Beginner wanting to invest responsibly

MoOwens

El_Torro said:

What is a responsible fund? An ethical fund? Something else?

Generally speaking the best thing a beginner can do is invest in a global tracker or multi asset fund. Not the most exciting investment (don’t expect it to grow from £50 to £3,000 in the space of 10 years!) but it’s a tried and tested way of investing and should over the long run comfortably outpace inflation.

I would suggest avoiding individual company shares, this is a very risky way to invest.

Thank you. Yeah I think a tracker fund sounds good having looked it up since

MoOwens

tacpot12 said:

I would suggest you look at Vanguard's LifeStrategy 60 Fund as a good all-rounder. If you start investing in that fund, and then, over time, look at all information about it you will know more about why it is a good fund. You can always decide to invest in something else later, but it is important to start investing as soon as you have the funds to do so.  

I know, it's killing me having the money just sit there and not really knowing what to do with it. But this has been a big help! 

MoOwens

InvesterJones said:

Advice is regulated, but we can offer some general guidance. So to establish some facts, we're talking about a SIPP fund choice, and you'd like it to be on HL, and something you can contribute to monthly? Is it going to be 10+ years until you need to access it? Are there any other considerations ('responsible'=?)

There are cheaper platforms than HL, especially as the investment size increases, so it's worth considering alternatives if not now, then at some point in the future. Platform choice doesn't make any difference to fund performance so it's a gain for free. But if you want to stay on HL then there are no restrictions to fund choice. 

If considering >10 years timescale then you can probably accept 100% equities and the expected higher return compared to funds like lifestrategy 60% which are only ~60% equities (these are better suited to people with a shorter timescale). For a 'set and forget' strategy then going for a single, global index tracker, fund will give you a lot of diversification and therefore no need to manage and change around. There's no need to go for an active fund in this case, so you can also benefit from cheap fees.

For monthly payments it's probably cheaper to stick with OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds. On HL go to the shares & funds > Funds page, select Sector: Global, Unit type: Accumulation, Fund type: Tracker. to see a shortlist. You can click on the Charges header to sort by fees and then compare the results. Some other pointers: Funds with '100' in the name track only a shortlist of worldwide stocks, usually the largest companies. 'International' and 'Ex-uk' tend to avoid UK companies, so if you don't want that look for the ones with 'world' for example Fidelity Index World (is actually developed world), and HSBC FTSE All-world Index (is all-world: developed + emerging).

If you want an environmental/social/governance screened (eg. somewhat 'ethical') fund then look for ESG - but look at the factsheets to check what the screening actually entails.

Yes, 10+ years. I'm turning 40 shortly. The money is locked in to HL so I want to reinvest ASAP. I had also considered an ISA but would need to hurry up I guess lol.

Tracker fund sounds like the one then, thanks. You wrote above 'OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds'... What is the difference here?

Ive been looking at UK funds and global funds, as well as responsible (to use hl lingo). But it doesn't seem to give a breakdown of the actually companies that these funds invest in. Is that the norm... off limits info?

The fees and risk on the esgs def seem higher, which is putting me off. Maybe one is better off not knowing what one is investing in and just focus on the growth! 😬

MoOwens

dunstonh said:

'm v new to this and my instinct is to invest in an actively managed fund with responsible holdings (not even sure I'm using the right terminology!)...
But if my understanding is right, these funds look a bit riskier than if I were to be investing in e.g. Amazon.

Investing in Amazon is higher risk than investing in a fund.  You have it the wrong way around.   A multi-asset fund can hold 20,000 companies.    Investing in Amazon is just one.

The couple of responsible funds that I looked at on HL seem to have had reasonably good performance but the whole thing is making me a bit confused and I'm second guessing myself.

Responsible investing generally results in lower returns in most cumulative periods than conventional investments.  They are also typically more expensive due to the screening that goes on.  So, you are putting your money where your mouth is.

You also need to decide what style of responsible you are after.  Ethical (personalised screening), ESG criteria (focusing on ESG criteria), sustainability and/or responsible (more generic and not as restrained).

I would suggest you look at Vanguard's LifeStrategy 60 Fund as a good all-rounder.

VLS60 is not a responsible investment.   

Thank you for this. As is said above i might just reconsider the ethical slant on the basis of this advice... Can do that when I have a better idea what I'm doin! It seems to be a bit of a learning curve... 

MoOwens

Albermarle said:

Long story short, my friend set up a Sipp fund for me on hargreaves lansdown about 10 years ago. It grew to nearly 3k without me ever putting anything in it. He put £50 in it to start it off. 

Hopefully you have another pension fund building up somewhere ( at work ?) 

£50 to £3K seems incredible, even for a high growth fund over 10 years. What was it ?

Yeah I have my work pension. College lecturer. I thought £50 to 3k was insane too. I can't see a way to look over the account activity for past 10 years but I'm pretty certain my pal just put in an initial £50

masonic

MoOwens said:

InvesterJones said:

Advice is regulated, but we can offer some general guidance. So to establish some facts, we're talking about a SIPP fund choice, and you'd like it to be on HL, and something you can contribute to monthly? Is it going to be 10+ years until you need to access it? Are there any other considerations ('responsible'=?)

