Recommendations on switching from Child Trust Fund to Junior ISA?

confusedmummy

At the moment my children have Child Trust Funds opened by the Government when they were born. They are both HSBC stocks and shares ones. Family members add about £1,500 to each every year. They have done quite well, however, I am thinking of converting them into Junior ISA's which I understand have the same tax advantages and cannot be accessed until the child is 18 but tend to have much lower charges and some other advantages. Is this correct?

Can anyone give me some advice on the following;

1) What is the best Junior stocks and shares only ISA in terms of minimum charges and best performance?

2) What is the best Junior cash ISA in terms of interest rate (preferably one that is fixed and doesn't have some sort of introductory rate). I don't want to have to switch ISA's every few years to chase better rates.

Thank you.

eskbanker

http://www.moneysavingexpert.com/savings/junior-isa includes a best-buys section for cash JISAs and a link to https://www.moneysupermarket.com/savings/junior-isas/ for comparing S&S ones.

Alexland

Also worth considering Orbis Access who are unique in only charging a fee if they outperform the benchmark (and rebate fees if they underperform). Their investment strategy has outperformed by an average of 4% pa since the late 1980s although the radical retail fee structure was only devised a couple of years ago.

They are offering no fee units for transfers and new money into their Junior ISA during the first 12 months (which can cover 2 tax years) until the child is 18.

I have been really pleased with the performance of my son's Orbis Access account and he is up about 7% since opening in April.

confusedmummy

Alexland wrote: »

Also worth considering Orbis Access who are unique in only charging a fee if they outperform the benchmark (and rebate fees if they underperform). Their investment strategy has outperformed by an average of 4% pa since the late 1980s although the radical retail fee structure was only devised a couple of years ago.

They are offering no fee units for transfers and new money into their Junior ISA during the first 12 months (which can cover 2 tax years) until the child is 18.

I have been really pleased with the performance of my son's Orbis Access account and he is up about 7% since opening in April.

Thanks for the recommendation! Will take a look.

Alexland

If you are going with Orbis Access and the children are old enough to have CTFs then I would suggest the Global Balanced Fund rather than the more volatile Global Equity Fund.

Both funds are Morningstar 5* rated however when they do really well in outperforming the fee applicable units (for contributions after 12 months) can be as high as 2% to 3%. On the flip side they give you their money back from a reserve if they underperform. However even the Global Balanced Fund is higher risk than a traditional 60/40 tracker.

Alex

confusedmummy

Alexland wrote: »

If you are going with Orbis Access and the children are old enough to have CTFs then I would suggest the Global Balanced Fund rather than the more volatile Global Equity Fund.

Both funds are Morningstar 5* rated however when they do really well in outperforming the fee applicable units (for contributions after 12 months) can be as high as 2% to 3%. On the flip side they give you their money back from a reserve if they underperform. However even the Global Balanced Fund is higher risk than a traditional 60/40 tracker.

Alex

If you don't mind me asking, how does this compare to the HSBC UK Growth & Income Fd CTF Accumulation which they are currently invested in in terms of performance and risk?

https://markets.ft.com/data/funds/tearsheet/summary?s=gb00b06f4j59:gbx

The fee is 1.50% per annum.

I know nothing about how these things work.

Alexland

Using data from the FT website if you invested £1000 in July 2012 your HSBC fund would have delivered a gain of nearly £600 which is slightly below the UK category benchmark and the Orbis Global Equity fund would have delivered a gain of £1000 which is significantly higher than the Global category benchmark.

The Orbis fund accelerated more during periods of market gain and decelerated more during periods of market loss so is the more volatile. Possibly also as your HSBC fund is 88% shares.

Alex

Alexland

Orbis have just sent me an email as they are again running a £100 matched promo on both ISAs and Junior ISA. So for the first £100 you invest they will invest a further £100 into your account.

My son took this offer back in April and the matched money was invested within about a week of the offer closing which in this case is 2nd October. Hovever the free money does count towards his Junior ISA allowance for the year.

You still get the 12 months of buying fee free units with their Junior ISA (not regular ISA) product. I only have a few days next April to stick in the FY18/19 contributiond to qualify for a total of around 9k with no fees.

Agram

Thank you for the Orbis Access suggestion Alexland. Still got a lot of reading to do before I decide who to go with.


I can't find mention of annual charge having a maximum limit for Orbis, so are companies like Vanguard Junior ISA with 0.15% capped at £375 a year a better option?

Alexland

Comparing the same 5 year FT data the performance of both the Orbis strategy and VLS100 fund they were both excellent delivering similar results although the Orbis did slightly better.

Remember the Vanguard platform fee is 0.15% but the VLS fund is an extra 0.22% uncapped. Orbis have no capping (they don't charge for the platform anyway) and their fund fee is entirely performance based they even absorb fund running expenses (trading, etc) if they don't outperform.

Orbis are unashamed stock pickers using a team and method based approach (so no star fund manager) whereas Vanguard are trying to track the index with minimal human decision making.

The majority of my investments are in passive Vanguard or Blackrock funds so I am using Orbis as something with a bit more risk and potential reward. Certainly with a matched £100 and buying fee free units for the first 12 months it seems a no brainer.

You could always transfer it to Vanguard later if you are not happy or want to start dialing down the risk as the child gets older?

Whichever you pick hope it does well for you.

Alex