Stocks & Shares ISA: Switching Multiple Funds to One Fund; Switching to Cash.

Damage

I have a new stocks and shares ISA with Hargreaves Lansdown which I am currently regretting because I opened it before I knew anything about what I was doing (it has been taking a dive since the moment I opened it, and it's currently over £300 down). I would like to take any opportunity to get myself out of it with minimal losses, before making a more informed decision once I have learned a bit more about investing.

It seems that my options are to switch it to cash, or to another fund, but I'm not quite sure how this happens or how long it takes (I have read the HL FAQs, but am still none the wiser).

If I want to switch my multiple-fund ISA to a single fund, how would I do that? Do I need to switch the five funds to cash, then the cash back to a single fund?

Also, if I switch to another fund, or to cash, does it happen straight away, or is the price that my funds are worth now liable to change unexpectedly in the time between when I perform the 'deal' (or whatever it's called) and when it actually takes place? The value of my ISA has been all over the place since I opened it, so I don't want to think I'm only losing (for example) £60, only to find that I've magically lost £300 when the switch has taken place.

Thanks very much in advance for any information.

Lokolo

Funds are priced daily, so the price you see today will not be the price you trade at. You will place an order and it will be dealt tomorrow.

How much are we talking here and what fund?

Damage

It's the HL Vantage Stocks and Shares ISA, which I put £15,240 into. It's currently down £332.65 (now worth £14,907.35).

I was thinking that each time one of the five funds increases to around about where I started (if it does, that is) then I could switch it out to cash with minimal loss. Then once it's all in cash (if that's the sensible thing to do) I could re-invest once I know what I'm doing.

By the way, I understand that I shouldn't be looking at my ISA every five minutes and worrying about a few-percent fall, especially considering my long-ish term investment period, but the more I read of my book (Tim Hale's Smarter Investing) the more convinced I am that I've made a big mistake here.

Damage

Just to add, the actual funds are as follows:

Artemis Strategis Assets
CF Woodford Equity Income
Lindsell Train Global Equity
Newton Real Return
Old Mutual UK Alpha

Drp8713

Your talking around a 2% drop. Movement like that happen daily. Investing is a long game. Other than a bit of overlap your fund choices arnt too wild, you have global coverage in equities and total return funds/ flexible invetment funds which invest across asset clases

mvarrier

If you had put the same money in to a diversified portfolio of passive trackers you would be down too. Look at the Vanguard Lifestrategy funds over the same time period. Would it have made a difference?
If you want to switch then yes, sell to cash and then buy the funds you want.

bowlhead99

Damage wrote: »

It's the HL Vantage Stocks and Shares ISA, which I put £15,240 into. It's currently down £332.65 (now worth £14,907.35).

So about 2% down in 2-3 months? That's nothing, and I'm sure Tim Hale's book will tell you that is entirely normal for a set of funds which contain a lot of equities (or bonds or property for that matter). Tim Hale does not tell you to sell out fearful of a having made a big mistake, just because something goes below its purchase price.

I was thinking that each time one of the five funds increases to around about where I started (if it does, that is) then I could switch it out to cash with minimal loss.

The individual fund managers do not know or care what price you bought in at and have no particular goal to get you back there. So having an arbritrary target of 'getting back to break even' before you will exit a fund that you don't want to be in, is a nonsense.

It is a nice thing, psychologically, to 'not lose money' and be able to exit cleanly without the 2% loss. However if you believe that a different set of funds would more reliably produce the long term growth you are looking for, then it is silly to hold this set of investments that you do not actually want, to grow the balance from £98 to £100, instead of getting out and allowing your NEW set of investments to grow the balance from £98 to £100 and on to whatever your long term goal is.

FWIW, I have a couple of those funds in one of my pensions myself and some family members have three of them, so I have some figures to hand:

Artemis Strategic Assets : a broad remit multi-asset fund including stocks, bonds, currencies and commodities. They are currently positioned cautiously and notably are short government bonds. I hold. Up 5.5% in 3 months, up 34% in 3 years.

CF Woodford Equity Income: a UK focussed equities fund investing in companies which pay or have the potential to pay a high level of income relative to their share price. Up 0.7% in last 3 months, up 17% since inception just over a year ago. Manager has stellar track record in the sector. I hold.

