equity ISA

satish_141

can some one suggeste me a good equity ISA for £4000 for investing this year. That will be great.

regards,

satish

dunstonh

With reference to your other thread, we cant do that here. That is classed as advice and any suggestions would be in breach of FSA rules.

cheerfulcat

Hi,satish,

I won't recommend a specific fund - not so much out of fear of the FSA as because no-one, not even an IFA, can tell you how well any given fund will do. What I will say is that, since more than 80% of managed funds do no more than track an index ( and finding the outperforming managers isn't always easy ), on the whole an unmanaged index tracker is as good a choice as any and better than most because the charges are very low. A FTSE All-Share tracker will give you marginally more diversification than a fund which tracks the FTSE 100.

HTH

Cheerfulcat

whiteflag_3

A FTSE All-Share tracker will give you marginally more diversification than a fund which tracks the FTSE 100.

On the whole I agree with Cheerfulcat, but with a good equity income fund you will have a similar fund to a FTSE 100 tracker but also benefit from reinvestment of dividends. The benefits of dividends are well documented on this site.

carnet

cheerfulcat wrote:

finding the outperforming managers isn't always easy ), on the whole an unmanaged index tracker is as good a choice as any and better than most

Perhaps not too easy but definitely possible with a fair degree of experience and up-to-date research.

I would always go for a proven (or even, occasionally, up-coming ) manager with good stock-picking skills over a passive fund.

Trying to beat the relative indices is half the "fun" of the "game" .

competitionscafe

satish_141 wrote:

can some one suggeste me a good equity ISA for £4000 for investing this year. That will be great.

regards,

satish

You can view discount brokers lists of recommended funds on their web sites:
eg: Hargreaves Lansdown and Best Invest:
http://www.hargreaveslansdown.co.uk/research/dampier.asp
http://www.bestinvest.co.uk/funds/FMPro?-db=webprices.fp5&-format=fundperflist.htm&-lay=fund%5finfo&-op=gt&starlen=2.5&calc%5ffundtype=open&-max=200&-find=&-token=3&-token.2=2&-sortfield=starlen&-sortorder=descending

You may also want to look at this article:
Unit trusts for first time investors:
http://www.thisismoney.co.uk/investing-and-markets/tips-and-tactics/article.html?in_article_id=401642&in_page_id=23

NB: this is not advice - they are 'suggested' funds but as to which is best for you that depends on your attitude to risk, your existing investments, time span, etc, etc - and of course there is no guarantee that the suggested funds will be the best performers (nobody can predict the future!). It can be a useful starting point though and there are a few fund managers who seem to consistently outperform - follow the manager and not the fund as they can often change!

dunstonh

Trackers often get mentioned as they are cheap but over the last 5 years the 80% of managed funds figure doesnt stack up as trackers have generally been outperformed by other UK equivalent sectors.

Comparing a managed corporate bond fund against a tracker would be wrong as the goals are different, risk different and volatility different. Over the long term, a corporate bond manged fund is likely to perform at a lower rate than a UK stockmarket tracker. However, it doesnt have the risk or the volatility that the tracker has and many people prefer the lower risk.

Including a tracker in the portfolio is not a bad thing but one fund solutions are old fashioned and these days income distributions (back into the ISA) are of a high priority. The UK Equity Income sector which is slightly lower risk than UK trackers has outperformed UK FTSE/All Share index trackers for the last 5 years.

No-one knows what funds are going to appear top in the future. However, it is sector/asset allocation which is important and anyone who has used correct asset allocation in the past to invest over a spread of areas would have outperformed UK trackers. This has been confirmed by the FSA in one of their studies and is one of the main reasons they are promoting the use of asset allocation with advisors.

cheerfulcat

dunstonh wrote:

Trackers often get mentioned as they are cheap but over the last 5 years the 80% of managed funds figure doesnt stack up as trackers have generally been outperformed by other UK equivalent sectors.

Trackers are not just advocated because they are cheaper than managed funds; the fact is that *most* managed funds are closet trackers. The managers' performance is benchmarked to the appropriate index for the fund. The manager is discouraged from outperforming that index. The fund nearly always underperforms the index by 1% or so - the annual management charge. A straightforward, honest tracker does the same job for less.

Comparing a managed corporate bond fund against a tracker would be wrong as the goals are different, risk different and volatility different. Over the long term, a corporate bond manged fund is likely to perform at a lower rate than a UK stockmarket tracker. However, it doesnt have the risk or the volatility that the tracker has and many people prefer the lower risk.

It is you who have chosen to compare the corporate bond fund to a FTSE tracker! :-) I would rather compare it to the relevant (corporate bond ) index, which, like many indices, is also available as a tracker . As to risk; I would suggest that corporate bond funds can in fact be very risky, especially at the high yield end.

Including a tracker in the portfolio is not a bad thing but one fund solutions are old fashioned and these days income distributions (back into the ISA) are of a high priority.

Most trackers pay dividends which can be reinvested. I agree on the importance of the reivestment of dividends.

The UK Equity Income sector which is slightly lower risk than UK trackers has outperformed UK FTSE/All Share index trackers for the last 5 years.

Which is why one of the very best investment strategies is to buy a portfolio of high-yielding shares and reinvest the dividends...

Cheerfulcat

EdInvestor

cheerfulcat wrote:

Which is why one of the very best investment strategies is to buy a portfolio of high-yielding shares and reinvest the dividends...

Cheerfulcat

And it's a great way of avoiding paying charges too - even cheaper than a tracker

dealseeker

Is it possible to have a "self select" ISA? I know you used to get this in PEPs but not sure I've heard of them for ISAs. If so who are the best "providers" with lowest charges reasonable service?

If you don't ge these then I would probably sell shares and invest in a low cost tracker funds.

cheerfulcat

dealseeker wrote:

Is it possible to have a "self select" ISA? I know you used to get this in PEPs but not sure I've heard of them for ISAs. If so who are the best "providers" with lowest charges reasonable service?

If you don't ge these then I would probably sell shares and invest in a low cost tracker funds.

Yes, there are many brokers who provide self select ISAs. You can compare prices here -

http://www.moneysupermarket.com/shares/