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Which fund?
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- Lemon Slice
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Which fund?
I have a 40 odd share/22 sector HYP which I am currently transitioning from building to taking income from and I have some separate funds which I’d like to put into something that does not overlap too much sector or strategy wise. E.G. something more global in nature (ie not necessarily from the London stock exchange), growth oriented rather than (necessarily) income producing, and with some exposure to technology. I read with great interest the thread on Fundsmith (Terry Smith Explains) which is a definite contender. In that thread other funds are mentioned, LindsellTrain, SMT, and one or two others that I can’t remember off hand.
The aim is to protect and grow the capital with view to selling in 5, 10+ years time when the funds are required for something such as a house move, medical need or even something more fun. I’m in my 50s.
I’ve never invested in a fund before and there is a bewildering array of them, so my rather basic question is how do you choose? and once chosen, how do you know the fund is trading at a good price? If anyone cares to throw in any suggestions (funds or further reading) that would also be welcome.
The aim is to protect and grow the capital with view to selling in 5, 10+ years time when the funds are required for something such as a house move, medical need or even something more fun. I’m in my 50s.
I’ve never invested in a fund before and there is a bewildering array of them, so my rather basic question is how do you choose? and once chosen, how do you know the fund is trading at a good price? If anyone cares to throw in any suggestions (funds or further reading) that would also be welcome.
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- The full Lemon
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Re: Which fund?
Any of the big generalist ITs would do the job but Scottish Mortgage is probably at the less conservative end of the spectrum with Fundsmith and funds managed by Lindsell Train at the other.
You say protect and grow your capital. That would indicate the more conservative end. I would plump for Finsbury Growth and Income. It is managed by Nick Train, has a good growth record since he became investment manager and as an IT has relatively low charges. I hold it although that is no reason for you to.
Others will no doubt advocate what seems to be the current fashion for passive funds but I would go for a well managed fund.
Sorry, you ask about price. Open ended funds such as OEICs will trade very close to NAV, but most ITs will trade above or below NAV depending on the demand for their shares and it is usually unwise to buy at much more than par. Finsbury is standing at something over a 1% premium. I would regard that as acceptable and will not go into all the ins and outs of this as I do not want to write a book!
Dod
You say protect and grow your capital. That would indicate the more conservative end. I would plump for Finsbury Growth and Income. It is managed by Nick Train, has a good growth record since he became investment manager and as an IT has relatively low charges. I hold it although that is no reason for you to.
Others will no doubt advocate what seems to be the current fashion for passive funds but I would go for a well managed fund.
Sorry, you ask about price. Open ended funds such as OEICs will trade very close to NAV, but most ITs will trade above or below NAV depending on the demand for their shares and it is usually unwise to buy at much more than par. Finsbury is standing at something over a 1% premium. I would regard that as acceptable and will not go into all the ins and outs of this as I do not want to write a book!
Dod
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- Lemon Half
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Re: Which fund?
(1) You mention LTI - here's a recent Lemon discussion I think you might be interested in.
viewtopic.php?f=54&t=12321#p147484
(2) You might like to review the AIC website (section "Find and Compare Investment Companies" at the top of the intro page)
https://www.theaic.co.uk/
This will allow you to quickly filter out "Global Growth" contenders.
(Of course, the next thing to do might also be to adjust the search filter to "growth + income"....but then the choice increases).
(3) Global ETFs such as Vanguard [VWRL] which is almost "pan-galactic" ( ) at 3133 holdings
(click on the 10 year view)
http://www.hl.co.uk/shares/shares-searc ... etf-usdgbp
viewtopic.php?f=54&t=12321#p147484
(2) You might like to review the AIC website (section "Find and Compare Investment Companies" at the top of the intro page)
https://www.theaic.co.uk/
This will allow you to quickly filter out "Global Growth" contenders.
(Of course, the next thing to do might also be to adjust the search filter to "growth + income"....but then the choice increases).
(3) Global ETFs such as Vanguard [VWRL] which is almost "pan-galactic" ( ) at 3133 holdings
(click on the 10 year view)
http://www.hl.co.uk/shares/shares-searc ... etf-usdgbp
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- Lemon Half
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Re: Which fund?
I suggest that you look at F&C IT (FRCL) and Witan (WTAN). Both are pretty global and also dabble in Private Equity. They have an enviable record of dividend increases. Probably better than any passive investment.
