Having to self manage funds within an ISA

Having to self manage funds within an ISA

Author
Discussion

croyde

Original Poster:

22,702 posts

229 months

Friday 22nd July 2016
quotequote all
I have invested in various funds within ISAs and PEPs over the years and tend to just buy and sit on them.

Approaching Brexit I noticed that a few of my funds were losing money fast so I cashed some in and along with more cash bought into BlackRock Gold & General Fund D Acc and probably for the first time ever it has looked like I made a decent financial decision lol.

Within a week of Brexit I was up 34%. The fund settled back to 31% profit but overnight it has dropped to 24%.

I stupidly thought that the fund managers would take care of my money but should I be constantly switching in order to keep profits. What am I paying the fund managers for?

From what little I have picked up, it would seem that Gold goes up as the FTSE falls thus with a currently healthy 100 index Gold should and has come down. If I know this, how come the fund managers have not acted on it?

Thanks for any education and insights?

Edited by croyde on Friday 22 July 10:24

London424

12,826 posts

174 months

Friday 22nd July 2016
quotequote all
I'm only new to this too so look forward to the experts helping out but from my very limited knowledge the way it works is that the fund you've picked is invested in only 1 sector.

The fund manager won't swap out companies or alternate vehicles when the positions you've highlighted start to reverse as that isn't in their remit, you're in a Gold fund.

So with some funds you do have to do a bit of active management yourself...as in 'do I even want to be in the fund at all'.

With other funds that invest in a variety of sectors the FM may move out of certain companies or sectors if there are opportunities but when you're in a fund with such a narrow variety there is nowhere to go.

Simpo Two

85,149 posts

264 months

Friday 22nd July 2016
quotequote all
croyde said:
What am I paying the fund managers for?
You do realise that on this forum that's a bit like walking into a church and saying 'So where is this God bloke then?'

sidicks

25,218 posts

220 months

Friday 22nd July 2016
quotequote all
croyde said:
I have invested in various funds within ISAs and PEPs over the years and tend to just buy and sit on them.

Approaching Brexit I noticed that a few of my funds were losing money fast so I cashed some in and along with more cash bought into BlackRock Gold & General Fund D Acc and probably for the first time ever it has looked like I made a decent financial decision lol.

Within a week of Brexit I was up 34%. The fund settled back to 31% profit but overnight it has dropped to 24%.

I stupidly thought that the fund managers would take care of my money but should I be constantly switching in order to keep profits. What am I paying the fund managers for?
Who advised you to invest in this fund and on what basis?

croyde said:
From what little I have picked up, it would seem that Gold goes up as the FTSE falls thus with a currently healthy 100 index Gold should and has come down.
You think there is a such a simple and direct relationship?

croyde said:
If I know this, how come the fund managers have not acted on it?
As ever on these threads, what you think you know and what you actually know are two different things!

What did you expect the fund manager to invest in instead?

How has the manager performed relative to his benchmark?

sidicks

25,218 posts

220 months

Friday 22nd July 2016
quotequote all
Simpo Two said:
You do realise that on this forum that's a bit like walking into a church and saying 'So where is this God bloke then?'
No it's a perfectly reasonable question, it's just the answer that dime people seem to struggle with, particularly those non-experts that frequent the forum to post I'll-informed nonsense...

davepoth

29,395 posts

198 months

Friday 22nd July 2016
quotequote all
Day trading (moving your money to take account of short term fluctuations in the market) is about as reliable as betting on horses. It's a dangerous game and not one that casual investors (I'm one of them) should get involved in too deeply as you don't have the capability to shift your money quickly enough to make it work.

Buy to hold long term IMO.

Looking at the asset allocation of this fund:

http://www.morningstar.co.uk/uk/funds/snapshot/sna...

it invests in gold mining companies rather than in gold itself. That means that you open yourself up to fluctuations in the wider commodities market, which can be extremely volatile. It's also quite heavily focused on Canada, with nearly 54% of assets based there. That also means you need to take fluctuations in the GBP/CAD rate into account.

Of course, you already knew all of this. wink

sidicks

25,218 posts

220 months

Friday 22nd July 2016
quotequote all
davepoth said:
Of course, you already knew all of this. wink
biggrin

croyde

Original Poster:

22,702 posts

229 months

Friday 22nd July 2016
quotequote all
Only here for advice as I stated.

I have taken my profit and have moved it into one of my less volatile funds.

Just needed the answer to how the fund is managed and whether I need to take a more active role, which I have done. Thanks to the first poster.

Edited by croyde on Friday 22 July 11:43

sidicks

25,218 posts

220 months

Friday 22nd July 2016
quotequote all
croyde said:
Only here for advise as I stated.

I have taken my profit and have moved it into one of my less volatile funds.

Just needed the answer to how the fund is managed and whether I need to take a more active role, which I have done. Thanks to the first poster.
Isn't that the sort of thing you should do before you invest..?!

Ozzie Osmond

21,189 posts

245 months

Friday 22nd July 2016
quotequote all
sidicks said:
Isn't that the sort of thing you should do before you invest..?!
Why do you keep posting this ill-informed nonsense? You already know the proper PH route to investment,
  • BTL
  • Peer-to-peer lending
  • "Future classic" cars
Risk analysis is completely unnecessary because nobody's got a crystal ball.

Jockman

17,912 posts

159 months

Friday 22nd July 2016
quotequote all
Lol.

