Investing in Funds

IanSt

funkey_monkey wrote: »

At 40 years old, I was thinking that the LS100 fund would be taking on too much risk.
Maybe the LS 60 (or LS80) would be more sensible options.

You could have another 50+ years where you'll first be contributing and then drawing out from your pension - so there are many different types of risk that you need to consider.

For instance you have to consider the risk of running out of money if your portfolio is too conservative and your expectations too high. In that case the inflation proofing of a big chunk of equities might help.

Yes there is the risk of market corrections and then 100% equity funds will likely drop further than those with some bonds, but history has so far shown that globally diversified equity funds will regain and pass their previous highs.

So don't just consider the fund in isolation, you need to consider how it would work within your total portfolio.

Prism

funkey_monkey wrote: »

Thanks - seems like a lot of funds out there to down-select from.

At 40 years old, I was thinking that the LS100 fund would be taking on too much risk.
Maybe the LS 60 (or LS80) would be more sensible options.

Only you can decide how much risk you should take. I am 46 and 100% in equities. I plan on staying this way until 5 years from retirement when I will look at reducing that. If the world then is like the one now then that would probably be a 40/60 bond/shares split but things could be very different. I 'need' to do this because I played it too safe early on and also didnt save enough. Your requirements however are likely very different, but there is no hard and fast rule.

funkey_monkey

Hi everyone - thanks for all the useful advice.
I think my portfolio with the advisor (£130k split evenly across low, medium and high risk funds) is pretty balanced, so taking on board what you are saying, the LS100 might be a better option for a portion of my funds.
I've also got approx £40k sitting in a bank account. So I feel I have a good spread of money.

Also, I've got a LISA opened with the minimum amount. Should I max it out first with my money and then opt for the straight investment into LS100.

I've done some brief digging about and there doesn't seem to be many alternatives to LS100. HSBC World Selection Adventurous Portfolio C Acc would be the main alternative that I've seen, although its fees are 0.8% compared with 0.22%. Performance appears to be similar.

dunstonh

ve done some brief digging about and there doesn't seem to be many alternatives to LS100.

Look in the global equity sector.

funkey_monkey

I did but I thought the best thing was to get a fund of funds? I've been looking at 'mulit-manager funds' as well - as I think this is different terminology of the same thing.
Baillie Gifford Managed B Acc is quite close in terms of performed to LS80.
However, LS100 seems to out perform both.

There are over 100 funds listed on Trustnet ahead of LS100 in terms of performance over a 5yr period.

However, Baillie Gifford have the following two funds (single manager) which both appear to be performing well over the 5yr period:
- Baillie Gifford Global Discovery B Acc (TER: 0.77%)
- Baillie Gifford International B Acc (TER: 0.6%)

Both of these funds are consistently in the first quartile. Am I barking up the wrong tree with LS100 - and should I opt for one of the above Baillie Gifford funds? Their TER is higher.

What is confusing me is that although their performance is much better than LS100, the yield is significantly less.
Baillie Gifford International is returning a yield of 0.46% whereas LS100 has a yield of 1.71%.
So which is the better fund? Sorry this must be such a basic question

Prism

funkey_monkey wrote: »

Baillie Gifford have the following two funds (single manager) which both appear to be performing well over the 5yr period:
- Baillie Gifford Global Discovery B Acc (TER: 0.77%)
- Baillie Gifford International B Acc (TER: 0.6%)

BG Global Discovery is a global small companies fund. You would expect it to do well during the good years which we have had recently. It also however performed fairly well during the financial crisis. I have this fund in my portfolio but it is only about 7% of the total.

BG Internation is a global large company fund with no UK exposure and quite a high emerging markets percentage.

Both of these funds are consistently in the first quartile. Am I barking up the wrong tree with LS100 - and should I opt for one of the above Baillie Gifford funds? Their TER is higher.

What is confusing me is that although their performance is much better than LS100, the yield is significantly less.

They are active global funds rather than 'fund of funds'. Both have had great returns so far. Will they continue to do this nobody knows.

Baillie Gifford International is returning a yield of 0.46% whereas LS100 has a yield of 1.71%.
So which is the better fund? Sorry this must be such a basic question

Both BG funds invest in growth companies that spend more of their profits rather than paying dividends. LS100 includes all of the banks, utilities, energy companies and house builders that pay higher dividends.

funkey_monkey

Prism wrote: »

They are active global funds rather than 'fund of funds'. Both have had great returns so far. Will they continue to do this nobody knows.

Okay - so other than creating my own portfolio there are not many alternatives to the LS100? The ones I've looked at do not come close to LS100. Conversely, there are a number of funds which outperform LS100 by a factor of two.

I've came from reading Monevator which has LS as a darling fund.

What should I do here? Go majority into the 'safe' bet that is LS100 but hold a small bit to play with in funds such as the BG funds?

My main goal here is to put some of my cash (£10k) into something higher risk for about 10 years in order to hopefully make some good returns.

Prism

funkey_monkey wrote: »

Okay - so other than creating my own portfolio there are not many alternatives to the LS100? The ones I've looked at do not come close to LS100. Conversely, there are a number of funds which outperform LS100 by a factor of two.

There are other passive managed funds like LS100 which aren't fund of funds. For example Vanguard FTSE Global all cap.
https://www.trustnet.com/factsheets/o/ngly/vanguard-ftse-global-all-cap-index-a-acc-gbp

However many of them are ETFs. If your platform allows access to these then there are many more options.
https://www2.trustnet.com/passive-funds/global-equities.html

However the high performance ones over the last few years you are referring to are active funds. They have higher charges but might or might not get you better performance. If you fancy one of these then either the two you mentioned, or Lindsell Train Global, Fundsmith and others. Most people wouldn't invest their entire portfolio into an active fund but of you are looking for a part of it then you could research some of these.

Audaxer

funkey_monkey wrote: »

Okay - so other than creating my own portfolio there are not many alternatives to the LS100? The ones I've looked at do not come close to LS100. Conversely, there are a number of funds which outperform LS100 by a factor of two.

I've came from reading Monevator which has LS as a darling fund.

What should I do here? Go majority into the 'safe' bet that is LS100 but hold a small bit to play with in funds such as the BG funds?

My main goal here is to put some of my cash (£10k) into something higher risk for about 10 years in order to hopefully make some good returns.

What about this L&G International Index fund which has virtually no UK equity:
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-international-index-trust-c-accumulation

Alexland

Audaxer wrote: »

What about this L&G International Index fund which has virtually no UK equity:
http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-international-index-trust-c-accumulation

And consequently nearly 60% US exposure.