child trust fund

Alexland

kuratowski said:

According to this page, 
https://www.foresters.com/en-gb/products/childrens-savings/flctf
it's invested in a FTSE tracker.

They also seem to be blaming that Halifax UK tracker fund for any drop that occured before they took over on 10th April and continued with the same fund.

Malthusian

There is still a difference between a bare Trustee and a nominated contact.

Only in the sense that all Trustees are not nominated contacts; all CTF nominated contacts are also trustees, because they look after somebody else's money. The CTF legislation does not provide any exemption from the common law duties of Trustees for nominated contacts.

Unlikely or not makes no difference to the legal position.

Never said it did. I only clarified the notion that it could take a court battle for a bare trustee to release the money of someone who was of age and compos mentis. It is possible but the idiot trustee would have to ignore the advice of every reputable solicitor, and drag it out to court proceedings despite knowing they were going to lose a lot of their own money, which qualifies as highly unlikely.

And choosing cash over shares is a legitimate choice.

But not a choice that a prudent businessperson would make for money they could be certain they would not touch for at least a 6-year timeframe, possibly longer (for the 10 year old), which is the relevant statutory duty.

Returning to the OP's question: if it is invested in a UK tracker fund then the drop in value is normal, and the best option is still likely to be to leave it where it is.

As a matter of principle they should consider spreading the funds more widely. But given the small amount involved and the restricted fund choice they are likely to have, that may be more hassle than it is worth.

Speculator

xylophone said:

If you are unhappy with a share based CTF, you might consider a transfer to a cash JISA?
https://www.nsandi.com/junior-isa

Thanks. Wasn't aware it was possible to transfer my daughters Child Trust fund to a Junior ISA.

 

ratechaser

Malthusian said:

There is still a difference between a bare Trustee and a nominated contact.

Only in the sense that all Trustees are not nominated contacts; all CTF nominated contacts are also trustees, because they look after somebody else's money. The CTF legislation does not provide any exemption from the common law duties of Trustees for nominated contacts.

Unlikely or not makes no difference to the legal position.

Never said it did. I only clarified the notion that it could take a court battle for a bare trustee to release the money of someone who was of age and compos mentis. It is possible but the idiot trustee would have to ignore the advice of every reputable solicitor, and drag it out to court proceedings despite knowing they were going to lose a lot of their own money, which qualifies as highly unlikely.

And choosing cash over shares is a legitimate choice.

But not a choice that a prudent businessperson would make for money they could be certain they would not touch for at least a 6-year timeframe, possibly longer (for the 10 year old), which is the relevant statutory duty.

Returning to the OP's question: if it is invested in a UK tracker fund then the drop in value is normal, and the best option is still likely to be to leave it where it is.

As a matter of principle they should consider spreading the funds more widely. But given the small amount involved and the restricted fund choice they are likely to have, that may be more hassle than it is worth.

Well in that case Mrs RC and I have clearly failed in our statutory duty because we took the conscious decision to stay cash based for our 2 children... hard to be precise with the return given the non linear input amounts, but I'd estimate the return has averaged about 4% over the past 17 years. Don't forget that CTF and JISA cash rates have been pretty attractive relative to the rest of the savings market. So we have a return that has outpaced inflation, admittedly not by a huge amount, but it is real term growth.

Be interested to know what an equivalent FTSE tracker would have produced - the index itself is about flat since 2003, but clearly there is the impact of dividends to factor in. Most funds I've looked at will only give me a 5 year performance view.

And yes, I'm sure a more sophisticated/diverse fund allocation would have significantly outstripped cash. But I suspect many/most parents might choose to take a fairly cautious approach to their little darlings nest egg.

That was our thinking, and we are comfortable with the outcome given we have taken no capital risks along the way...