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Setting up portfolio for my father
Frank McCabe
Posted: 06 March 2018 22:39:00(UTC)

Joined: 06/03/2018(UTC)
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I’m setting up a portfolio for my father.
Value c£25k. He’s 70 retired and has a good regular income. He’s looking for a better return than he can get at the banks and is prepared to accept more risk. Investment timeline is 5 years min. How should I look to invest? I was considering 5 x trackers or good quality investment funds with the money being drip fed in.
I plan to use a HL account.
Advice, suggested funds or ITs welcome
Posted: 08 March 2018 14:00:36(UTC)

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I would suggest you look at the Hawksmoor funds, low risk and low volatility.
Posted: 08 March 2018 16:24:02(UTC)

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At the 25k level the stats usually show HL are not a bad place for holding funds, but I think they get more expensive as you get around the 35k mark and above However, with 25k my suggestion would be to cut costs by purchasing IT's with HL, they are free to hold in the Fund & Share a/c whilst there is a £45 per year cost for the ISA account.

If he doesn't need the income then I would go with 5 IT's at 5k each. If you want to drip feed in then perhaps one purchase a month. If he has a degree of caution then take a look at RIT Capital Partners, Capital Gearing and Seneca Income & Growth.

For simplicity and reduced costs, he could drop the lot into a Global IT such as Foreign & Colonial, Brunner, Bankers etc (

If he is happy to take on more risk then Scottish Mortgage, Monks and possibly the soon to launch American Smaller Co's offering from Baillie Gifford.

Another option is to take advantage of the 7-day free trial offer of John Baron Portfolios at


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Mr Helpful
Posted: 08 March 2018 16:27:41(UTC)

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Frank McCabe;58325 wrote:

I was considering 5 x trackers

VWRL : Global
VHYL : Global Higher Yield
VUSA : US S&P 500
VERX : Europe (optional as are other regions)

If income is the purpose above might need re-jigging.

P.S. There are no guarantees that monies invested today in Stocks, will be intact in five years time or whenever. That date might coincide with a Stock slump. So make sure other financial assets are available as necessary.

For some sort of Fixed Income defensive balance then one option maybe :-
IS15 : Investment Grade short-term Corporate Bonds.

N.B. All above is information for consideration, not recommendations.
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laang lee on 11/03/2018(UTC)
Inderpal Singh Khalsa
Posted: 08 March 2018 16:28:42(UTC)

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There are lots of decent ITs providing growth ,Income or both.

UK- Finsbury Growth & Income
Aberdeen Smaller Companies Income
Fidelity Special Values
Schroder UK Mid Cap

Global: Scottish Mortgage
F&C Investment Trust
Murray International
F&C Global Smaller Companies

Others: Baillie Gifford Shin Nippon
JP Morgan Emerging Markets
Worldwide Health Care
Blackrock World Mining

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Hank Elvis Dobbs (texan)
Posted: 08 March 2018 16:32:30(UTC)

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who? ..yer setting it up for frank?....!..ha'ha
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laang lee on 11/03/2018(UTC)
King Lodos
Posted: 08 March 2018 16:36:00(UTC)

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I'd go with Lindsell Train Global and Fundsmith.

With so much uncertainty over inflation, rates, trade wars, etc. I think quality investing makes most sense, and despite strong performance, a lot of these stocks aren't particularly expensive
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Posted: 08 March 2018 16:41:28(UTC)

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Personally I'd put it all in City of London Investment trust. (CTY) A yield of close to 4% plus capital growth. It has upped it's dividend for the last 51 years, which is a record it will fight tooth and claw to defend. It will never make him a millionaire but it also wont lead to sleepless nights either. If you really want to split it then something like Witan as a global trust would be my choice. Both good core holdings
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mcminvest on 10/03/2018(UTC), Rickenbacker Al on 11/03/2018(UTC), laang lee on 11/03/2018(UTC)
Alan Selwood
Posted: 08 March 2018 17:55:00(UTC)

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Frank McCabe;58325 wrote:
I’m setting up a portfolio for my father.
Value c£25k. He’s 70 retired and has a good regular income. He’s looking for a better return than he can get at the banks and is prepared to accept more risk. Investment timeline is 5 years min. How should I look to invest? I was considering 5 x trackers or good quality investment funds with the money being drip fed in.
I plan to use a HL account.
Advice, suggested funds or ITs welcome

I assume that he does not have any ISA for the current year?

If he does not, then put £20,000 by 5th April 2018 in an ISA, and on/after 6th April, put anything up to another £20,000 (if available) in an ISA. This will mean that nothing needs to be recorded to go on the tax return, which makes for an easier life and may also save unnecessary tax.

