Halifax Child Trust Fund Lost 20.32% in one year - where to move savings?

Rick_Hough

My lad turned 18 today and we were somewhat vexed to discover that in its last year of operation his Halifax CTF lost 20.32%
I wondered where others have moved what's left of their fund on turning 18, and if anyone else has seen such appalling mismanagement of their CTF?

eskbanker

Rick_Hough said:

I wondered [...] if anyone else has seen such appalling mismanagement of their CTF?

Who was managing it?  What was it invested in?

Rick_Hough

eskbanker said:

Rick_Hough said:

I wondered [...] if anyone else has seen such appalling mismanagement of their CTF?

Who was managing it?  What was it invested in?

It was a Halifax CTF which was invested in something called a "Halifax UK FTSE 100 Tracker" with a 1% management fee. Value at 02-09-2019 was £957.16 and when Halifax transferred the fund to Foresters Financial 09-05-2020 that was down to £762.64. Oh OK, so a little over 12 months.

Albermarle

During Quarter 2 Covid meant a big drop in all global stockmarkets but most have largely recovered, even grown in the US.
Unfortunately the stand out poor performer is the FTSE 100 and that is the reason for your drop .
Normally it is not wise to have all your eggs in one basket but I guess the low value of the CTF meant nobody thought about diversification. 
So it has not been mismanaged, you just happened to be in a poor performing fund .
On a maybe more positive note if the last valuation was May , then it should have improved since. . I think the FTSE100 is still down about 15% though.

eskbanker

Rick_Hough said:

eskbanker said:

Rick_Hough said:

I wondered [...] if anyone else has seen such appalling mismanagement of their CTF?

Who was managing it?  What was it invested in?

It was a Halifax CTF which was invested in something called a "Halifax UK FTSE 100 Tracker" with a 1% management fee. Value at 02-09-2019 was £957.16 and when Halifax transferred the fund to Foresters Financial 09-05-2020 that was down to £762.64. Oh OK, so a little over 12 months.

Not sure if you've transposed one or both of those dates into American date format but September 2019 to May 2020 is obviously less than a year, not more, but throughout most of 2019 the FTSE 100 index was well above 7,000 and for the last few months it's rarely been above 6,000, so an investment set up only to track this index (as opposed to something better diversified) would be expected to have lost about 20% over that time.

Rick_Hough

Thanks folks yes you are right under 12 months, date formats are right (checked the letter) so he's just going to stick it in a savings account. At least it can't go down that much - I don't do any investing other than a bit of buying and selling so to me a 20% loss would be dreadful, glad I don't have anything invested in shares!

Albermarle

Rick_Hough said:

Thanks folks yes you are right under 12 months, date formats are right (checked the letter) so he's just going to stick it in a savings account. At least it can't go down that much - I don't do any investing other than a bit of buying and selling so to me a 20% loss would be dreadful, glad I don't have anything invested in shares!

By selling now you are crystallising the loss . Probably better to leave it where it is and hope it recovers .
glad I don't have anything invested in shares!
Your  experience with the CTF is not normal. Typical return for investing in shares ( but not just the FTSE 100) is an average 3 or 4 % above inflation ( as opposed to below inflation returns from savings accounts ) so most people are very glad they are invested in shares or related funds , especially when they come to retire.

Notepad_Phil

Rick_Hough said:

At least it can't go down that much - I don't do any investing other than a bit of buying and selling so to me a 20% loss would be dreadful, glad I don't have anything invested in shares!

Are you not putting money away into a pension - or are you one of the lucky ones and have a defined benefit pension (though even then the company behind the pension may well be investing the money in shares).

AnotherJoe

Rick_Hough said:

Thanks folks yes you are right under 12 months, date formats are right (checked the letter) so he's just going to stick it in a savings account. At least it can't go down that much - I don't do any investing other than a bit of buying and selling so to me a 20% loss would be dreadful, glad I don't have anything invested in shares!

I am just buying a house partly with the profits from selling shares , so perhaps instead of making wild generalisations  you could ask yourself  why you were invested in, frankly, a crap selection of shares *you chose* for what, 15 years, instead of looking at the performance and asking if there was a better candidate?  And noting that the appalling mismanagement was yours in sticking with that selection for so long. 

Also, unless you are lucky enough to have final salary pension, then you are invested in shares via your pension (and, most likely since you've taken no interest in it, as crappy a selection as the CTF) 

kangoora

There is nothing inherently wrong with investing in 'funds' - NOT shares. The FTSE 100 index tracker is/was a spectacularly bad fund to invest in especially if it comprised ALL of the investment. Most people invested in diverse global funds should now be back above where they were after the market dropped earlier this year - unless invested heavily in UK funds/100 index. For comparison, my funds are now comfortably a few % above where they were before the markets dropped.

ElephantBoy57

Rick_Hough said:

It was a Halifax CTF which was invested in something called a "Halifax UK FTSE 100 Tracker" with a 1% management fee. Value at 02-09-2019 was £957.16 and when Halifax transferred the fund to Foresters Financial 09-05-2020 that was down to £762.64. Oh OK, so a little over 12 months.

If there was just the £500 in there from the Government, they have done well.

How much actual cash had been deposited into the CTF?