Funds what to do

20122013

I have around 30  funds in S&S ISA on the Aegon platform.   I was going to start DIY,  either by asking the new platform to sell my funds and transfer them out as CASH ISA (so to reduce the fund management fees while I think what I funds to invest in)  or transfer all to the new platform then decide what to do. I think if I transfer all out,  it will only save a small percentage of the platform fee?  Either way, I need to decide on a platform(s).  As I am still not confident on DIYing and mindful that  a lot of my gain has been and still is being eaten up by fees, so I need to take action and now I  need to find an excellent IFA

My main goal is to have a smaller number of funds (max 5?) , well diverse and  invest in better performing funds - to make up the lost time / returns (for the past years) with low cost passive funds and reduce any fees (if possible).

My questions is

How would I know if the IFA will do a  good job ? and their charges

How, what and where to find  an IFA to help with my goals?

or as I have menionted earlier, sell it all and put in an CASH ISA take my time to do some more research - my challenge is finding it not easy to understand the analysis or what I should be looking at as time is ticking and will not have enough time to make up the past poor returns.

Eyeful

How & why did you get so many funds.
Before looking for an IFA, read my notes below I hope they will be of help to you.

https://www.biglawinvestor.com/meet-the-gotrocks-family/

Watch this video:  https://www.kroijer.com/ 

1. Academic research shows that after charges & fees most of the time active fund managers do not beat a simple Major World Index such as  the MSCI or FTSE WORLD INDEX.

2. Suggest that you consider "Simple Investing" which consists of choosing a low cost Global Multi Asset Fund.
This gives you a ready made portfolio, you only need to decide on the share/ bond split that you are happy with.
Example:-
https://www.assetmanagement.hsbc.co.uk/en/intermediary/capabilities/multi-asset/hsbc-global-strategy-portfolios

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

3. https://monevator.com/compare-uk-cheapest-online-brokers/

eskbanker

20122013 said:

My main goal is to have a smaller number of funds (max 5?) , well diverse and  invest in better performing funds - to make up the lost time / returns (for the past years) with low cost passive funds and reduce any fees (if possible).

[...]

my challenge is finding it not easy to understand the analysis or what I should be looking at as time is ticking and will not have enough time to make up the past poor returns.

What's done is done, i.e. there's no point in looking backwards and thinking about notionally lost value, so you'd be better served by simply looking at it from the perspective of starting now with a pot of £x and identifying objectives to achieve with that - in other words, don't be tempted to take risks that you're not happy with in order to chase an overly aggressive target just because you feel you've fallen behind the curve.

Are you able to articulate why you feel you need five funds?  Other than those with fairly clear rationales for favouring specific markets or sectors, the needs of many DIY investors will be met by a single one....

masonic

DIY will be the lowest cost way of proceeding, but if you are not comfortable doing that, then there is an option between that and personalised advice from an IFA. There are various options involving an investment platform selecting funds based on a risk questionnaire (see https://www.moneysavingexpert.com/savings/stocks-shares-isas/#doitforme ). These are likely to be around a third of the cost of advice, and where you are looking to invest in low cost index funds, the advice cost will be the lion's share of your overall cost. This would not prevent you from taking over in the future, once you've had enough time to do the research you feel you need. I suspect once you get up to speed with these options, you'll see there isn't a vast difference between the service they provide vs a single multi-asset fund you could buy as a DIY investor.

Eyeful

How much risk?
https://meaningfulmoney.tv/2022/09/26/how-much-investment-risk-should-i-take/

dunstonh

My main goal is to have a smaller number of funds (max 5?) ,

If you are higher risk, that is possible or if you want a multi-asset fund that is possible.  However, if you are not higher risk then a portfolio will typically need around 8-10 funds.

My questions is
How would I know if the IFA will do a  good job ? and their charges
How, what and where to find  an IFA to help with my goals?

The IFA doing a good job or not is not really an issue.  Its the charges that are the main issue as some are low cost and some are greedy.
Generally, avoid the national/regional firms and use a local one.

My main goal is to have a smaller number of funds (max 5?) , well diverse and  invest in better performing funds - to make up the lost time / returns (for the past years) with low cost passive funds and reduce any fees (if possible).

Were the returns actually poor or was the period poor?  For example, bonds fell between December 2021 and October 2023 and were flat to small positive in 2024.      Bonds are valued where they were 7 years ago.  Gilts were, by far, the worst in terms of loss as they suffered a hundred year event.

So, if your portfolio is heavy in bonds and gilts, then the performance is not poor because of the funds but because of the asset class going through a period of negativity.

20122013

eskbanker said:

What's done is done, i.e. there's no point in looking backwards and thinking about notionally lost value, so you'd be better served by simply looking at it from the perspective of starting now with a pot of £x and identifying objectives to achieve with that - in other words, don't be tempted to take risks that you're not happy with in order to chase an overly aggressive target just because you feel you've fallen behind the curve.

Are you able to articulate why you feel you need five funds?  Other than those with fairly clear rationales for favouring specific markets or sectors, the needs of many DIY investors will be met by a single one....

I agree.