There are cheaper platforms than HL, especially as the investment size increases, so it's worth considering alternatives if not now, then at some point in the future. Platform choice doesn't make any difference to fund performance so it's a gain for free. But if you want to stay on HL then there are no restrictions to fund choice. 

If considering >10 years timescale then you can probably accept 100% equities and the expected higher return compared to funds like lifestrategy 60% which are only ~60% equities (these are better suited to people with a shorter timescale). For a 'set and forget' strategy then going for a single, global index tracker, fund will give you a lot of diversification and therefore no need to manage and change around. There's no need to go for an active fund in this case, so you can also benefit from cheap fees.

For monthly payments it's probably cheaper to stick with OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds. On HL go to the shares & funds > Funds page, select Sector: Global, Unit type: Accumulation, Fund type: Tracker. to see a shortlist. You can click on the Charges header to sort by fees and then compare the results. Some other pointers: Funds with '100' in the name track only a shortlist of worldwide stocks, usually the largest companies. 'International' and 'Ex-uk' tend to avoid UK companies, so if you don't want that look for the ones with 'world' for example Fidelity Index World (is actually developed world), and HSBC FTSE All-world Index (is all-world: developed + emerging).

If you want an environmental/social/governance screened (eg. somewhat 'ethical') fund then look for ESG - but look at the factsheets to check what the screening actually entails.

Yes, 10+ years. I'm turning 40 shortly. The money is locked in to HL so I want to reinvest ASAP. I had also considered an ISA but would need to hurry up I guess lol.

Tracker fund sounds like the one then, thanks. You wrote above 'OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds'... What is the difference here?

Ive been looking at UK funds and global funds, as well as responsible (to use hl lingo). But it doesn't seem to give a breakdown of the actually companies that these funds invest in. Is that the norm... off limits info?

The fees and risk on the esgs def seem higher, which is putting me off. Maybe one is better off not knowing what one is investing in and just focus on the growth! 😬

The big advantage of ETFs with HL is the cap on platform fees, though this is of little concern until you have enough to reach that on a 0.45% basis, and for a SIPP the cap is £200. All funds should at a minimum give the top 10 holdings. For index tracking funds, the index can be looked up and will dictate what is in the fund.

InvesterJones

MoOwens said:

InvesterJones said:

Advice is regulated, but we can offer some general guidance. So to establish some facts, we're talking about a SIPP fund choice, and you'd like it to be on HL, and something you can contribute to monthly? Is it going to be 10+ years until you need to access it? Are there any other considerations ('responsible'=?)

There are cheaper platforms than HL, especially as the investment size increases, so it's worth considering alternatives if not now, then at some point in the future. Platform choice doesn't make any difference to fund performance so it's a gain for free. But if you want to stay on HL then there are no restrictions to fund choice. 

If considering >10 years timescale then you can probably accept 100% equities and the expected higher return compared to funds like lifestrategy 60% which are only ~60% equities (these are better suited to people with a shorter timescale). For a 'set and forget' strategy then going for a single, global index tracker, fund will give you a lot of diversification and therefore no need to manage and change around. There's no need to go for an active fund in this case, so you can also benefit from cheap fees.

For monthly payments it's probably cheaper to stick with OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds. On HL go to the shares & funds > Funds page, select Sector: Global, Unit type: Accumulation, Fund type: Tracker. to see a shortlist. You can click on the Charges header to sort by fees and then compare the results. Some other pointers: Funds with '100' in the name track only a shortlist of worldwide stocks, usually the largest companies. 'International' and 'Ex-uk' tend to avoid UK companies, so if you don't want that look for the ones with 'world' for example Fidelity Index World (is actually developed world), and HSBC FTSE All-world Index (is all-world: developed + emerging).

If you want an environmental/social/governance screened (eg. somewhat 'ethical') fund then look for ESG - but look at the factsheets to check what the screening actually entails.

Yes, 10+ years. I'm turning 40 shortly. The money is locked in to HL so I want to reinvest ASAP. I had also considered an ISA but would need to hurry up I guess lol.

Tracker fund sounds like the one then, thanks. You wrote above 'OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds'... What is the difference here?

Ive been looking at UK funds and global funds, as well as responsible (to use hl lingo). But it doesn't seem to give a breakdown of the actually companies that these funds invest in. Is that the norm... off limits info?

