JUNIOR S&S ISA QUESTION

j_netprofit

Hi all!

Bit of a newbie to investing so please fogive me if some of my terminology is left field.

So I've just opened a S&S JISA with H&L for my 2yr old.

I plan on setting up a DD for £25 a month to go into it.

My chosen investment will be in the Vanguad FTSE Dev World. 

However my question is....as the current price of this ≈ £73 am I correct in saying that I won't actually be able to buy anything for at least three months and then obviously every 3 months recurring pending on price....hopefully longer as obviously I want the ETF to increase in value.

So with all that being said because my monthly investment is so low am I better of investing into something like the Vanguard Lifestragegy Funds? 

Or am I missing something...?

Thanks in advance!
Jay

j_netprofit

Sorry...just spotted the ISA sub thread, have since posted there!

Like I said I'm new here 

cloud_dog

Why restrict yourself to ETFs, and opportunity costs due to high unit process.

Why not go for one of the many similar OEICs (Fidelity Index World, HSBC FTSE All World Index fund, etc).

j_netprofit

Sorry I’m not familiar with OEICs? 

cloud_dog

They are probably more usually called 'funds' (I appreciate funds is really just a generic term for collection in investments).

OEIC / funds can track indexes just as well as ETFs 

A lot of people only become aware of ETFs because they read a lot of information  / guides that originate from the US, where they are more popular than 'mutual funds' (due to different tax treatment over there), but in the UK there are no specific differences in their tax treatment over ETFs.

j_netprofit

So like the Vanguard 100% Lifestrategy Fund I originally mentioned? My reasoning for not choosing that over an ETF is because the charge is pretty much double.

As this is a JISA and the investment will likely run for over two decades I believe a Golbal Index ETF will get much higher return at a significantly lower cost?

Again like I said I'm very new to all of this so forgive me if mistaken.

NoviceInvestor1

I actually don't know if you can buy fractional shares of an EFT (i.e. if you need to have £75 to buy one unit OR if you can buy 1/3rd of a unit for £25). Someone else will probably confirm.

But if not the solution is to (as others have said) simply buy "funds" (OEIC's) rather than ETF's as you can invest any amount into a fund.

If you want a global index fund which is the best option given your 2 decade time horizon, I'd suggest looking at HSBC FTSE All World Index, which can be found on HL as below; 

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-all-world-index-class-c-accumulation

The net ongoing charge is 0.13%. 

If you'd prefer something which is a passive but with a bit of manual intervention (like Vanguard Lifestrategy 100) then look at Blackrock Consensus 100;

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-consensus-100-i-accumulation

The net ongoing charge is 0.08%

Over time I suspect performance will be similar enough that you won't be at risk of feeling silly for buying one over the other. 

Both the above compare favourably with Vanguard when it comes to charges. 

j_netprofit

Great info thank you Novice.

Can anyone else please confirm if you can actually buy ETFs fractionally?

Albermarle

As this is a JISA and the investment will likely run for over two decades I believe a Golbal Index ETF will get much higher return at a significantly lower cost?

There is no reason what an ETF following a global index will perform any better that an OEIC/fund which is doing the same.

Another to look at is this well known one, also  available on the HL platform.

Fidelity Index World (Class P) Accumulation Fund Price & Information (hl.co.uk)

root

cloud_dog said:

They are probably more usually called 'funds' (I appreciate funds is really just a generic term for collection in investments).

OEIC / funds can track indexes just as well as ETFs 

A lot of people only become aware of ETFs because they read a lot of information  / guides that originate from the US, where they are more popular than 'mutual funds' (due to different tax treatment over there), but in the UK there are no specific differences in their tax treatment over ETFs.

ETFs have lower fees with some platforms.

ispookie666

I would probably.move the ISA to Fidelity and invest in Fidelity Index World Fund P. 
Fidelity do not charge any fees for Junior ISA and the above fund has low ongoing charge.