Lindsell Train Global Equity: a global equities fund with a concentrated portfolio (with relatively low turnover of holdings) focused in the major developed markets of US, Japan and Europe (weighted to UK). Less than 5 year history but has done well in the bull markets since launch. Down 2% in 3 month but up 73% in 3 years. My mum has this one

Newton Real Return: an fund which invests globally across asset classes with the aim of producing positive returns in sterling in different market conditions. Down 1% in 3 months, up 13% in 3 years and up 100% in 10 years. It is more volatile than a number of other AR funds and the returns have not been much to write home about since bond returns started to dry up in the last few years, but 100% in a decade is more than double the 'targeted absolute return' sector average. So, they're not complete numpties, even if the performance in the last 3 years is only around 30th out of about 60 funds in their sector.

Old Mutual UK Alpha: A UK equities fund down 0.7% in 3 months, up 63% in 3 years. Comfortably above the average 'UK all companies' IA sector average over 3 and 5 years although lags over 10 years as it suffered more than others in the credit crunch crash. Has been managed by the same guy since late 2009 and only lagged the sector for brief periods since then (including, unfortunately for you, the last month or two)

These funds do not strike me as a particularly 'big mistake'. Might other funds deliver better returns net of management fees? Of course they might. But can you find them (once you've finished reading Tim Hale's book)? Personally, I'm not convinced you need to sell up and run for the hills. Of course, if you are concerned about the value being 'all over the place' since you opened it, perhaps you are not cut out for holding equity investments and should put the £15k with Santander for a guaranteed 3% p.a. pretax return.

mvarrier wrote: »

If you had put the same money in to a diversified portfolio of passive trackers you would be down too. Look at the Vanguard Lifestrategy funds over the same time period. Would it have made a difference?
If you want to switch then yes, sell to cash and then buy the funds you want.

True. You can just sit in cash and wait until you know what you really want, and then buy that instead.

jimjames

You don't need to switch to cash.

You can sell one fund and directly buy another. No need to cash in first.

Kendall80

Your funds seem a solid choice. Allocations may need to be looked into at a later date. The only issue is that you started up at a challenging time. I'm down 7% from my peak this year too. Dont worry about such short term wobbles. Just think of it as an opportunity to buy/invest more at a cheaper price

arbster

Given what others have said about your choice of funds, I personally wouldn't rush to switch out to cash. Time in the market is still a good thing. Your concern appears to be that you're increasingly convinced by Tim Hale's arguments on index investing, as am I. Why not finish the book as quickly as you can, identify your target allocation and attitude to risk, and then decide whether you want to switch it all to trackers, or just re-balance over time?

To echo bowlhead's comment above - if you're concerned about a few hundred pound swings then you're in for a rough ride, index-investor or not. Personally, as I'm planning a fairly hefty topping up of my pension over the next 2-3 years, the sooner we get a correction the better, if there must be one. Having said that, I'm not confident enough I know when it'll be to pause my contributions. It's all part of the joy of investing, apparently!

Damage

Thank you all for your replies, and special thanks to Bowlhead99 for such a detailed post - especially with the reassuring fund details.

My target to get out of it without a loss (i.e. break even) isn't nonsense in that I would remain out of investing for the moment, if I succeeded in getting out without a loss. It would simply return me to my starting point, with £15,240 to invest, so it isn't an arbitrary decision. My original post could perhaps have been clearer in that I would separate the getting-my-money-back part from the re-investing part. If I were to dive straight back in to another fund then my goal to break even beforehand would indeed be nonsense due to the effective continuity of the investment - assuming that my re-investment choice performed broadly the same over my investment period.

I think perhaps I have been reading too many articles recently. I currently have it in my head that I have dived in right on the tip of a peak, and forthcoming events ('Grexit' etc) are going to prompt a fall in the market, which will put me at a disadvantage right at the beginning of my investment period. I'm not worried about large fluctuations in the market throughout my investment period, and I've been told what to expect per decade of investment, which is all fine.

If it wasn't for the M&G website fiasco with my original ISA choice (as detailed in my other thread), then I wouldn't even be thinking about all this. The upset of all that cast the seed of doubt as to my subsequent choice at Hargreaves Lansdown. I originally wanted the M&G 'Sterling Class A Income Shares' fund as another family member is invested in those and they had performed well according to the paperwork I had access to.

It has been reassuring to read that my current funds aren't bad ones though, so I might just have to shut up about it all and let things happen.

Thanks again everyone for your replies. I feel a lot better about things having read what you have said.