CIS Investment ISA vs adding to Investment Bond?

catweazle_2

Hi,
Hoping someone might beable to advise me. I already have a CIS Platinum investment Bond which has done very well in the last 5 years. The term was up last year, but I can let it ride indefinately. I have a small lump sum equivilent to an ISA to invest, but I do not know whether to take out a new ISA investment bond or merely add to my Bond. Not surprisingly, the CIS agent is keen for me to take an ISA, as he'll get a comission.

My question really is - is there any advantage to be gained from taking a new Investment style ISA? Is CIS the best to be had anyway?

dunstonh

I already have a CIS Platinum investment Bond which has done very well in the last 5 years.

Not when you compare it to real investments. It was actually hard to do badly in the last 5 years (2007 being the exception).

is there any advantage to be gained from taking a new Investment style ISA?

ISAs are not new. They existed before your took out the investment bond. Indeed, it is possible the investment bond was a part mis-sale if you didnt use the ISA allowance 5 years ago.

You wont be paying corporation tax on the ISA and the growth upon encashment wont have any impact on your income tax position. ISAs before bonds every single time.

Is CIS the best to be had anyway?

Not even close.

Not surprisingly, the CIS agent is keen for me to take an ISA, as he'll get a comission.

True he will earn a commission but it is the right thing to do, even if it is 5 years too late.

You should never use a tied insurance agent for financial advice though as you are limiting yourself to a small range of products and the chances of those being the best products are unlikely. Plus, you will be paying full charges for them as well as tied salesforces are the most expensive distribution channels.

Keybiz

Differing ISA funds will all aim to achieve different results depending on your attitude to risk, the sector the invetment is held in and type of fund.
Depsite the comments of Dunstonh the CIS Income with Growth trust has consistently performed at the very peak of its sector over the last few years as proven by its Citywre ranking.
The Sustainable leaders trust also won UK fund manager of the year award last year and Is AA rated (top 10% of funds) meaning a consistent outperformance.
I have held funds across the board over the years and CIS has always delivered just as well as the others.

I agree that an ISA may be the best bet depending on the amount to invest and risk attutude, particularly given the forthcoming tax changes but as regards always using independant advisers, be careful in who you choose. Tied advisers still take exactly the same qulaifications as independant advisers and are bound by FSA regualation and must prove best advice was given. In dealing with several IFA's in the past I was on a couple of occasions astounded by their lack of knowledge (bad luck maybe). On one ccasion it was recommended that i switch funds from one performing in my opinion at a good level to one I was told was performing better elsewhere. The proceeding years showed this to be completely wrong. IFA's take commission for the sale and in may cases an annual commission provided your business stays with them. It is often in their interests (financiallly) to move your money around on the pretence of better perfomance.

Since nobody can predict the future, and as i always say now...If YOU are happy with the return and type of invetment you hold, wherever they may be, why is there a need to to alter?

jamesd

catweazle, using an ISA tax wrapper is almost always the correct first investment choice. The funds within an ISA can do almost anything, from fixed income to high risk, high reward investments. Adding more money to the existing bond is also quite likely to produce commission.

Keybiz wrote: »

Depsite the comments of Dunstonh the CIS Income with Growth trust has consistently performed at the very peak of its sector over the last few years as proven by its Citywre ranking.

The Citywire chart shows it underperforming the FTSE All-Share index a little. Their rankings show it ranked 1 for capital preservation, 2 for performance and consistency, 3 for cost. Trustnet shows it ranked 11 out of 31 for performance over one year, 3rd over three and five years, compared to other UK Income and Growth funds.

Keybiz wrote: »

The Sustainable leaders trust also won UK fund manager of the year award last year and Is AA rated (top 10% of funds) meaning a consistent outperformance.

CIS says that it is A rated with an AA rated manager. Citywire currently seems to have no A rating for the fund at all and rates the manager A. Rates it 1 for performance, 2 for consistency, 1 for capital preservation and 3 for cost. The CIS Sustainable Leaders Trust also fails to meet my ethical standards on global warming because it avoids nuclear power investments, while top-ranking electricity in general and gas pipelines, in spite of the high carbon footprint of most of the rest of the electricity industry.

