Choosing Unit Trusts/OEICS

[MDS1951]

I intend to invest £20k a year in unit trusts/OEICS over several years within an ISA. I already invest regularly within the ISA that I shall use in the following:-

Artemis Global Income
HSBC FTSE 250 Index
L&G European Index Trust

I am thinking of adding 4 more to the portfolio:-

Jupiter Asian Income
Legal & General International Index
Legal & General US Index
Newton Global Income

I already know which ones are the trackers and which are the managed funds, and I'm happy to have a mix of them. I've also had a quick look at the combined geographic spread of the investments made by all 7 funds - approximately 34% USA, 22% Europe, 17% East Asia, 14% FTSE 250, 13% everywhere else - and I'm happy with that as well. I've had a look at the yields because I'll be drawing on some of the dividends and while the two new Legal and General funds are low-yielding I'm happy to sell a few units of those if I need to as well as pocketing the dividends. I'm also aware that the Jupiter fund is a fairly recent addition to the funds universe.

I looked up these funds on the Hargreaves Lansdown website, and they thought they are OK. I'm inclined to stop looking now and go ahead later this year, but I thought I'd post my thoughts to seek reassurance that I'm not being stupid, and perhaps be informed of other funds to consider.

I also have a HYP plus a small portfolio of investment trusts, so these aren't my only investments.

Thanks in advance!

MDS1951

[FrenchJames]

I always look at the risk/return profile of funds before selecting one. The FT has a couple of useful tools for this. The first compares the risk/return for a given fund to the others in its category. Its based on 3 years performance and the performance may have changed recently, but you can see which funds have provided a better return for a given level of risk. As usual in this context risk means volatility which of course ignores all sorts of real world risks. The other tool shows the Lipper scores (another rating system) for the fund. Just search for the fund on the FT website. I sometimes use data from Morningstar and FE Trustnet to look at different time periods but this is labour intensive as there is no simple way to download the data.
I also create the same sort of chart from scratch for investment trusts as the FT does provide the tools for ITs.

[scotia]

Your choices look perfectly respectable. But I think I would add small cap funds. There are lots of choices in this area - e.g. for the UK I hold Amati UK Smaller Cos, AXA Framlington UK Smaller Cos, Marlborough Special Situations and Marlborough UK Micro Cap Growth. And for Global Smaller Cos, I hold Standard Life Inv Global Smaller Cos. I tend to spread my ISA acquisitions throughout the year to smooth out stock market volatility, and with Unit Trusts/ OEICs there are usually no purchase costs involved. However in an ISA with Hargreaves Lansdown (which I use), the platform costs can mount up significantly with large Unit Trust/OEIC investments, whereas they cap Investment Trust platform charges. So, if you are using HL, it may be sensible, when you have built up a sizeable ISA, to switch some of the Unit Trusts/OEICS into Investments Trusts (as I have done).

[MDS1951]

Thank you very much FrenchJames for pointing me in the direction of the FT tools for the risk/return profile of funds.

Thanks for the ideas about small cap funds, Scotia - I might well include one of the funds you suggest.

MDS1951