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

DireEmblem

There is nothing wrong with investing in a FTSE 100 fund, bar lack of diversification, but given your fund is essentially an index tracker, a 1% management fee is rather expensive.  For comparison see - https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00000OOAS

Given the value, I would open a LISA for them, to help the towards buying their first home.  The government would add 25% to the balance.

www.gov.uk/lifetime-isa

Something like this:

https://www.hl.co.uk/investment-services/lifetime-isa

You can deposit up to 4k a year, and the Government would match 25% up to 1k.

I would then choose a cheap global fund, the Vanguard LifeStrategy funds are popular.

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-100-equity-accumulation

Thrugelmir

Rick_Hough said:

 if anyone else has seen such appalling mismanagement of their CTF?

For the majority of people it comes down to investing in something that they don't fully understand. To quote a famous investor, "If making money were that easy we would all be librarians".  

steampowered

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!

This is an absurd comment. Why are you only looking at the last 12 months of performance when this money has been invested for 18 years? Look at performance over the whole period in which the CTF was invested. 

Over the last ten years, the total return for the FTSE 100 was +103.98% with dividends reinvested. That's a 7.38% annualised return.

That was calculated in May 2020 - AFTER the coronavirus hit that dropped your son's portfolio by 20% - the figures already take that into account. 

You won't have quite got that level of return due to the 1% per year management fee, but your son is still much better off having been invested in a FTSE 100 tracker, than he would have been if you had paid this money into a savings account. 

princeofpounds

steampowered said:

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!

This is an absurd comment. Why are you only looking at the last 12 months of performance when this money has been invested for 18 years? Look at performance over the whole period in which the CTF was invested. 

Over the last ten years, the total return for the FTSE 100 was +103.98% with dividends reinvested. That's a 7.38% annualised return.

That was calculated in May 2020 - AFTER the coronavirus hit that dropped your son's portfolio by 20% - the figures already take that into account. 

You won't have quite got that level of return due to the 1% per year management fee, but your son is still much better off having been invested in a FTSE 100 tracker, than he would have been if you had paid this money into a savings account. 

This x1000!

If you leave your son with the lesson that investing is too risky at a young age because of this episode, you will do huge harm to his future financial outcomes.