Beginner - Navigating funds on HL

dizzeedollee

Hi all, I'm after some basic advice. I'm looking to start an investment portfolio but I'm finding it difficult to navigate all the different fund types. I want to invest in tracker funds but I'm having a lot of difficulty working out whether funds are tracker or not when I look on HL, Morningstar etc. Is there something obvious I'm missing here?

ColdIron

A 'tracker' (or more fully an index tracker, by definition a fund that tracks an index) will always say which index it tracks. At HL this will usually be stated in the 'Fund Objective' but you should confirm this by reading the providers factsheet. Typically (but not always) an obvious clue is that the name of the fund will include the word 'Index'

dizzeedollee

Hi ColdIron, thank you for your explanation (and speed!). If I'm looking specifically for an ETF, will this be stated explicitly somewhere or do I need to look for a description to that effect in the KIID?

Albermarle

https://www.hl.co.uk/shares/exchange-traded-funds-etfs

ColdIron

ETFs generally (but again not always) track a simple index but you should always confirm by looking at the providers documentation. The KIID would probably be enough for that, but you should read the factsheet at a bare minimum before parting with your cash

However I feel you are doing this back to front. You should first determine which index or indexes you require to meet your objectives and only then go looking for the best vehicle for them, that could be an ETF or fund. ETFs have complexities that funds do not and unless you can identify a clear advantage they are probably best avoided at this stage

Most novices would be best served by a single fund (or fund of index funds). This could be one that tracks a single global index or a professionally built portfolio of several indexes. Do you have the knowledge to construct a portfolio of index trackers?

Edit: I may have misunderstood your question. ETFs are traded on an exchange so are usually listed quite separately from funds so there should be little chance of confusing the two

Albermarle

In general funds are better for novice and for 'buy and hold ' investors IMHO.
Easier to understand for one thing , especially if you look into the details of how ETF's work ,and they do say never invest in anything you do not understand .
I know on this forum we repeat ourselves a lot but really a new investor is better off with a low cost multi asset fund at the appropriate risk level and then maybe develop from that simple but effective base,

DireEmblem

Before you invest - why did you choose Hargreaves?  It might not be the best platform out there for your needs.

dunstonh

If you are going to build a portfolio of tracker funds then you need to decide your investment strategy first along with your target allocation weightings. These things tend to be fluid over the economic cycle. So, you will need to understand when to make changes.     How is your knowledge on those things?   Or would you be better off with a multi-asset fund?

AnotherJoe

Whats the big deal with ETFs? Why do "novices" need to  hold funds and not ETFs?

dizzeedollee

DireEmblem said:

Before you invest - why did you choose Hargreaves?  It might not be the best platform out there for your needs.

Hi DireEmblem, I haven't made a firm decision just yet but it seems the simplest (and cheapest!) option for a beginner. Many of the other brokers I've had a look at require more than £25 a month and as I'm just starting out, I would prefer to invest smaller monthly amounts initially.

dunstonh said:

If you are going to build a portfolio of tracker funds then you need to decide your investment strategy first along with your target allocation weightings. These things tend to be fluid over the economic cycle. So, you will need to understand when to make changes.     How is your knowledge on those things?   Or would you be better off with a multi-asset fund?

Hi dunstonh, in all honesty I'm not quite sure I've understood everything you've said there! As I understand from my reading, the best options for a beginner are to invest in tracker funds following the FTSE 100, etc. Are these not multi-asset funds?

ColdIron

AnotherJoe said:

Whats the big deal with ETFs? Why do "novices" need to  hold funds and not ETFs?

No big deal but the OP identifies as a beginner who has 'difficulty working out whether funds are tracker or not'. Walk before you run and all that good stuff?