Investing in Funds

funkey_monkey

Hi,

I’ve got approximately £70k to invest which has been sitting in a savings account. I’m not getting much return out of this money by means of self management and I have been recommended to get it professionally managed. I would do it myself but I do not know about finances and markets sufficiently to do so.

The company I have been recommended charges 0.75% for a management fee and can typically get between 4% and 6% for a cautious fund and possibly into double digits for something risky. Obviously this will be over a period of time longer than a year due to how investments can fluctuate. I am happy to accept that I need it in for a number of years for the short term volatility to settle.

The way it would be managed would be to split the money across a number of funds/investment types and markets depending on risk. Reviewed every quarter and any big gains reinvested in a way to maintain a predetermined profile and to avoid overexposure to a certain market. This will be backed up by quarterly reports and recommendations.

Who else provides a service like this and how could I check on the performance of the recommendation?

　
Thanks.

eskbanker

Talk to some independent financial advisors, if you need help finding them then https://www.unbiased.co.uk will help.

funkey_monkey

I suppose my question should be how do I go about spreading my money across a wide range of funds - i.e. create a portfolio whereby I can alter my exposure to varying markets, etc.


Would the 0.75% be on the return on investment or on the complete pot? Would this also be on top of the management % for the funds invested in?


Just how straightforward is it for someone to do this themselves with only a little financial knowledge?

Thrugelmir

funkey_monkey wrote: »

The company I have been recommended charges 0.75% for a management fee and can typically get between 4% and 6% for a cautious fund and possibly into double digits for something risky.

Markets have been negative recently. Even the best fund managers will struggle in volatile markets. Drip feed your money into a diversified portfolio. Providing you choose more winners than losers you'll be doing well.

dunstonh

I suppose my question should be how do I go about spreading my money across a wide range of funds - i.e. create a portfolio whereby I can alter my exposure to varying markets, etc.

You decide your risk profile, research which asset allocation model fits your needs and then use investments which match your risk profile, the allocation model and your level of understanding.

Just how straightforward is it for someone to do this themselves with only a little financial knowledge?

Anyone can DIY. However, whether you are able to DIY well or not is a different matter.

EdGasket

Just do it yourself. Find a lowish cost platform like x-o or AJ Bell, and buy a bunch of ETF's. Have a look at iShares core series which have low costs plus look at Vanguard ETF funds which also have low costs, typically 0.2% pa. Assuming you buy some world, Europe and Asia equities then the only thing to think about is how much you want in bonds, if any. That is because when interest rates eventually go up, the capital value of bonds will fall. If you want the security of bonds then buy a short-dated gilt like TR18 which is guaranteed to pay back £1 per bond in 2018.

bigfreddiel

EdGasket wrote: »

Just do it yourself. Find a lowish cost platform like x-o or AJ Bell, and buy a bunch of ETF's. Have a look at iShares core series which have low costs plus look at Vanguard ETF funds which also have low costs, typically 0.2% pa. Assuming you buy some world, Europe and Asia equities then the only thing to think about is how much you want in bonds, if any. That is because when interest rates eventually go up, the capital value of bonds will fall. If you want the security of bonds then buy a short-dated gilt like TR18 which is guaranteed to pay back £1 per bond in 2018.

Ditto, I use td directinvesting, completely free if you stick to equities and that includes etf's.

Warren Buffet has set up a very simple portfolio for his wife which has been widely publicised, 90% global tracker fundand 10% bonds! and he specifically suggested Vanguard

Simple, as good as a complex portfolio, and will do just as well over the long term as a portfolio of 10+ equities.

Ask yourself, if you have more than four trackers you're talking about very small percentage differences in the make up of your portfolio, so how do you decide on 5 or 10% in global bonds, or 5 or 10% in emerging markets. Will it improve your return or not? Will it make your portfolio less or more risky?

You decide and then go for the simple tracker portfolio, no more than four trackers, global equity, gilts, property and uk small caps for example.

Cheers fj

funkey_monkey

dunstonh wrote: »

Anyone can DIY. However, whether you are able to DIY well or not is a different matter.

Thi is the bit that concerns me

AlanP_2

And so it should.

As said it is reasonably straightforward to go DIY, select your own mix of Funds / ETFs / Bonds and the like that are invested in different geographic and market sectors (small / large companies, property etc).

This will cost you less per annum to run than an IFA provided service but nobody knows whether it will deliver a better or worse performance over the period of the investment.

There is no "easy answer" on this so think before taking any "just go for it" encouragement as gospel, and that applies equally to both DIY and the IFA route.

When do you need that £70k available as cash again?

What other cash savings have you got access to as an emergency fund?

Al.

Funkey,

Do you know what your capacity for investment risk and loss is? 6% for a cautious fund? I wish!

I'm assuming too, that the 0.75% doesn't include the cost of the funds and/or investment platform?

kangoora

Take a look at Monevator

http://monevator.com/category/investing/passive-investing-investing/

There's a lot of reading there though! Also, you could look into recommended reading thread

https://forums.moneysavingexpert.com/discussion/5043692

and buy a few books (Tim Hale - Smarter Investing is one a lot of people here have read)

After that you should have a reasonable idea if it's the thing for you and you can always ask more directed questions with a bit more knowledge.