The fees and risk on the esgs def seem higher, which is putting me off. Maybe one is better off not knowing what one is investing in and just focus on the growth! 😬

OIECs/Unit Trusts have only one dealing point per day and you don't get to know the price in advance, while exchange traded funds (ETF) are bought and sold like stocks, so can be traded any time the market is open, and you do get to know the price. The make up of the funds could be identical (e.g. the stocks they're invested in), but the platform fees for OIECs/Unit Trusts vs ETFs can be quite different. Some platforms only offer one or the other, and for those that offer both (e.g. HL) the costs can be quite different. HL charge something like 0.45% of the total value for OIECs/Unit Trusts, but there's no charge for buying/selling, while for ETFs they have the same charge but only up to a maximum annual fee of £200 for SIPP, and in addition there is a £11.95 buying or selling fee for ETFs, and finally there is a bid-offer spread on ETFs which means the price to sell is less than the price to buy, i.e. acts like a small one-off cost. So for those reasons, if you're not talking enormous sums, and you want to invest monthly, it's probably not worth considering ETFs.

You should be able to find out the companies that the funds invest in, the factsheets usually list at least the top 10 holdings, but you may have to look at the fund providers own website to find a full listing, or if they are tracking an index you can look up the index. For a global tracker you're talking well over a 1000 companies usually. For example, the HSBC FTSE all-world index tracks the FTSE all world index, the companies of which can be found here: https://research.ftserussell.com/analytics/factsheets/Home/DownloadConstituentsWeights/?indexdetails=AWORLDS

MoOwens

InvesterJones said:

MoOwens said:

InvesterJones said:

Advice is regulated, but we can offer some general guidance. So to establish some facts, we're talking about a SIPP fund choice, and you'd like it to be on HL, and something you can contribute to monthly? Is it going to be 10+ years until you need to access it? Are there any other considerations ('responsible'=?)

There are cheaper platforms than HL, especially as the investment size increases, so it's worth considering alternatives if not now, then at some point in the future. Platform choice doesn't make any difference to fund performance so it's a gain for free. But if you want to stay on HL then there are no restrictions to fund choice. 

If considering >10 years timescale then you can probably accept 100% equities and the expected higher return compared to funds like lifestrategy 60% which are only ~60% equities (these are better suited to people with a shorter timescale). For a 'set and forget' strategy then going for a single, global index tracker, fund will give you a lot of diversification and therefore no need to manage and change around. There's no need to go for an active fund in this case, so you can also benefit from cheap fees.

For monthly payments it's probably cheaper to stick with OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds. On HL go to the shares & funds > Funds page, select Sector: Global, Unit type: Accumulation, Fund type: Tracker. to see a shortlist. You can click on the Charges header to sort by fees and then compare the results. Some other pointers: Funds with '100' in the name track only a shortlist of worldwide stocks, usually the largest companies. 'International' and 'Ex-uk' tend to avoid UK companies, so if you don't want that look for the ones with 'world' for example Fidelity Index World (is actually developed world), and HSBC FTSE All-world Index (is all-world: developed + emerging).

If you want an environmental/social/governance screened (eg. somewhat 'ethical') fund then look for ESG - but look at the factsheets to check what the screening actually entails.

Yes, 10+ years. I'm turning 40 shortly. The money is locked in to HL so I want to reinvest ASAP. I had also considered an ISA but would need to hurry up I guess lol.

Tracker fund sounds like the one then, thanks. You wrote above 'OIECs/Unit Trusts (Funds in HL speak) rather than exchange traded funds'... What is the difference here?

Ive been looking at UK funds and global funds, as well as responsible (to use hl lingo). But it doesn't seem to give a breakdown of the actually companies that these funds invest in. Is that the norm... off limits info?

The fees and risk on the esgs def seem higher, which is putting me off. Maybe one is better off not knowing what one is investing in and just focus on the growth! 😬

OIECs/Unit Trusts have only one dealing point per day and you don't get to know the price in advance, while exchange traded funds (ETF) are bought and sold like stocks, so can be traded any time the market is open, and you do get to know the price. The make up of the funds could be identical (e.g. the stocks they're invested in), but the platform fees for OIECs/Unit Trusts vs ETFs can be quite different. Some platforms only offer one or the other, and for those that offer both (e.g. HL) the costs can be quite different. HL charge something like 0.45% of the total value for OIECs/Unit Trusts, but there's no charge for buying/selling, while for ETFs they have the same charge but only up to a maximum annual fee of £200 for SIPP, and in addition there is a £11.95 buying or selling fee for ETFs, and finally there is a bid-offer spread on ETFs which means the price to sell is less than the price to buy, i.e. acts like a small one-off cost. So for those reasons, if you're not talking enormous sums, and you want to invest monthly, it's probably not worth considering ETFs.

You should be able to find out the companies that the funds invest in, the factsheets usually list at least the top 10 holdings, but you may have to look at the fund providers own website to find a full listing, or if they are tracking an index you can look up the index. For a global tracker you're talking well over a 1000 companies usually. For example, the HSBC FTSE all-world index tracks the FTSE all world index, the companies of which can be found here: https://research.ftserussell.com/analytics/factsheets/Home/DownloadConstituentsWeights/?indexdetails=AWORLDS

Thank you for this!! Its been really helpful. Wish I could sit you down over a coffee and soak up your wisdom lol! But seriously, thanks very much