Royal London ISA Value Drop

TeleGuy

Hi, I have a modest Royal London ISA which was worth £8K in October 2019 and is worth £6.5K in April 2020. And £600 has been paid into it in that period.
So it's worth £1.5K less than it was 6 months ago and if you include monthly deposits, I'm £2100 worse off.
I understand this is because of Covid-19 crashing the financial markets.
Are other ISAs having as bad a time as this ? Should I keep on paying in ?
thanks for reading & stay safe

eskbanker

What's it worth in May?

A 25% drop isn't freakish by any means - what is it invested in?  When do you anticipate needing the money?

TeleGuy

It's in Royal London UK Growth Trust A.
The price at statement valuation date was 425.90 and the current price is 477.40
I don't anticipate needing the money.
Thank you for your reply.

dunstonh

Are other ISAs having as bad a time as this ?

An ISA is just an administration tax wrapper for your investments.  You can invest in 30,000 odd different things with a near infinite number of variations.   ISAs do not make or lose money. It is the investments you have within it.

it's in Royal London UK Growth Trust A.

And that is your problem.  You are in a single sector fund investing 100% into the UK stockmarket.   The UK stockmarket has been hit harder than most other stockmarkets.      It is bad quality investing to invest solely in one country/region.    As it stands, on a typical 1-10 risk scale (with 1 being cash and 10 being 100% equity mainstream), you are currently sitting at 9 out of 10 for risk. Whereas most consumers sit around 4-6.    So you have two things to consider. 1) is your risk level appropriate for you and 2) look at the funds available and pick something more suitable.

TeleGuy

Thank you for your advice. My wife took this out with CIS and has really taken no interest in it since. I normally just scan the statements with not much more interest than her to be honest, so this is an area in which I am wholly incompetent I guess. Having read your reply I suppose I could have Royal London buy Royal London 'US' Growth Trust units (or some such things) instead and just leave the UK units to hopefully recover. They seem to be going in the right direction. Thanks again.

dunstonh

My wife took this out with CIS 

I knew you were going to say that.  CIS were very limited in their offering.  Plus, it is the sort of fund that was only bought via CIS agents.

Having read your reply I suppose I could have Royal London buy Royal London 'US' Growth Trust units (or some such things) instead and just leave the UK units to hopefully recover. 

Single sector funds (like UK equity or US equity) are designed to be held in a wider portfolio of other single sector funds.  e.g. one for UK, one for US, Europe, Asia, Japan etc.   You have one piece of a 10 piece jigsaw.    I don't know if RL have improved the fund range since they took over the CIS book.   You could look to see if they have a fund that invests in all those areas within the fund (known as a multi-asset fund).    Alternatively, if you feel up to it, you could look to move it to a modern option as what your wife has is an old fashioned expensive fund.  Modern versions would be better.

TeleGuy

Thank you again for shining a light on this, dare I say, commonly-avoided-world. RL doesn't seem to have an all encompassing fund. However, 'old fashioned expensive fund' and  'move it to a modern option' has got my attention. If I may be so bold, what might be an example of a modern version. A point in the right direction would be great and I apologise if I'm pushing my luck.

kuratowski

You need to decide two things: 1) what investment to hold and 2) what provider to hold it with.

For 1) given the sum invested, you should probably be looking at a multi-asset fund.  They come in different risk levels (the lower risk ones are typically called something like 'cautious', then as the risk increases the fund name is something like 'balanced', and at the higher risk end it will be called something like 'adventurous').  Now you are currently in a 100% equities fund which is higher risk, but you may need to consider whether that's truly what you want.  To get an idea, have a read of this:
https://monevator.com/vanguard-lifestrategy/
(I'm not suggesting VLS is the best option for you, but the article explains the concept of multi-asset funds and what they're trying to achieve.)

For 2) take a look at this table, which compares the various platforms in cost terms:
https://monevator.com/compare-uk-cheapest-online-brokers/