My ex 'professional' IFA had selected all my funds and I want to get back on track with 10 years to invest (I can take some realistic risk)

    

I have decided on 5 funds for my S&S ISA as it will be more manageable and also the size of the funds (as it may need to be within the FCSC?) than my current 30 funds. also planning to diversifed ?  (If I ever need access I can sell some )  I am thinking ''not putting all the eggs in one basket' so will use more than one platform which may incur more fees but again.  Does this sound mad?  

dunstonh

I have decided on 5 funds for my S&S ISA as it will be more manageable and also the size of the funds (as it may need to be within the FCSC?) than my current 30 funds.

30 is far too many.  But with just 5 funds, what areas have you chosen to leave out of your portfolio to achieve that?

I am thinking ''not putting all the eggs in one basket' so will use more than one platform which may incur more fees but again.  Does this sound mad?  

why do you think you need more than one platform?

20122013

dunstonh said:

I have decided on 5 funds for my S&S ISA as it will be more manageable and also the size of the funds (as it may need to be within the FCSC?) than my current 30 funds.

30 is far too many.  But with just 5 funds, what areas have you chosen to leave out of your portfolio to achieve that?

My plan is to diversified : different risk levels, sectors, countries, industries  (learning on the job ) what would be a good size funds?

 

I am thinking ''not putting all the eggs in one basket' so will use more than one platform which may incur more fees but again.  Does this sound mad?  

why do you think you need more than one platform?

All online platforms are digital (so need a backup plan) and also of the FSCS rules.

Please see my reply in bold.

20122013

dunstonh said:

My main goal is to have a smaller number of funds (max 5?) ,

If you are higher risk, that is possible or if you want a multi-asset fund that is possible.  However, if you are not higher risk then a portfolio will typically need around 8-10 funds.

That's interesting.  I was planning to allocate 20% of my current portfolio which I am prepare to lose in higher risk funds and 65% in medium risk and 15% low risk

My questions is
How would I know if the IFA will do a  good job ? and their charges
How, what and where to find  an IFA to help with my goals?

The IFA doing a good job or not is not really an issue.  Its the charges that are the main issue as some are low cost and some are greedy.
Generally, avoid the national/regional firms and use a local one.

I was looking at local IFA via the internet, not sure how to select for what I need (by qualifications, experience or somthing else? ):

1. review my current portfolio to see whether any funds is worth keeping, however, as I am looking to reduce the mgt and platform fees, any benefit to do a review? As it seems low cost passive funds seem to be doing better than actively managed funds?  

2. to rebalance my portfolio and align with my financial goals and select funds and I will  then take it from there

3. any other things I may have missed that I should ask?

My main goal is to have a smaller number of funds (max 5?) , well diverse and  invest in better performing funds - to make up the lost time / returns (for the past years) with low cost passive funds and reduce any fees (if possible).

Were the returns actually poor or was the period poor?  For example, bonds fell between December 2021 and October 2023 and were flat to small positive in 2024.      Bonds are valued where they were 7 years ago.  Gilts were, by far, the worst in terms of loss as they suffered a hundred year event.

So, if your portfolio is heavy in bonds and gilts, then the performance is not poor because of the funds but because of the asset class going through a period of negativity.

Please see my reply in bold

dunstonh

My plan is to diversified : different risk levels, sectors, countries, industries  (learning on the job ) what would be a good size funds?

Depending on your investment strategy, you need around 5 STMM/Gilts/Bond funds to get diversification. Unlike equities, fixed interest securities don't have many catchall funds.    The equities bit can be done in a single fund. Although using a selection of single sector funds (as in country/region each) is usually cheaper but needs a bit more work and you would typically have around 5 of those if you use that method.

All online platforms are digital (so need a backup plan) and also of the FSCS rules.

FSCS is largely irrelevant.    If you have the same fund house on different platforms, then you are not doubling up on FSCS protection at fund level.     At fund house level, if you have one fund house on one platform at £100k or 10 platforms with £10k using the same fund house, then you get the same level of FSCS protection. i.e. £85k protected and £15k not.    At platform level you would get multiple FSCS protection but unless you are moving away from the mainstream, that isn't really going to be an issue.

Liquid unit linked funds don't really have an FSCS issue.     If you are using non-maintream small players as your platform, and especially those heavy in illiquid assets, then yes, it can make sense to use multiple platforms.    However, if you are sticking to mainstream providers with high levels of liquid assets on their platform, then it's largely pointless.

In respect of "digital", its worth noting that around 7 out of 10 platforms use the same software provider and that provider controls the backend for all of them.   So, if the backend goes down, it would go down for all of them.   The platforms themselves only control their front end.   So, if one front end goes down, the backend still works but the front end of the others doesn't go down.

Software seems to cycle.  It used to be mostly in-house.  Then it went mostly to third party (2 main software suppliers) but now it is trending back to in-house again.   That is driven by costs as the software suppliers take a cut of the assets under management (typically around 0.1%) and that puts costs pressures on the platform provider.

So, if you are going to be quite paranoid about the digital side of things then you need to make sure your platforms are not using the same software provider.