TJH
TJH
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- Lemon Slice
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Re: Which fund?
Totally agree : go for F&C IT (FRCL) - a sort of "rock of ages".
Otherwise for a bit of zest look at some AIM VCTs. (I particularly like AMATI which does have some international companies). These come with a 30% tax break if you buy new shares and you can tick the reinvest dividend box which means more new shares and more 30% off the purchase of the new shares. Look at the venture capital trust board for more info so you can do your own research.
Otherwise for a bit of zest look at some AIM VCTs. (I particularly like AMATI which does have some international companies). These come with a 30% tax break if you buy new shares and you can tick the reinvest dividend box which means more new shares and more 30% off the purchase of the new shares. Look at the venture capital trust board for more info so you can do your own research.
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- Lemon Slice
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Re: Which fund?
I agree with the others regarding Foreign and Colonial Investment Trust (FRCL) - a large and highly diversified world equity trust, which is effectively a ready-made portfolio in one fund. The chairman, Simon Fraser, when asked at last year's AGM regarding what the unique selling point of the trust would be, he replied that 'it was a one-stop shop'.
I have held FRCL for the past 20 years and have not been disappointed - 9.00% per annum on average with dividends re-invested. The trust is currently trading at a small discount of 1-2%.
I have held FRCL for the past 20 years and have not been disappointed - 9.00% per annum on average with dividends re-invested. The trust is currently trading at a small discount of 1-2%.
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- Lemon Slice
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Re: Which fund?
I've just downloaded a guide from Hargreaves Landsdown re how to select a fund, but I suspect the suggestions put forward here (thank you very much) will help cut through a lot of that. It does indeed look like FRCL might fit the bill, I'm reading up on it and the others mentioned now.
Bytheway, the funds I've allocated for this are outside of any tax wrapper, I'm not keen on buying through HL with whom I have an ISA, due to their fees. If I were to plump for FRCL for example, would it be best to go directly to F&C Investments and open an account with them?
Bytheway, the funds I've allocated for this are outside of any tax wrapper, I'm not keen on buying through HL with whom I have an ISA, due to their fees. If I were to plump for FRCL for example, would it be best to go directly to F&C Investments and open an account with them?
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- Lemon Half
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Re: Which fund?
You might do better with Halifax Sharedealing. Then you are not limited to what FCAM offer.
TJH
TJH
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- Lemon Quarter
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Re: Which fund?
Fluke wrote:I've just downloaded a guide from Hargreaves Landsdown re how to select a fund, but I suspect the suggestions put forward here (thank you very much) will help cut through a lot of that. It does indeed look like FRCL might fit the bill, I'm reading up on it and the others mentioned now.
Bytheway, the funds I've allocated for this are outside of any tax wrapper, I'm not keen on buying through HL with whom I have an ISA, due to their fees. If I were to plump for FRCL for example, would it be best to go directly to F&C Investments and open an account with them?
I too hold FRCL, and have been satisfied with its performance - particularly over the past 5 years.
I don't use Hargreaves so may be mistaken, but don't their non-ISA annual charges only apply to funds (unit trusts etc) - and NOT to Investment Trusts such as FRCL?
Check out this point before complicating your life with another broker.
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- Lemon Slice
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Re: Which fund?
77ss wrote:I don't use Hargreaves so may be mistaken, but don't their non-ISA annual charges only apply to funds (unit trusts etc) - and NOT to Investment Trusts such as FRCL?
Check out this point before complicating your life with another broker.
Very good point 77 I didn't check for FRCL only Fundsmith, thanks, I'll look into it.
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- Lemon Slice
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Re: Which fund?
tjh290633 wrote:You might do better with Halifax Sharedealing. Then you are not limited to what FCAM offer.
TJH
You mean if I was interested in other funds/ITs etc?
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- Lemon Quarter
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Re: Which fund?
Fluke wrote:The aim is to protect and grow the capital with view to selling in 5, 10+ years time when the funds are required for something such as a house move, medical need or even something more fun. I’m in my 50s.
Stock markets don't just move upwards. If you really might want your money back in 5 years time, think carefully about how you much it would hurt you at the time if say you only got 60% of it back. Although the returns are not great, cash deposits, at least for a proportion, might help you sleep better at night. Also bear in mind that if you choose an IT which uses gearing, you might want to hold more in cash compared with an IT or fund that does not, as should there be a significant market falls, gearing will very likely magnify the fall. NAV discounts tend to widen when stock markets fall as well, which again can increase your losses.
