Which funds for my ISA?

[Matt..]

I am going to open an S&S ISA next month, and need to decide on which funds to go with. It won't have a huge amount of money in it (starting at £1k), and i'll only put in £100 or so each month.

The aim is to keep it for a minimum of 5yrs, though it will probably end up being far more than that. This isn't my only savings, and i am comfortable with having at least half the money in a more risky fund.

I'm fairly sure i'm going to use Cavendish as it's seems fairly good value for money for low investment values.


Can anyone recommend any suitable funds?


Thanks

[RanchoGrande]

Where are you opening the S&S ISA?

[Matt..]

RanchoGrande said:

Where are you opening the S&S ISA?

Cavendish. They use Fidelity.

[GT03ROB]

Matt.. said:

RanchoGrande said:

Where are you opening the S&S ISA?

Cavendish. They use Fidelity.

Is that cheaper than going direct to Fidelity?

[RanchoGrande]

Matt.. said:

Cavendish. They use Fidelity.

Sorry, missed that...I've just opened an account with hargreaves lansdown. They have some good funds

[Matt..]

GT03ROB said:

Is that cheaper than going direct to Fidelity?

Considerably so. Fidelity are £45/yr for sub £15k.

[JulianPH]

Have you looked at Club Finance - similar to Cavendish but cheaper (IIRC) and also offer more options.

[DSLiverpool]

Woodford ?

[Ozzie Osmond]

I'd happily suggets Fidelity in the OPs situation and I'd go direct.
All of the platforms offer all of the funds so that side of things makes no difference.
Any mainstream S&S fund ought to meet the OPs requirements.

[JungleJim]

Open one now if you can - get some of this year's tax allowance in while you still have the chance.

[Ozzie Osmond]

I'm not sure that's necessary for the OP with the modest level of investment anticipated.

[Jockman]

JulianPH said:

Have you looked at Club Finance - similar to Cavendish but cheaper (IIRC) and also offer more options.

Interesting to know as Cavendish were the cheapest I could find last time I was looking.

[Ginge R]

Are you investing for growth or income? If you're looking for steady income and some capital protection, then a bond based fund may be right you.

If you're looking for income and capital growth, then something like a UK Equity income fund is probably the best choice. If you're looking for capital growth, it's hard to go wrong with a low-cost index tracker. If you're not altogether sure, a basket of funds comprising of all three considerations usually works.

Then, consider your attitude to investment loss and capacity for risk, if you're looking for dividend units, does your basket of funds have enough headroom to make a decent dent in your annual £5000 dividend allowance (from next month)?

The active versus passive skull knocking has been well aired so I won't dwell on that. But most active fund managers *do* fail to beat the index they're tracking (despite their high costs, which mean, consequently, there's less to give back to you) so more often than not it's best to choose boggo standard passive funds over actIve ones, especially if you're quite an inexperienced investor (others might have other views, it's just my opinion).

If you have a large portfolio, if you know how to manage it, if you have 'income' units then you may consider that holding actives is better for a proportion of your portfolio, over some/all *passive* ones. You may of course, also decide that active is better all the way, that's a philosophical position as much as anything. One size doesn't fit all.

Finally, a juicy management charge can seriously eat into what you get in your pocket over time. When you're looking for a fund to buy, it's essential you consider the total expense ratio or TER, forget the AMC (the Annual Management Charge). The lower the TER the better.

Edit: replaced active with *passive*. Early morning biff moment. Thanks for the gracious email.

Edited by Ginge R on Tuesday 29th March 08:11

Edited by Ginge R on Tuesday 29th March 08:13

[Craikeybaby]

I did pretty much what you are planning to do last year, also with Fidelity/Cavendish. I went for the Vanguard LifeStrategy 60 fund, which is pretty diversified, it has been a bit up and down this year, but I think most will have been too.

[iantr]

Ginge R said:

The active versus passive skull knocking has been well aired so I won't dwell on that. But most active fund managers *do* fail to beat the index they're tracking (despite their high costs, which mean, consequently, there's less to give back to you) so more often than not it's best to choose boggo standard passive funds over actIve ones, especially if you're quite an inexperienced investor (others might have other views, it's just my opinion).

Somewhat less "well aired" is that most passively managed funds also fail to beat their indices after costs.

[Ginge R]

iantr said:

Somewhat less "well aired" is that most passively managed funds also fail to beat their indices after costs.

Correct, and some (those with a big tracking error - Scottish Widows, I'm looking at you) miss it by a country mile too. I don't touch them with a barge pole. Costs will always chip away at returns; the point is I guess, passives are easier to understand, especially if they track an index that is easily understandable. The risks they present in terms of 'unknowns' are much fewer than most actives. For my money, most people are well served by buying diversified passive portfolios, addressing all asset classes.

[Tim330]

Ginge R said:

Are you investing for growth or income? If you're looking for steady income and some capital protection, then a bond based fund may be right you.

If you're looking for income and capital growth, then something like a UK Equity income fund is probably the best choice. If you're looking for capital growth, it's hard to go wrong with a low-cost index tracker. If you're not altogether sure, a basket of funds comprising of all three considerations usually works.

Then, consider your attitude to investment loss and capacity for risk, if you're looking for dividend units, does your basket of funds have enough headroom to make a decent dent in your annual £5000 dividend allowance (from next month)?

The active versus passive skull knocking has been well aired so I won't dwell on that. But most active fund managers *do* fail to beat the index they're tracking (despite their high costs, which mean, consequently, there's less to give back to you) so more often than not it's best to choose boggo standard passive funds over actIve ones, especially if you're quite an inexperienced investor (others might have other views, it's just my opinion).

If you have a large portfolio, if you know how to manage it, if you have 'income' units then you may consider that holding actives is better for a proportion of your portfolio, over some/all *passive* ones. You may of course, also decide that active is better all the way, that's a philosophical position as much as anything. One size doesn't fit all.

Finally, a juicy management charge can seriously eat into what you get in your pocket over time. When you're looking for a fund to buy, it's essential you consider the total expense ratio or TER, forget the AMC (the Annual Management Charge). The lower the TER the better.

Edit: replaced active with *passive*. Early morning biff moment. Thanks for the gracious email.

Edited by Ginge R on Tuesday 29th March 08:11

Edited by Ginge R on Tuesday 29th March 08:13

As this is an ISA the new £5,000 dividend allowance would not apply would it? (unhappy ltd co contractor here!)

[Ginge R]

Tim,

You're absolutely right, I was on auto-pilot there! Many people tend to overlook decumulating, I suppose my point was a more principled, general one. It ain't what you make, it's what you keep.