[Money] How do you select a fund to invest in?

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Soldato
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My situation is that I have a bit of money from relatives that I don’t need/want to touch right now, so I’d like to lock it away in a fund (as an ISA) for growth. I’ve been told that over time, funds generally perform better than fixed rate cash ISAs, as you’d expect, so I thought a fund would probably be the best option. I don’t think I have the time for stocks and shares dealing.

Now, I’ve invested a very modest amount in three different funds before, all on Fidelity. Two of the funds are managed by Fidelity themselves, and one by JP Morgan. I chose these funds simply based on the rating at the time, plus the blurb read like they were something I was looking for i.e. low risk, fund for growth etc. I’m sure there can be more to it than that though...

So, does anyone have any tips, or websites with fairly simple investment advice/analysis?

I’ve considered asking a financial advisor, but I guessed after their “cut”, I doubt if I’d see any improvement over simply sticking it in a fixed rate ISA. Correct me if I’m wrong of course.
 
Sundance said:
My situation is that I have a bit of money from relatives that I don’t need/want to touch right now, so I’d like to lock it away in a fund (as an ISA) for growth. I’ve been told that over time, funds generally perform better than fixed rate cash ISAs, as you’d expect, so I thought a fund would probably be the best option. I don’t think I have the time for stocks and shares dealing.

Now, I’ve invested a very modest amount in three different funds before, all on Fidelity. Two of the funds are managed by Fidelity themselves, and one by JP Morgan. I chose these funds simply based on the rating at the time, plus the blurb read like they were something I was looking for i.e. low risk, fund for growth etc. I’m sure there can be more to it than that though...

So, does anyone have any tips, or websites with fairly simple investment advice/analysis?

I’ve considered asking a financial advisor, but I guessed after their “cut”, I doubt if I’d see any improvement over simply sticking it in a fixed rate ISA. Correct me if I’m wrong of course.
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a lot of financial advisors work on commission from the products they steer you into. At least, that's my experience with them.

Out of interest, your funds on fidelity, what's your current growth %?
 
For simple and straight forward funds on Fidelity check out the likes of their Moneybuilder Range of funds. Cheap, straighforward and nothing to risky.

MoneyBuilder UK Index Fund - AMC 0.10% - Basically tracks the FTSE.
MoneyBuilder Asset Allocator - AMC 0.75% - Again basically a tracker fund so cheaper end of the scale.
MoneyBuilder Growth Fund - AMC 1.00% - Invests mainly in larger companies (often known as ‘blue chips’) listed on the London Stock Exchange

Beyond that Invesco Perpetual High Income Acc is always a favourite, managed by Neil Woodford and has a very solid long term track record - 1.5% AMC.

Also you can check out various "fund ratings" like Morningstar - Morningstar rates investments from one to five stars based on how well they've performed in comparison to similar investments, after adjusting for risk and accounting for all relevant sales charges. Within each Morningstar Category, the top 10% of investments receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bottom 10% receive one star. Investments are rated for up to three time periods - 3, 5, and 10 years, and these ratings are combined to produce an overall rating.

http://www.morningstar.co.uk/uk/

That's a quick quick version for you. None of the above are recommendations of specific funds and none of them should be taken as any form of financial advice or recommendations. The value of investments and the income from them can go down as well as up so you may get back less than you invested. Past performance is not a guide to what might happen in the future.

Sorry for the above quotations but as an IFA, you get used to quoting things like that before people try and shoot you down!

Anything else - just ask.
 
DcD said:
a lot of financial advisors work on commission from the products they steer you into. At least, that's my experience with them.

Out of interest, your funds on fidelity, what's your current growth %?
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Not any more - from 31st December 2012 -

The way you pay for financial advice and how the cost is presented to you has changed. Find out what this means for the way you pay an adviser.

Financial advice has never been free and, in the past, it was not always clear how advisers were paid.

If you received financial advice before our changes, you would probably have paid commission to your adviser – but you might not have even known.

Commission was usually paid as a percentage of your investment, typically 1 to 8%. So if you made a £10,000 investment, £100 to £800 could be paid to the adviser. This would come out of the money you invest.

The trouble with commission was the potential for advisers to be influenced by what they would receive for recommending a particular product or using a certain provider. For example, if one investment plan paid commission of 5% some advisers might have been tempted to recommend that over one that paid them just 2%.