You might want to consider a mixed asset fund such as a Vanguard LifeStrategy fund. These mix a proportion of government and investment grade corporate bonds with global equities. The split between equities and bonds depends on the fund you buy, so LS 60 for example maintains a split of 60% equities, 40% bonds. The more bonds in the fund, the smoother the growth path and the lower the fall in a stock market crash, but the more bonds in the mix, the lower the expected growth rate. In other words, by increasing the amount of bonds, you reduce downside risk, but also reduce potential upside growth.
Another approach would be to hold a mix of cash deposits and a global tracker fund or ETF and balance between them once per year. e.g. if you want to hold 50/50 cash/equities sell part of the ETF/fund when it increases in value over the year by more than cash and buy more when it drops. Doing this does require more discipline than with the multi-asset fund approach though as emotions can get in the way of your plan. For example you might not want to invest more money if you have seen the investment drop 25% over the last year. Similarly "Greed" can kick in and if your ETF/fund has gone up by 25% you might want to hold or increase your investment (and risk) instead of sticking to plan and taking profits.
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- Lemon Half
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Re: Which fund?
Fluke wrote:tjh290633 wrote:You might do better with Halifax Sharedealing. Then you are not limited to what FCAM offer.
TJH
You mean if I was interested in other funds/ITs etc?
Exactly. You have a wide range of securities from which to choose, and the fees are low.
TJH
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- Lemon Half
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Re: Which fund?
77ss wrote:I don't use Hargreaves so may be mistaken, but don't their non-ISA annual charges only apply to funds (unit trusts etc) - and NOT to Investment Trusts such as FRCL?
They did very briefly threaten to introduce custody fees for ITs. Very rapidly they backed off.
Brokers vary in their treatment of OIECs. Some make no charge for investment but a % of value as a custody or platform fee. Others will treat them the same way as any other investment. No platform fee but they charge for each purchase and sale. If someone is investing smallish amounts on a regular basis, the platform fee route may work better.
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- Lemon Slice
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Re: Which fund?
Fluke wrote:I’ve never invested in a fund before and there is a bewildering array of them, so my rather basic question is how do you choose? and once chosen, how do you know the fund is trading at a good price? If anyone cares to throw in any suggestions (funds or further reading) that would also be welcome.
It is very difficult.
First, read this book
A Random Walk Down Wall Street
https://www.amazon.co.uk/Random-Walk-Do ... all-street
then this one
The Little Book of Common Sense Investing
https://www.amazon.co.uk/dp/1119404509/ ... _pi_sims_4
then read this paper, but ignore the last section from 3.3
https://papers.ssrn.com/sol3/papers.cfm ... id=2740027
and finally read this website
http://www.monevator.com
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- Lemon Quarter
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Re: Which fund?
I have read "A Random Walk down Wall Street" and would recommend it.
I also regularly browse the Monevator site - it is number two on my list after TLF.
I will take a look at the other two suggestions - thank you OhNoNotimAgain
tuk020
I also regularly browse the Monevator site - it is number two on my list after TLF.
I will take a look at the other two suggestions - thank you OhNoNotimAgain
tuk020
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- Lemon Slice
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Re: Which fund?
hiriskpaul wrote:Although the returns are not great, cash deposits, at least for a proportion, might help you sleep better at night.
Always good to be reminded hiriskpaul, after all I was an investor in Carillion, say no more. No, the funds I've allocated are over and above cash reserves I already have.
Thanks OhNoNotimAgain for the reading suggestions, there's no great rush to invest so I may get round to a few of those.
Interestingly I read an article this week suggesting that the combination of a possible slump in world trade on top of a chaotic Brixit while financial markets start to buckle under their own weight, could lead to the perfect storm. A subject for a different board perhaps but I might just bide my time before making a decision.
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- Lemon Half
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Re: Which fund?
Here's a link to a free download of the Investment Trust Handbook 2018...normally £25 in hardback but PDF is free.
The link is to a Lemon fool discussion but then the first post takes you to the download.
viewtopic.php?f=54&t=8337&p=95223&hilit=Trust+handbook#p94853
The link is to a Lemon fool discussion but then the first post takes you to the download.
viewtopic.php?f=54&t=8337&p=95223&hilit=Trust+handbook#p94853
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