LISA investment choices

Herbalus

I'm interested to know what strategies people have employed for LISAs that are destined for retirement access when over 60.

These are firmly long term investments, with say 25-30 years before many can access without penalty. Given the sensible investor has sufficient cash buffers and other S&S ISAs with a broad range of targets for identified needs in the next few years, it seems LISAs can be higher-risk funds, 100% equity at least. Volatility isn't really a problem as you can't access them anyway.

I have chosen a 50:50 split between HSBC FTSE 250 index tracker, and L&G International Index Trust. Investing £1k/year.

Reasoning is quite simple, in that L&G is the global equity tracker recommended by HL (I know, I know, their recommendation isn't necessarily important, but I don't know the differences between that and similar, and I'd rather have one recommended than not). FTSE 250 is fully home-bias related.

I don't know whether FTSE 250 is too dull for a 30 year horizon? My view is this is money I don't need for 30 years+, so the objective is simply to grow as much as possible.

keyboardworrier

I'm investing for around 30 years and put the majority into BlackRock Consensus 100, with a smaller amount in Lindsell Train Global Equity. I'd be interested to hear if anyone has any ideas about how to increase the risk/reward ratio given the time frame...

Zorillo

Mine is in VLS100 and I see no reason to worry until the value has grown substantially. 30 years is a long time.

Novice_investor101

Mine is 100% in the L&G international index trust. It's a set & forget until I'm about 55 (in 20 years) when I'll look at possibly de-risking it a bit.
I pay £100 a month and see it just as an additional pension - as I can't pay lump sums or extra regular contributions outside of my salary sacrifice, I see this as a good compromise that allows me to save more for retirement with a regular extra payment & lump sums when I'm able.

TheShape

Herbalus wrote: »

'...it seems LISAs can be higher-risk funds, 100% equity at least.

at least?

My LISA is with HL. I'm invested in Blackrock Consensus 100, partly influenced by the discount that HL offers on the fund.

Thrugelmir

Herbalus wrote: »

FTSE 250 is fully home-bias related.

By market capitalisation. The largest companies generate over 80% of their profit from overseas. The bias may not be as great as you are assuming. The bigger issue is the concentration within certain industrial and commercial sectors.

Filo25

Personally if I had a LISA I would just mirror my SIPP investments and obviously asset allocation, similar long term time horizon.

greenglide

By market capitalisation. The largest companies generate over 80% of their profit from overseas.

But the FTSE 250 is the 101st to the 350th companies by market capitalisation so it will not suffer from the same issues as the FTSE 100.

The FTSE 350 is effectively the FTSE 100 plus the FTSE 250.

I personally wouldn't want to track any of these indexes.

Herbalus

Zorillo wrote: »

Mine is in VLS100 and I see no reason to worry until the value has grown substantially. 30 years is a long time.

Aha. My S&S is with the Vanguard platform itself, so I can't see the sense in adding Vanguard products on HL where the platform cost is 3x as much. If I need more VLS I would use Vanguard platform at this time.

TheShape wrote: »

at least?

My LISA is with HL. I'm invested in Blackrock Consensus 100, partly influenced by the discount that HL offers on the fund.

Haha yes. I see what you mean with "at least". I was trying to convey longer term investing (in my view) warrants 100% equities as a minimum, regardless of whether you can go above 100%.

With Consensus 100, there are 2 of these on HL. What is the difference between them? The website says Class A is "inclusive", which means higher management fees and loyalty bonuses, but HL savings mean the fee is the same on both. Is there a difference to the fund structure?

Also, these have a buying and a selling price, with c5% difference. This puts me off, as it seems to be a 5% cost whereas other funds don't have this. Is this a supply/demand scenario or simply initial dealing costs?

ColdIron

Inclusive is the name that HL give to the older style pre 2014 Retail Distribution Review funds that included commission. It's only available for people who haven't switched to clean funds, same fund but you don't want it. A spread is common on unit trusts, it's pretty insignificant on a LISA you intend to keep for decades and partially offset by the low OCF

Alexland

You don't pay the full Consensus spread shown on HL as most if it appears to be the initial 5% which does not apply. When I invested £4k in Consensus 100 it was showing as immediately down about £10 (circa 0.25%) when valued against the sell price and was in profit the next day. Similar result when I invested the bonus. The spread is not going to deter me.

I run our ISAs more adventurously than our pensions as I prefer the higher growth in tax free wrappers. The pensions are more of a safety net and contain some bond and cash funds.