The new way to pay
Changes to the way advisers are paid and the information they have to give you about it have now taken effect, under our Retail Distribution Review (RDR).

Instead of the adviser being paid commission, they now have to explain to you how much advice will cost and together you will agree how you will pay for it.

You will now come to an agreement with the adviser, whether to pay an upfront fee or for the adviser to take their fee from your investment. A fee might be paid in a lump sum or instalments.

Fees may vary from adviser to adviser, depending on their qualifications and location, so it may be worth shopping around, if you can, to compare fees and confirm the cost before you see an adviser.

However you pay for advice, your adviser should set out the charges in a clear and transparent way and make sure you understand how much you are paying. You can even negotiate with the adviser on the amount you pay depending on your advice needs.

The changes mean you can be sure the advice you receive will not be influenced by how much the adviser could earn from the investment.
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http://www.fsa.gov.uk/consumerinfor...l-advice/how-changing/paying-financial-advice
 
My FIL suggested Fundsmith, I've have had an ISA with them for 18 months now and been very happy with them so far.
 
booyaka said:
Snip
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Jimbo Mahoney said:
http://monevator.com/the-slow-and-steady-passive-portfolio-update-q4-2012/
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Some good info there, cheers guys :)

DcD said:
Out of interest, your funds on fidelity, what's your current growth %?
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JPM Emerging Markets Fund A Acc - 2.85% since investment on 14/02/2011
Fid FIF MoneyBuilder Growth ISA Fund - 3.22% since investment on 14/02/2011
Fid FIFIV Multi Asset Growth - 0.18% since investment on 25/01/2011

Most of the growth has actually only happened in the recent months. All the funds have been negative the majority of the time. Fingers crossed the upward trend continues.
 
I think there are many people that would like to know the answer to this question, myself included!

I'm in a similar position. My workplace don't offer a very good pension, so I've setup a Stocks and Shares ISA to put some many away for retirement, but selecting what funds is tricky.

I don't really have much in the way of financial/economic knowledge so I too struggled to work out what to invest in. The problem I have is that I'm not a very trusting person. I wouldn't trust an IFA that I don't know personally with such a potentially large sum of money (to me anyway). Then if you choose a managed fund, you're also trusting the people managing the fund to make the right choices.

As a result I've plumped for a couple of low cost tracker funds for now. I know that the above paragraph will seem like nonsense to a lot of people. Essentially I've said; "I know nothing about this topic, and I'm refusing to listen to someone who does". BUT if my funds peform badly, I have no one to blame but myself. I'd much prefer that to paying an IFA and/or AMC charges for mangaged funds only for the fund to still perform badly - I'd be very peeved off at the people in charge. Very illogical I know but that's just the way I feel on the situation.
 
How much risk do you want to take? High risk = high reward.
How much money are you looking to spend a month? No point buying only one or two shares in a strong fund until you build up a bit of capital in the investment product.
How quickly would you need the money in the event of an emergency? A low risk fund would be much more cost effective if you need the money quickly. The higher risk funds tend to be used for longer growth.

Source: Ex IFA.

You can get free information only advice from Fidelity when you explain your goals etc. Look for the contact numbers in your policy docs.
 
Moses said:
So, instead of seeking proper advice, you're ignorantly gambling?! I'd trust them more than I'd trust you!
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IFAs, Stockbrokers are salespeople... its not like he's trying to diagnose/treat his own serious medical condition or represent himself in a murder trial etc...

Advising on investments as an IFA or as a Stockbroker has only really required the person dishing out the advice to pass some basic multiple guess exams that are at the same level as A-levels... (or from the start of this year they're apparently equivalent to the first year of a uni degree)...

Basically its an area where doing your own research is likely just as good as speaking to a chav in a suit.
 
Moses said:
I understand that. My point was that he basically he admits he has no idea, and has just guessed. That's stupid. It'd makes sense to work it out for yourself, if you're able to... but he's admitted he has no idea, and still shuns any kind of advice.
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I didn't just guess. I did plenty of research on what kind of fund I was looking for. Length of investment, risk level, types of funds, managed vs passive etc. I'm obviously still way off the amount of knowledge a fund manager/IFA has on the area, but enough not to 'ignorantly gamble' as you put it. Plus, it doesn't matter how much knowledge you have, at the end of the day you're still gambling.
 
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