JulianPH

9,912 posts

113 months

Friday 22nd July 2016
quotequote all
OP - The funds you hold are managed along with the individual remit of each fund, so a Gold Fund will not move out of that market in the same way Corporate Bond fund would not move out of corporate bonds.

You are paying the fund managers to manage volatility and out perform the sector they are investing in (whether they manage to do this is another mater).

You are not, however, paying anyone to manage risk and asset allocation management (which is the area you are talking about as this is what ensures your money is spread as best as possible across the best asset classes i at any time - in conjunction with your requirements).

You can access asset allocation management by using a Managed Portfolio Service or Discretionary Fund Management (companies like Quilter Cheviot offer this). With these you still have to decide upon the risk you are prepared to take and regularly review this (personally with MPF or with your broker with DFM, the more expensive option).

If you want risk management, asset allocation management and investment management all in one place have a look at intelligentmoney.com under the Investment Management section. This gives an overview of the whole process but you can't actually invest directly with them, they only take clients referred through an authorised adviser.

Which brings me onto the last point, if you have built up a decent size portfolio then it is worth finding a good adviser. Yes there will be a fee, but the advice may cover this many times over.

Al, a regular here (Ginge R), has a company called fiveraday.co.uk and his service might be right up your street (I have no other connection with him other than this forum).

EDITED for Typo

Edited by JulianPH on Friday 22 July 19:36

sidicks

25,218 posts

220 months

Friday 22nd July 2016
quotequote all
Ozzie Osmond said:
Why do you keep posting this ill-informed nonsense? You already know the proper PH route to investment,
  • BTL
  • Peer-to-peer lending
  • "Future classic" cars
Risk analysis is completely unnecessary because nobody's got a crystal ball.
rofl

Ozzie Osmond

21,189 posts

245 months

Friday 22nd July 2016
quotequote all
JulianPH said:
Which brings me onto the last point, if you have built up a decent size portfolio then it is worth finding a good adviser. Yes there will be a fee, but the advice may cover this many times over.
^^^ This.

Jockman

17,912 posts

159 months

Friday 22nd July 2016
quotequote all
Ozzie Osmond said:
JulianPH said:
Which brings me onto the last point, if you have built up a decent size portfolio then it is worth finding a good adviser. Yes there will be a fee, but the advice may cover this many times over.
^^^ This.
Bloomin'eck Ozzie !!

Thought you didn't like IFAs ? smile

Ozzie Osmond

21,189 posts

245 months

Friday 22nd July 2016
quotequote all
Jockman said:
Thought you didn't like IFAs ? smile
I wouldn't go that far. Now that previous bad selling practices have hopefully been eliminated I simply have reservations about the standardised nature of advice and how that interacts with the concept of "value". However, it seems standard advice might significantly assist the OP on this occasion.

I realise that my own approach to investment might be categorised as "high risk" and would not wish it upon the unwary! Others might consider it hopelessly cautious....

JulianPH

9,912 posts

113 months

Monday 25th July 2016
quotequote all
This topic does raise a serious point that many people overlook.

If your investments (ISA, SIPP or otherwise) are held on a self select platform then whilst a fund manager may manage their individual fund element, it is entirely down to you to manage the collective portfolio of funds (or shares).

This means ensuring the risk/reward ratio is right and you have the correct asset allocation model before you even consider the funds/shares to match these factors.

Then you have to keep on top of this and make amendments with every market change AND in line with the reduction in risk/reward as you approach requiring the funds (and you must do this in line with what you require the funds for - capital withdrawal will need a completely different plan than income, for example).

This is why target dated investments are now the most popular investments in the US, as this is what they do. We now have them here in the UK (primarily due to automatic enrolment, the same reason they were developed in the US).

Wikipedia link here: https://en.wikipedia.org/wiki/Target_date_fund

Alternatively, you could pay a financial adviser. As I said before Ginge R has a good value proposition at fiveraday.co.uk (no connection other than chatting on this forum).

Ginge R

4,761 posts

218 months

Monday 25th July 2016
quotequote all
Julian,

Just seen this and your previous - your reference is very kind, thank you.

You make some good points, portfolio 'A' might be perfect for one client, but not another. By way of an illustration, I had lunch with two clients today. This (fot) forms a small part of each's portfolio and movement within one part of the portfolio over the past few months. It was acceptable for one of the two clients, but not (rightly so) the other, and not just because of asset allocation.


LeoSayer

7,299 posts

243 months

Tuesday 26th July 2016
quotequote all
Let's say you bought units in a 'UK Equity' fund and the fund prospectus says it will invest 100% in those.

If the fund manager bought some gold and made a loss on that then the unitholders would have the right to sue the fund manager for their loss. Of course, it rarely gets that far because fund managers have systems that prevent them buying stuff they shouldn't.

Managing a fund to the prospectus is the responsibility of the fund manager.
Managing a individual's portfolio of investments is the responsibility of the individual (ie. you) or someone who you appoint.

sidicks

25,218 posts

220 months

Tuesday 26th July 2016
quotequote all
LeoSayer said:
Let's say you bought units in a 'UK Equity' fund and the fund prospectus says it will invest 100% in those.

If the fund manager bought some gold and made a loss on that then the unitholders would have the right to sue the fund manager for their loss. Of course, it rarely gets that far because fund managers have systems that prevent them buying stuff they shouldn't.

Managing a fund to the prospectus is the responsibility of the fund manager.
Managing a individual's portfolio of investments is the responsibility of the individual (ie. you) or someone who you appoint.
clap

Some people just don't get this and then try and blame the fund manger!

Edited by sidicks on Tuesday 26th July 08:37