche Holding AG 206 Switzerland 5.15
BAE Systems PLC 310 United Kingdom 4.78
Imperial Tobacco Group PLC 205 United Kingdom 4.60
BT Group PLC 308 United Kingdom 4.49
GlaxoSmithKline PLC 206 United Kingdom 4.48
Reynolds American Inc 205 United States 4.46
Capita PLC 310 United Kingdom 3.54
Reckitt Benckiser Group PLC 205 United Kingdom 3.33

CF Woodford

Assets in Top 10 Holdings 48.71

Name Sector Country % of Assets
AstraZeneca PLC 206 United Kingdom 7.65
Imperial Tobacco Group PLC 205 United Kingdom 6.65
British American Tobacco PLC 205 United Kingdom 6.48
GlaxoSmithKline PLC 206 United Kingdom 6.31
BT Group PLC 308 United Kingdom 5.03
Capita PLC 310 United Kingdom 3.93
Reynolds American Inc 205 United States 3.30
BAE Systems PLC 310 United Kingdom 3.24
Roche Holding AG Dividend Right Cert. 206 Switzerland 3.18
Allied Minds PLC 311 United Kingdom 2.95

Thrugelmir

Start with an investment such as Scottish Mortgage Trust.

This will give you Global exposure. Let the fund manager choose the right allocation.

InvestInPoker

Some discussion on those two funds here
https://forums.moneysavingexpert.com/discussion/5167878

I currently hold both as well but switching into all Woodford shortly.

Totton

I'd go with an IT as well but if you want funds then possibly Woodford and Fundsmith as a 50/50 split would give you respectable coverage.

5erge

Thanks everyone. Will think carefully.