Suggest a fund

Novice_investor101

Can any much more experienced people suggest me a fund that will meet this objective?
I hold a cash balance in my Stocks and Shares ISA that I add to monthly, basically whatever is left in my bank the day before payday and over the year this builds up. This usually never gets to more than £1.5k before I get an opportunity to buy into funds with it. I already invest monthly into the funds by DD so benefit from pound cost averaging.
The reason for holding in cash is to be ready to take advantage if unit prices plummet on my two funds - which has worked out well in the last two years. I prefer to hold it in the ISA rather than a savings account as I am very good at not touching the ISA but not so much savings accounts with spare money sloshing about in them....

I only get 0.5% interest on the cash balance - what type of fund could I look to invest this into that would mostly hold it's value whilst markets dropped but would still give something of a return whilst they were on the way up? I appreciate low risk equals low return, but I'm happy with a little bit of risk for a bit of return and to then sell out to buy into the 100% equities funds I have my main holdings in when they have dropped off a cliff.

Preferences - low cost trackers. Should I just jump on the VLS20/HSBC etc train? I don't really understand Bond funds - any suggestions for these welcome if they sound relevant?
Or is it really not worth it and I should just carry on holding as cash?

TIA

Thrugelmir

Novice_investor101 wrote: »

I appreciate low risk equals low return,

Taking a higher risk does not guarantee nor result in a higher return. How much can you afford to lose should be your starting point.

As a novice start with as broadly based funds as is possible. Let the fund managers determine the investment allocation for you.

bowlhead99

So you are already investing into the investments in a monthly drip feed, but you are also building up spare cash to make periodic lump sum investments in a tactical basis when you see that the share price has dropped a bit?

In a lot of cases you would be better just investing the money as soon as it is available but difficult to tell without hindsight.

If the goal for the money to have it liquid and available at all times in preparation for a tactical purchase whenever the state of the markets take your fancy, you seem to be describing a bank account rather than an investment product. If you are disappointed by getting 0.5% you could about triple that by using a different bank for your instant access savings, or more by using a 'regular saver'.

Yes by all means use an investment product - but although some are much less volatile than others, you are looking to capitalise on short term drops, and investment products aren't immune to those short term drops. You may find that when your high risk fund that you could have bought at 100p and watched rise to 120p, falls back to 90p so you can finally pounce... your low risk fund that you bought at 100p has fallen to 97p. You would have been better putting the 100p in a savings account paying 1.5% and have it be worth 101p after your eight month wait.

JohnWinder

Hold its value while markets drop (which markets were you thinking of) and get some return after they turn?
Some people could picture bonds doing that; so why not spend three months learning about bonds and bond funds? Likely time we’ll spent if you’re under 70 years old. You could start with Annette Thau’s book, if there aren’t suitable local ones.

Novice_investor101

Thanks, Thrugelmir. 2.5 years on from creating my account, I'm a little less of a novice - but i'm still learning. I also work in pensions admin, so I get the caveats around returns etc but only really see a lot of info about accumulation of assets, not preservation and decumulation.
I'm quite fine seeing my investments (SS, Pension, LISA) drop when markets go down - I see it as a buying opportunity. I'm 100% invested in equity funds that are all mainstream global trackers, the "riskiest" one probably being L&G Technology index with about 2% of my total portfolio. I know they could drop 50% in a real crash, stay low for years and they will go up and down like a yo-yo on the regular. I'm 37 and these investments are all for retirement, so I can wait it out.
Obviously, I wont be in 100% equities as I get closer to retirement but this is my growth phase.
I already hold a cash emergency fund etc and don't need the money i'm investing, otherwise I wouldn't be investing it!

Hence, i'm a bit stuck whether I should drop this small amount of cash I leave aside to jump on a downturn into a fund or just leave it as cash - waiting on a drop that may be a long way away (or may not....who know???).

Novice_investor101

bowlhead99 wrote: »

So you are already investing into the investments in a monthly drip feed, but you are also building up spare cash to make periodic lump sum investments in a tactical basis when you see that the share price has dropped a bit?

In a lot of cases you would be better just investing the money as soon as it is available but difficult to tell without hindsight.

If the goal for the money to have it liquid and available at all times in preparation for a tactical purchase whenever the state of the markets take your fancy, you seem to be describing a bank account rather than an investment product. If you are disappointed by getting 0.5% you could about triple that by using a different bank for your instant access savings, or more by using a 'regular saver'.

Yes by all means use an investment product - but although some are much less volatile than others, you are looking to capitalise on short term drops, and investment products aren't immune to those short term drops. You may find that when your high risk fund that you could have bought at 100p and watched rise to 120p, falls back to 90p so you can finally pounce... your low risk fund that you bought at 100p has fallen to 97p. You would have been better putting the 100p in a savings account paying 1.5% and have it be worth 101p after your eight month wait.

This is the kind of explanation I was looking for that puts into context what I was trying to figure out! Thank you.
I already have a Natwest Savings builder which will pay 1.5% and doesn't get used to its full potential, so I guess I need to stop overcomplicating and have a bit of discipline!

Apodemus

I use Premium Bonds for a similar purpose. Just difficult enough to not touch on a daily basis, but quick enough to get hold of if needed. I’ve consistently managed around 1.25% to 1.5% return on these.

Thrugelmir

Novice_investor101 wrote: »

Hence, i'm a bit stuck whether I should drop this small amount of cash I leave aside to jump on a downturn into a fund

How will you know when the bottom of a particular market has been reached.

I'm 100% invested in equity funds that are all mainstream global trackers

Use your spare cash to diversify the portfolio.

I know they could drop 50% in a real crash, stay low for years and they will go up and down like a yo-yo on the regular.

They might simply underperform over a decade.

george4064

What are you currently invested in?

As others have suggested, why not just buy more of what you already hold?

Novice_investor101

Currently DIY invested in:
ISA - L&G International index 90%, L&G technology index 10%

LISA - Vanguard global all cap 100%

Pension - Artemis global growth 45%, an Aviva passive global tracker 45%, a blackrock UK all share tracker 10%.

Apart from the Artemis & technology funds, they're pretty boring & will stay the same for the next 15-20 years. I'll diversify when they're worth a bit more & I'm nearer retirement (with the help of an IFA). The pension is a works one & there's not a lot of funds to choose from. I know that there's a lot of US/developed world/large cap/duplication in there & a fair bit less EM/small cap. That is what I wanted & am comfortable with. I've no real interest in adding any satellite Asia/EM/small cap etc funds.

The LISA & pension just chug along with their regular investments being paid in every month, I rarely look at them as I'm not going to change anything.
The ISA is the one I add a bit of cash to & hold for when the unit price of the International index fund goes down.

Nobody knows when the bottom of a market is reached. I just keep a track of the unit price of the L&G fund & I use the cash I've held back to buy when I like the price of it - to average down.
In this case, it's been highlighted it would be more prudent (& a lot simpler) to hold that cash in a savings account until I choose to chuck it into the fund.
I was thinking of adding a VLS 20 or cautious fund to invest in & then selling out to buy when the L&G fund dropped but, as Bowlhead described, it doesn't sound like it'd be suitable for what I intended to use it for.

Novice_investor101

Apodemus my emergency fund is in PB's so I like to keep it separate from that.