Keybiz wrote: »

On one ccasion it was recommended that i switch funds from one performing in my opinion at a good level to one I was told was performing better elsewhere. The proceeding years showed this to be completely wrong.

Just to be clear here, you were told to switch to one that was performing elsewhere and the prOceeding or prEceeding years showed it to be wrong? It's impossible for the prOceeding (following) years to prove that the past performance was wrong because they weren't known at the time. But if you were wrongly told that the past performance was better at the time you switched, that would be clear misconduct. How did the two funds do in the following years? What funds and which years? For example, was one doing well before a market crash, you switched, then the market crashed?

dunstonh

Tied advisers still take exactly the same qulaifications as independant advisers and are bound by FSA regualation and must prove best advice was given.

That is not correct. Tied agents have to offer the best product from their range. IFAs have to offer the best product from their research from the whole of market. Tied agents also have restrictions on fund recommendations. IFAs have to recommend funds. Whereas tied agents present the funds in that risk profile for the client to choose. Whilst it doesnst always happen like that in reality, that is how it is documented.

The FSA have proposed that from 2009 there will be a clear definition in the differences between IFAs and tied salesforces. Primary advice (which is where the current salesforces will end up) will offer cut down versions of products which are simplified and more limited than the IFA version. There will also be virtually no FOS protection on the advice either. Plus, they will not be able to use the term "adviser" in their job title. IFAs will have to sit further qualifications and agree to work to remuneration standard.

Whilst this is still under consultation and bits are likely to change, it is clear that if you want best advice you can only get it from the whole of market source. Its no guarantee of quality of adviser but there isnt with the tied route either. However, tied route gives you about 15 products and a handful of funds. Whole of market gives you tens of thousands of products and tens of thousands of funds.

On one ccasion it was recommended that i switch funds from one performing in my opinion at a good level to one I was told was performing better elsewhere. The proceeding years showed this to be completely wrong.

Crystal ball job. Who knows what the futre will hold. The advice could have been right. It could still come right. Its another good reason not to look at single fund investing though.

IFA's take commission for the sale and in may cases an annual commission provided your business stays with them. It is often in their interests (financiallly) to move your money around on the pretence of better perfomance.

That is a big generalisation. Whilst some advisers may charge on switches, a good many do not. Especially NMA IFAs or servicing IFAs. Its mainly transactional IFAs that would make the charge.

Depsite the comments of Dunstonh the CIS Income with Growth trust has consistently performed at the very peak of its sector over the last few years as proven by its Citywre ranking.

So, they have one fund that has done well. i dont recall any funds being mentioned and if you really want that fund then why not get it cheaper from the whole of market?

Keybiz

Many thanks for your replies. I admit that on occasions I may have over-generalised with my comments.

On one ccasion it was recommended that i switch funds from one performing in my opinion at a good level to one I was told was performing better elsewhere. The proceeding years showed this to be completely wrong.

What I was really suggesting here is that had I just stuck with my investments as was, I would have been no worse off i.e if you the customer is happy with performance, don't try and fix what ain't broken. I totally agree that no-one can predict the future. To a degree, you pays your money and takes your chance when investing in stock related funds.

The Citywire chart shows it underperforming the FTSE All-Share index a little. Their rankings show it ranked 1 for capital preservation, 2 for performance and consistency, 3 for cost. Trustnet shows it ranked 11 out of 31 for performance over one year, 3rd over three and five years, compared to other UK Income and Growth funds.

I did not intend to open a can of worms regarding individual fund performance and selection, I was simply responding to comments that CIS funds "don't come close". The comments above show top qaurtile performance over 3 and 5 years.
The Sustainable Leaders fund has also done well in recent times. Ethical criteria in fund selection is very much a personal thing

The CIS Sustainable Leaders Trust also fails to meet my ethical standards

, but the co-op run a strict ethical engagement policy allowing its clients a say in which industries to invest which appeals to me and they also rank highly in the ethical consumer survey.

Dunstonh, I agree that hopefully any new change to make the FS industry more transparent can only be beneficial to clients. At the end of the day, whatever type of product you purchase the aim is to buy from knowledgeable, trustworthy, fairly priced businesses.