Collective Investment Account - cut my losses now?

Always_the_realist

Hi
Overview - I am 53, female, ex civil servant of 32 years, small pension due at 60. sold my main property, downsized (kept a small mortgage) and with the remains invested with a business partner into a limited company building houses and gave up my cs job. Did ok but (long story) bad financial management meant we didn't achieve the profits we should. the majority of the profit is now invested in the final property which should sell in about 18 months (i'm living in it). About 20 months ago 90k I had back from my initial investment I invested through an IFA, in an Old Mutual Wealth Collective investment account (stocks and shares). I opted for the low risk option. I can post the companies invested in. I know very little about investments but after taking advice off here, I decided to go in that direction rather than buy property. (The purpose of this investment was looking at a 10 year plan and the FA gave me all the info about investments going down etc but that historically I should be looking at 2 to 3% growth above the base rate. I was charged a 1% fee. For personal reasons I had to withdraw 30k to help with my business about 6 months ago. The money was fed into the account over 9 months and approx. 52 is now wrapped in an isa. my concern is that this investment has done nothing but lose money and I have lost all confidence. My 60k is now worth 57,500. My situation has changed. We are not continuing with the business. My only income now is from renting my house 750 pm and from a small part time retail job. I am not yet desperate for the money but, giving the continuing uncertainty with Brexit, and watching my investment grow less practically every day, I would appreciate views as to whether I should stick it out in the hope that it will do well over ten years or whether to cut my losses now.

fwor

Unfortunately, nobody can give you an answer with certainty. Essentially it comes down to your attitude to the potential risk of loss.

It's commonly said that past performance is no guarantee of future results, but past performance data is all we have.

If you try to draw an analogy between what has happened in the last few months and what happened in 2008 (which was of course the last major negative event) then the decline in values continued for many months during that event.

For example, all of my collective investments were still declining in 2009, from memory. And yet the markets recovered. It varies depending on exactly what funds you were invested in, but mine were generally back at breakeven within around 2 years, and they then performed extremely well for years.

But ultimately it is up to you - whether you feel sure that you can keep your nerve if things get worse before they get better.

jonnygee2

I would appreciate views as to whether I should stick it out in the hope that it will do well over ten years or whether to cut my losses now.

No one can predict the future. However over a 20 month period it isn't that uncommon for shares to lose value. A lot of first time investors do get scared by seeing their money 'go down' but most this corrects in time and people are better off holding fast. One surefire way to lose out on investments is to cash out when it's down!

But, there is a chance of further short term decline. If you are likely to need to withdraw this money again in the next five years, then keeping it in investments might not be a good idea. If you are sure you can keep it invested for 5+years (preferably more) it's probably best

At least posting the number of companies and types of investment would help in giving more specific advice. I guess they are a mixture of stocks and bonds? Is this a managed fund? Global or just UK?

Always_the_realist

Hi

Thank you both for your responses. It has made me feel a little better.
Not sure if this is going to work but I've tried to copy and past (can't seem to print screen). Approx 4500 is in a collective investment account waiting to be put into the isa in April (may have misled at the beginning)

Fund name
Unit
Type
Units
(number)
Unit
price
Fund
value
Fund Info
Standard Life Global Absolute Return Strategies -U
Accumulation
7,287.8499
55.67
£4,057.15

Aviva Investors Multi-Strategy Target Return -U
Accumulation
3,518.3557
102.48
£3,605.61

BlackRock UK Absolute Alpha -U2
Accumulation
735.3498
103.60
£761.82

Stewart Inv Asia Pacific Leaders -U
Accumulation
248.5920
746.86
£1,856.63

HSBC American Index -U
Accumulation
275.1002
529.30
£1,456.11

Invesco Global Targeted Returns (UK) -U2
Accumulation
1,880.0226
215.20
£4,045.81

Janus Henderson Multi-Asset Absolute Return -U
Accumulation
851.3197
115.90
£986.68

Janus Henderson UK Absolute Return -U
Accumulation
593.6134
161.40
£958.09

Jupiter Absolute Return -U
Accumulation
1,748.9045
55.57
£971.87

Jupiter Distribution -U
Accumulation
2,817.2903
103.59
£2,918.43

Jupiter European -U
Accumulation
78.1943
2,294.15
£1,793.89

Jupiter Strategic Bond -U
Accumulation
1,667.1892
101.30
£1,688.86

LF Lindsell Train UK Equity -U
Accumulation
598.2219
390.91
£2,338.51

Liontrust Special Situations -U
Income
503.0571
383.73
£1,930.38

M+G Feeder of Property Portfolio -U
Accumulation
197.9748
1,432.38
£2,835.75

M+G Global Target Return -U
Accumulation
938.3138
101.29
£950.42

Merian Global Equity Absolute Return -U2
Accumulation
2,887.5103
114.68
£3,311.40

