Lost Money due to Lifestyling being removed from my son’s Child Trust Fund

eskbanker

fluffyedgar said:

It’s disappointing, as having seen the higher value prior to COVID, and thinking it was protected by lifestyling to then discover it wasn’t...

But you can't have it both ways!  If the investment had been 'lifestyled' over to cash (or similar) to protect its value back in 2017, it wouldn't have suffered a significant drop in 2020 but it also wouldn't have risen to the February 2020 heights in the first place.  It's invalid to pick out the high water mark of the past few years and measure a notional loss from there, everyone would love to think they could sell at the top but few can, and if you had in mind that you'd protect the investment from losses as it approached maturity then you'd have frozen its value way before this year.... 

grumiofoundation

fluffyedgar said:

The statements make no reference to lifestyling being removed, even the one directly after the change. The fund dropped from 1.169 in February to 0.9531 today, so it has clearly not recovered. I guess I will have to wait to see what they say in response to my email asking for a copy of the lettter notifying me of the change. I guess then it will be a case of working out what the value would have been if lifestyling had been applied. It’s disappointing, as having seen the higher value prior to COVID, and thinking it was protected by lifestyling to then discover it wasn’t... I find it difficult to understand why they would let a child’s fund be so adversely affected. At worst it looks like he will get back what I paid in, which is a tad disappointing!...... but thanks both for your comments! 

How much would it be worth if it had been lifestyled versus what it is worth now having stayed invested? 

Is the valuation on their website you see actually up to date? 

dunstonh

How much would it be worth if it had been lifestyled versus what it is worth now having stayed invested? 

That would be impossible to work out due to the phased nature.    However, it would have started in 2016 and the growth would have been lower from that point on.  The VLS examples showing 20% through to 80% equity highlight the differences in lost growth and reduced drop.

 Yes I think I’m now learning the CTF is rubbish! 

It isn't that the CTF is rubbish.  It is the investment fund within this particular CTF that is rubbish.  This is not hindsight.  50% UK equity is very high. Typically you see it at around 30% or loss on a multi-asset fund. This fund is almost 100% equities.   Globally, the UK makes up around 4% of global GDP.   So, 50% doesn't really correspond well with that.  You expect some home bias. Hence the increases you typically see to 25-30%.  But 50% is not desirable and it is that which has caused the drag.

JF2019

My DD's CTF is with Foresters and I have been keeping a close eye on it. It reduced by about 3k at the start of lockdown, by May the reduction was about £1,300 and now it is bobbing between a reduction of £500 - £800 but looking at the graph has remained constant for a bit. She is still very much in profit based on total amounts paid in from the start versus current value i.e. Nov 19 statement value was £16,362.45 and today it is about £15,900. Payments made since inception to Nov 19 was £11,281.00 so a profit of £5081.45 at that point. Interestingly, it lost around £300 in value after the 2008 financial crash and it bounced back really well. 

It definitely incorporates lifestyling and this is something I was keen to keep and I was well informed about it by Foresters who said it would be retained unless I opted to remove it. "Each year we will switch a percentage of the investments from the current fund into the Foresters Stakeholder (Schroders) Managed 1 Fund, the “Foresters SM1” fund. There are no charges for this process. •15th Birthday  ­ 33% • 16th Birthday  ­ 50% • 17th Birthday  ­ 100%" (I can see that current holding for SM1 is 69.9%) 

This fund seems to be faring better than the other one which is the Aberdeen UK All Share Tracker so I am pleased that in 6 weeks time (when she turns 17) the Schroders will be at 100% and reassures me that the lifestyling is helping. 

dunstonh

This fund seems to be faring better than the other one which is the Aberdeen UK All Share Tracker

It would do.   UK equity is down a lot for both Brexit and the economy.  Its not normally a fund you would hold unless you have other single sector funds as well (e.g US equity, European Equity etc)

JF2019

dunstonh said:

This fund seems to be faring better than the other one which is the Aberdeen UK All Share Tracker

It would do.   UK equity is down a lot for both Brexit and the economy.  Its not normally a fund you would hold unless you have other single sector funds as well (e.g US equity, European Equity etc)

Thanks! I do have the option to move to 100% Schroders now rather than wait 6 weeks until she is 17 so will think about that.