Investment trusts for children

pandhandj

Hi All,

i have £5K to invest for my daughter and I was thinking of a unit trust. However, as this will be my first ever investment, I am unsure of where to get info on how to go about this.

I think that i want to go for a managed fund, as I dont think i know enough about investing to choose my own funds...yet.

I have had a look at citywire and the FT website, but the info on these sites appears to be for somone one who knows more than i do.

To this end, can anyone advise somewhere where i can research how and when i should make my choice.

thanks in advance for your help,

pandhandj

dunstonh

To this end, can anyone advise somewhere where i can research how and when i should make my choice.

You mention investment trust in title but unit trust in post. Which do you want it to be?

If unit trust (inc OEIC and SICAV) then you have around 2000 of these.

You choose them based on your attitude to risk, investement aims and your chosen investment strategy (i.e. sector allocation, asset allocation or high yield portfolio as three examples). In your case and low knowledge, picking 5 funds and investing £1k in each would be a good idea. You would pick a spread that averages out to your attitude to risk.

Funds tend to be listed by sector (area they invest in). However, you have to be wary looking at performance tables as all the funds in the sector will not have the same risk and aims. You may have funds that aim for second quartile consistency and funds that aim for outperformance. The outperformance funds will tend to be more volatile than the consistent ones. Your risk profile will decide which you should be aiming for.

The league tables like citywire and FT give basic data and is designed for the casual investor who wants a bit more info but doesnt want to pay for full data access. It is also a bit risky relying on those at this time as most of these free versions only go back 5 years and are presently only showing mostly good periods. You need 8 years or more to show the last crash to get a good idea of the sorts of losses that could occur in a bad period.

Like any subject, it takes time to research and understand how these things work and what the different data means. http://www.incademy.com/pages/home.htm?ginPtrCode=10002 is a good site to learn the basics on the different types of investments and what some of the terms mean.

pandhandj

thankyou dunstonh, i shall go away and do some learning!

pandhandj

agal

You may find this page helpful http://www.trustnet.co.uk/general/brochures.asp?brochure=children
It has links to some Investment Trust Children's Savings Plans.