Funds & ISA

[Deleted User]

I have just created a stocks and shares ISA and hoping to create a long term investment I’ve worked out I can comfortably each month out away £150-200.

Anyone care to share a few funds to consider ? I was looking at the Morgan Stanley US Advantage Fund

i don’t mind the riskier funds as I see this as a long term approach perhaps a 20year + investment plan

dunstonh

Anyone care to share a few funds to consider ? I was looking at the Morgan Stanley US Advantage Fund

Ok. That would fill your US allocation.  What about your UK, Europe, Asia, Japan, EMs etc?

JohnWinder

It doesn’t matter much which funds you choose at this stage, as a few percent/year difference in returns on £2000 or £4000 is trivial. More important is how much you can get into your investments in the early stages, to give them the longest possible period to get the benefit of compounding returns.

But there’ll be plenty here ready to tell you your Morgan Stanley would be hard to justify, but you should try……we’re listening.

It’s an active fund. There’s a wealth of data indicating it’s more likely to give you lower returns than a broad index tracker. You can start reading it here: https://www.evidenceinvestor.com/why-indexing-works-and-continues-to-grow/

The management cost of your MS fund is higher than many others. Some people are convinced that that is a rather reliable predictor of poorer returns to you. Read it here: https://www.morningstar.com/articles/115520/fund-fees-and-your-bottom-line 

Thirdly, it’s safer to invest more broadly than just in USA. You would have lost out a bit in returns in the past, but we don’t know about future returns; but we know it’s safer. Your call.

beancounter111

Anyone care to share a few funds to consider ? I was looking at the Morgan Stanley US Advantage Fund

I like the Fidelity Index World and the Legal & General US Index. Up 60% and 80% respectively in the last 5 years

InvesterJones

Could start by looking for the cheapest passive global index tracker you can. The exact fund will vary based on whether you're looking for a OIEC or an ETF. If you're looking at OIECs then there are things like HSBC FTSE All-World, Vanguard FTSE Global All Cap Index (more expensive but includes small cap stocks), or if you want only developed world then Fidelity Index World Fund.

[Deleted User]

Any suggestions for a few funds to check out!?

ColdIron

For very small amounts you only need one fund. Look at the link below. At your level it won't make much difference which one you choose and any could stand you in good stead for 10 years or more. Perhaps more importantly they will stop you making common mistakes made by novice investors

https://monevator.com/passive-fund-of-funds-the-rivals/

JohnWinder

If one was wedded to the idea of an actively managed fund, here’s an analysis of research on what type of fund might be more successful: https://rationalreminder.ca/podcast/103, start listening at 15min. In summary, from the transcript: ‘that's where my ability to apply any type of rigor to this decision stops. It's like we know we want low fee, low turnover, active funds. If we really have a lot of conviction in what they're doing we want high active share.’

‘Active share’ is how different the fund composition is from the index; the more different it is, the bigger the dispersion of returns (more very good, and more very bad returns compared to the index). The other elements in their summary is you’d choose a small cap/value fund since that’s a factor in explaining better returns, and a smaller rather than larger fund. 

They remind us that the legendary Peter Lynch ran the Magellan fund for 13 years achieving 29%/year returns on average, but that the average investor in that fund during that time lost money. They bought in after it proved how successful it was; didn’t have the conviction to stick with it during the down times etc.

To which we can add Cathie Wood’s ARKK fund with its stunning returns; the dollar weighted investor returns from that fund over 9 years are negative despite the fund gaining 9%/year. Most of the investments pour in after the fund does brilliantly, and then it doesn’t.

InvesterJones

[Deleted User] said:

Any suggestions for a few funds to check out!?

What are you looking for that isn't covered by the funds already suggested?

[Deleted User]

I’m new to this! Don’t want to pay for a IFA just yet! Just want to stick some money away each month that I have spare and see how it gets on in the long term!

im not rich! I have an average income but fully aware the importance of having a nest egg! Just wanted some ideas of some funds to invest in! 

But gathering the notion here that any fund will be fine in the early days while I build up my pot 

Linton

[Deleted User] said:

I’m new to this! Don’t want to pay for a IFA just yet! Just want to stick some money away each month that I have spare and see how it gets on in the long term!

im not rich! I have an average income but fully aware the importance of having a nest egg! Just wanted some ideas of some funds to invest in! 

But gathering the notion here that any fund will be fine in the early days while I build up my pot 

For someone just starting investing the fund you choose does not make much difference as long as it covers a wide range of industries.  For the next 10 years or so most of the increase in your ISA will come from ongoing contributions, not from investment returns.