Advice with First-Time Investing

justme8786 · 19 May at 5:02PM

First time investing solo. I already have some investments in an ISA but these are ones that my (wonderful) mum set up for me ages ago and I am only now starting to really look into my finances. She died recently so there is a lot to try to manage at the moment as well as starting uni.

The ones I have there are all active investments: European Assets Trust PLC, The Global Smaller etc. From the research I have done so far, a more passive approach would be preferred, with less individual funds. I am thinking of selling all the ones I have and buying an 80/20 stocks & bonds mix, just with something like HSBC All World Index plus some GILTS for a little stability.

I will be adding to this ISA as much as I can.

Would this do or is more diversification necessary? My age is 20 so hopefully I have a long horizon. Thank you

dunstonh · 19 May at 5:17PM

From the research I have done so far, a more passive approach would be preferred, with less individual fund

The quantity of funds doesn't matter unless you are a regular trader in direct assets (shares, ETFs, ITs). If you stick to OEIC/Unit Trusts, then whether you have one fund or ten funds doesn't matter. In, fact it can be slightly better as its often cheaper to hold individual funds to your target weightings than a catchall global tracker fund.

However, it would require slightly more work than a global tracker but seeing as you plan to buy gilts, you seem prepared to do the work.

El_Torro · 19 May at 5:21PM

Sorry to hear that you have lost your mum at a young age.

The HSBC All World Index is a good global tracker, you don't need to diversify any further for your equity allocation. It already invests in about 3,500 of the largest companies in the world.

One option would be to invest in a multi asset fund instead of a global tracker and a bonds / gilts fund. Some examples of multi asset funds: https://monevator.com/passive-fund-of-funds-the-rivals/

justme8786 · 19 May at 5:34PM

dunstonh said:

From the research I have done so far, a more passive approach would be preferred, with less individual fund
The quantity of funds doesn't matter unless you are a regular trader in direct assets (shares, ETFs, ITs). If you stick to OEIC/Unit Trusts, then whether you have one fund or ten funds doesn't matter. In, fact it can be slightly better as its often cheaper to hold individual funds to your target weightings than a catchall global tracker fund.

However, it would require slightly more work than a global tracker but seeing as you plan to buy gilts, you seem prepared to do the work.

Oh no is there lots of work with buying gilts? I assumed it was relatively hassle-free

justme8786 · 19 May at 5:39PM

El_Torro said:

Sorry to hear that you have lost your mum at a young age.

The HSBC All World Index is a good global tracker, you don't need to diversify any further for your equity allocation. It already invests in about 3,500 of the largest companies in the world.

One option would be to invest in a multi asset fund instead of a global tracker and a bonds / gilts fund. Some examples of multi asset funds: https://monevator.com/passive-fund-of-funds-the-rivals/

Thank you, and thank you. I will look into it. The multi asset funds are managed though no? meaning higher fees? I would just like something to include the whole market as much as possible with minimal interference. At least I think that's what I would like, I don't know very much.

Wow I didn't know the HSBC one had so many companies. If I do go for it, and want to have some bonds on the side for stability, would you recommend gilts or another type? Maybe also something global?

dunstonh · 19 May at 5:58PM

justme8786 said:

dunstonh said:

From the research I have done so far, a more passive approach would be preferred, with less individual fund
The quantity of funds doesn't matter unless you are a regular trader in direct assets (shares, ETFs, ITs). If you stick to OEIC/Unit Trusts, then whether you have one fund or ten funds doesn't matter. In, fact it can be slightly better as its often cheaper to hold individual funds to your target weightings than a catchall global tracker fund.

However, it would require slightly more work than a global tracker but seeing as you plan to buy gilts, you seem prepared to do the work.

Oh no is there lots of work with buying gilts? I assumed it was relatively hassle-free

You have to decide which gilts to buy. There are lots of them and typically you would buy multiple gilts.

Alternatively, you use a selection of bond funds. Or better still, go with a multi-asset fund where it is all done for you.

ColdIron · 19 May at 5:58PM

The HSBC Global Strategy fund has an OCF of 0.24% which is considerably cheaper than, say, 0.75% of a traditional actively managed fund. It also has a variety of bond types, government, corporate etc depending upon the risk/volatility model you choose. A one stop, fire and forget fund

https://www.assetmanagement.hsbc.co.uk/en/intermediary/capabilities/multi-asset/hsbc-global-strategy-portfolios

justme8786 · 19 May at 6:38PM

dunstonh said:

justme8786 said:

dunstonh said:

From the research I have done so far, a more passive approach would be preferred, with less individual fund
The quantity of funds doesn't matter unless you are a regular trader in direct assets (shares, ETFs, ITs). If you stick to OEIC/Unit Trusts, then whether you have one fund or ten funds doesn't matter. In, fact it can be slightly better as its often cheaper to hold individual funds to your target weightings than a catchall global tracker fund.

However, it would require slightly more work than a global tracker but seeing as you plan to buy gilts, you seem prepared to do the work.

Oh no is there lots of work with buying gilts? I assumed it was relatively hassle-free

You have to decide which gilts to buy. There are lots of them and typically you would buy multiple gilts.

Alternatively, you use a selection of bond funds. Or better still, go with a multi-asset fund where it is all done for you.

Do you know if a single fund exists that includes a variety of bonds?

justme8786 · 19 May at 6:42PM

ColdIron said:

The HSBC Global Strategy fund has an OCF of 0.24% which is considerably cheaper than, say, 0.75% of a traditional actively managed fund. It also has a variety of bond types, government, corporate etc depending upon the risk/volatility model you choose. A one stop, fire and forget fund
https://www.assetmanagement.hsbc.co.uk/en/intermediary/capabilities/multi-asset/hsbc-global-strategy-portfolios

It sounds good but I think my mum already has a SIPP, soon to be in my name, which mainly invests into that exact fund haha maybe not the best idea to have it twice.

InvesterJones · 19 May at 7:22PM

justme8786 said:

ColdIron said:

The HSBC Global Strategy fund has an OCF of 0.24% which is considerably cheaper than, say, 0.75% of a traditional actively managed fund. It also has a variety of bond types, government, corporate etc depending upon the risk/volatility model you choose. A one stop, fire and forget fund
https://www.assetmanagement.hsbc.co.uk/en/intermediary/capabilities/multi-asset/hsbc-global-strategy-portfolios

It sounds good but I think my mum already has a SIPP, soon to be in my name, which mainly invests into that exact fund haha maybe not the best idea to have it twice.

It's already about as diversified as you can get, so unless the fund you're considering holds something it doesn't (unlikely), you're not adding risk by having it twice as it where.