Stocks&Shares ISA Funds

catowner123

Hi all

Having only saved via cash ISAs for the past 5 years I am determined to be more smart with my cash and invest into funds. My plan is to use interactive investor and transfer 120k into 4 or 5 funds. Majority will go into global funds such as HSBC global balanced but also looking to invest a proportion into emerging markets and Japan. Likely this will end up being around 70:30 equity to bond split. I have read so much on this it’s seems one sided that this is a great and easy strategy especially for the long term. However, I haven’t actually met anyone who tells me how much they made using this approach and still hear shocking stories such as drops of 50% that took 7 years to recover.

Does anyone on here have any actual experience they could share? Looking at past performance of my chosen funds (I know this isn’t true of the future) none seem to suggest such big drops even during this year. I may wish to release some of this in 5 years to purchase a bigger house otherwise happy to sit on this for longer. 

Thanks 

dunstonh

Majority will go into global funds such as HSBC global balanced but also looking to invest a proportion into emerging markets and Japan. 

HSBC GS Balanced is a multi-asset fund.  It already invests in emerging markets and Japan.

However, I haven’t actually met anyone who tells me how much they made using this approach and still hear shocking stories such as drops of 50% that took 7 years to recover.

The risk profile of that fund is not one where a 50% loss would be expected or where a 7 year recovery would have been needed (historically).  With circa 60% equity, you are not going to suffer the same level of losses as 100% equity.  Equally, you are not going to get the same gains either.

Does anyone on here have any actual experience they could share?

Look at the fund data.  it tells you the returns.

catowner123

I did look at the fund data and generally they all seem like performing great excluding one year in the last 5 where returns were around minus 10% at most. Rather than just sticking it all into HSBC which I know is well diversified I thought I would put say 10k into emerging markets separately as it’s gives me a chance to make some good returns if they turn out like I think they well but at the same time I would be too concerned if I lost say 20/30% one year. I’m not sure if that approach makes sense. 

catowner123

Wouldn’t *

grumiofoundation

catowner123 said:

I did look at the fund data and generally they all seem like performing great excluding one year in the last 5 where returns were around minus 10% at most. Rather than just sticking it all into HSBC which I know is well diversified I thought I would put say 10k into emerging markets separately as it’s gives me a chance to make some good returns if they turn out like I think they well but at the same time I would be too concerned if I lost say 20/30% one year. I’m not sure if that approach makes sense. 

As said above HSBC fund has exposure to Japan (~4.5%) and EM (~9%).

Putting 10k each into Japan and EM will change this to ~12% and ~16% with concomitant drops in other areas (UK, US, bonds etc).

Whether it makes sense depends mostly on what you are looking for I guess?



Out of interest why interactive investor? Will cost you £120 per year. Are you going to utilise the 'free trade' you get each month?

If you won't be trading frequently you might want to consider iWeb - £100 opening fee (edit: from 4th Jan), no ongoing charges and £5 to sell/buy.

Alexland

grumiofoundation said:
If you won't be trading frequently you might want to consider iWeb - £100 opening fee, no ongoing charges and £5 to sell/buy.

Still £25 opening fee for a few more days...

grumiofoundation

Alexland said:

grumiofoundation said:
If you won't be trading frequently you might want to consider iWeb - £100 opening fee, no ongoing charges and £5 to sell/buy.

Still £25 opening fee for a few more days...

Ah true - no reason why couldn't get it open in time in the mad post Xmas cheap ISA sales (don't know why I had this timeframe being a difficulty in mind - all the days merge into one over the holidays...).

catowner123

I narrowed it down to iWeb and II, and decided to use II as it simply looked more user friendly for someone not that experienced and I liked the fact it gave a free trade a month which I will look to utilise. 

On my original question when I looked at the fund data some of the gains are great (e.g emerging markets funds have given 15-35% returns each month excluding one offs where negative returns occurred). I don’t know why I was so slow to invest in these! 

dunstonh

I did look at the fund data and generally they all seem like performing great excluding one year in the last 5 where returns were around minus 10% at most. Rather than just sticking it all into HSBC which I know is well diversified I thought I would put say 10k into emerging markets separately as it’s gives me a chance to make some good returns if they turn out like I think they well but at the same time I would be too concerned if I lost say 20/30% one year. 

You would be increasing your loss potential way beyond 20-30% if you do that.    

Why do you think HSBC has got the asset allocation wrong and you can do a better job?   

Alexland

catowner123 said:

I narrowed it down to iWeb and II, and decided to use II as it simply looked more user friendly for someone not that experienced and I liked the fact it gave a free trade a month which I will look to utilise. 

For the £10 a month that II charge you could have 2x £5 trades on iWeb. If you like free trades you might also like buy one get one free. The iWeb user interface is a bit dated but no harder than online banking.
Going from £120k cash to £120k invested is a big change in risk profile. I would suggest keeping your investments as simple as possible for now while you are learning and don't chase crazy high returns.

catowner123

I’m simply spreading my cash across different funds (with different investment managers) and allocating the amount of cash I think I’m comfortable with to regions/assets I believe may prosper. Not really me thinking HSBC allocation is wrong. I’m not sure how it can be wrong given we all have our own risk appetite and don’t own crystal balls. 

Would you think it would be better to allocate 120k to that one fund rather than 90k to it and then 10k respectively to EM and Japan specific funds?