Newton Real Return -U
Accumulation
2,153.1593
116.00
£2,497.66

Premier Multi-Asset Absolute Return (C) -U
Accumulation
2,347.1008
119.94
£2,815.11

Rathbone Multi Asset Total Return Portfolio -U
Accumulation
460.1557
126.80
£583.48

Slater Growth -U
Accumulation
408.6599
486.16
£1,986.74

SVS CH Tenax Absolute Return Strategies -U
Accumulation
623.3986
158.30
£986.84

Threadneedle Dynamic Real Return -U
Accumulation
853.8103
109.97
£938.94

Threadneedle UK Property Authorised Trust (Fdr) -U
Accumulation
426.8641
539.80
£2,304.21

Troy Trojan -U
Accumulation
898.3620
298.98
£2,685.92

Vanguard LifeStrategy 100% Equity -U
Accumulation
8.5592
19,893.00
£1,702.68

MaxiRobriguez

You have multiple different funds compromising shares, bonds and property.

Investing carries risk. It does not go up in a straight, predictable line.

If you don't need to access the money for a while yet (say, 10years plus), then I would leave your money where it is. If you "cash out" and crystalise a loss what else are you going to do with the money? If you put it in a risk free bank account then you lose out to inflation.

george4064

One thing I recommend you do is try to consolidate your holdings. You have far too many funds for the amount of cash you are investing, and in addition there is a lot of overlap between the funds which effectively means you might as well be better off in cheaper passive investments (as you are eliminating the extra active 'element' by investing in so many active funds covering the same asset classes).

Audaxer

Many investment portfolios have lost more than yours in the last 18 months or so. The 2 to 3% growth above base rate that you were forecast would be an estimated average over the long term, say 20 years. It just so happens that most investments have not done that well since you started investing, but hopefully things will pick up, but they may well get worse before that happens. I definitely wouldn't sell up for cash as that would just crystallise your £2,500 loss.

It is a low risk fund and I see there are a lot of Absolute Return type funds in there which are designed to try and limit losses if the markets crash, but I don't think that is guaranteed. You could have a look at your Old Mutual fund on Trustnet.com and you will be able to see how it compares to other similar funds performance-wise over a longer term. If it compares badly historically you could have a chat with your IFA about the performance, possibly with a view to changing to a different fund.

MaxiRobriguez

I highly doubt whether absolute return funds are any good in any situation. In an up market they weigh on growth, in a down market they might be better than full equity allocation but will quick investors be better in those funds than say, part cash, part bonds, part dividend stocks?

jonnygee2

One thing I recommend you do is try to consolidate your holdings. You have far too many funds for the amount of cash you are investing

I completely agree. One reason you might be losing money is that with such small amounts spread over so many funds, you may be paying a lot more fees and charges than you should be. Also you have so many funds its almost impossible to assess your portfolio.

It might be better to chose 1-3 funds that fit in with your risk strategy, perhaps something like the Vanguard Life strategy 60% equity fund or similar, and split your money between those?

Always_the_realist

Thanks for the responses. I haven't chosen the funds, I went with the advice of the FA who came through a personal recommendation. I wouldn't know where to start. My initial plan was to buy a house to do up and sell (which I do have some experience in) but then I weighed the costs of the additional stamp duty, fees, capital gains tax and the possibility that the property either wouldn't sell or make any money, and decided that investing would be the better option. I'm just hoping I made the right decision

dunstonh

(The purpose of this investment was looking at a 10 year plan

And you are under 2 years in to that.

When you invested, you knew there would be periods where the value goes down as well as up. You get good years, bad years and nothing years.

So, what has changed between now and when you invested? You accepted loss periods when you chose to invest. Yet you are not accepting a loss period now. So something must have changed.

My 60k is now worth 57,500.

That is a tiny loss.

I completely agree. One reason you might be losing money is that with such small amounts spread over so many funds, you may be paying a lot more fees and charges than you should be. Also you have so many funds its almost impossible to assess your portfolio.

The number of funds has no impact.

That said, it is an awful lot of funds for such as small amount. Portfolios tend to be around 10-15. But that is a size issue that has no impact on your portfolio returns.

It might be better to chose 1-3 funds that fit in with your risk strategy, perhaps something like the Vanguard Life strategy 60% equity fund or similar, and split your money between those?

I totally disagree. It is clear that the OP is concerned and has only suffered a very small level of loss. Suggesting that VLS60 is appropriate is just plain wrong.