If he is new to investing in equities, and is only doing it in the hope of getting a better return (without perhaps as much risk as more seasoned investors might put up with!), I would take a fairly cautious approach, which may mean foregoing the best gains simply in order to protect against the biggest falls in the down periods. He needs to be very clear in his mind that prices of equities, however carefully selected, and however cautious they are thought to be, can go down as well as up, and it is no good investing if a temporary 10% dip causes consternation and a desire to rush for the exit.

Among equity funds and investment trusts I would take a serious look at:
Fundsmith Equity Fund (T Class if bought direct, I class if bought through a platform like H/L)
Lindsell Train Global Equity Fund (not the IT)
Capital Gearing investment trust
Foreign & Colonial Investment trust
Lazard World Trust
Bankers IT
Law Debenture Trust
City of London IT
If greater risk is acceptable for greater potential reward, Scottish Mortgage IT for a minor portion of the total.

If he wants a bit more emphasis on income, consider (among others) these:
Funds :
Baillie Global Income Growth
Kames Global Equity Income
Artemis Global Income

Investment trusts:
Invesco Perpetual Select Global Equity
Henderson International Income Trust
Edinburgh Worldwide IT

Among ETFs, consider one of the 'Dividend Aristocrats' ETFs for an emphasis on income, otherwise perhaps a Legal & General International Tracker Fund or a Vanguard Global Equity tracker ETF.

None of the above is a recommendation, just a list of ideas to follow up using resources like TrustNet, Morningstar, Digitallook.

Good luck!
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Posted: 09 March 2018 16:21:01(UTC)

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Who better than Warren Buffet for advice. His recommendation for his widow's investments is: S&P 500 tracker ETF, 90%; short term bonds, 10%. In UK, I would favour mostly Vanguard Deveoped World (VEVE, could be VWRL), plus 2 years' spending money as cash.
Warren's widow will have more than £25k, though.
At 70+, my portfolio is more exciting, but I'm lining up such a scenario for my widow, or myself when I start to lose it a bit. r
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Posted: 11 March 2018 09:18:03(UTC)

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Hi Frank,

It sounds like you have done some research already but if you haven't looked already, the Moneywise website is worth a look assuming you are a beginner. I found it very helpful when setting up. Take a look at the First 50 Funds for Beginners and they also have articles on investing itself.

Good luck!
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laang lee on 11/03/2018(UTC)
Frank McCabe
Posted: 31 March 2018 06:57:15(UTC)

Joined: 06/03/2018(UTC)
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Thanks for ideas.

For £25k is it worth wrapping in ISA? As pointed out admin fee is £45 pa

Also, if you buy ITs via HL the fees make option of drip feeding less attractive

any thoughts?
Posted: 31 March 2018 07:52:22(UTC)

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This is a good tool for comparing platform charger
Chris Dean
Posted: 31 March 2018 08:03:07(UTC)

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Yes, as Alan has already pointed out, the Isa is worthwhile especially as it simplifies Tax matters.
Have a look at HL's website FAQs etc to clarify the charges on Investment Trusts etc.
Alan Selwood
Posted: 31 March 2018 08:26:30(UTC)

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If you want a cheap ISA for ITs and UK shares, try the X-O platform.

No ISA charge, no annual charge, £5.95 deal cost.

Only downside is no unit trusts or OEICs.

If Fundsmith Equity Fund alone will meet needs, do an ISA in that directly with the managers, and then there is no price difference from non-ISA, but you save the tax recording!

For the current tax year, skates need to be on, because cash needs to be at the platform as cleared funds before the end of 5th April!!
2 users thanked Alan Selwood for this post.
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Frank McCabe
Posted: 01 April 2018 19:31:13(UTC)

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Why are Investment trusts preferable to unit trusts?
Alan Selwood
Posted: 02 April 2018 10:22:32(UTC)

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Various investment commentators have done comparisons of past performance of investment trusts v. unit trusts & OEICs (open-ended investment companies), and for the most part, the investment trusts have produced a better performance over medium to long-term periods of time.

The reasons given for this include:
a) The investment trusts do not have to sell off shares to meet redemptions (such activity usually coincides with downturns in the market, causing sales at probably the least attractive times and prices), but the investor that holds x shares in the investment trust itself can sell their stake on to other inestors at their current market price if they do need to 'cash in', without the managers having to liquidate holdings themselves. This allows the IT managers to take a longer-term view.
b) Investment trusts can borrow money. If they borrow at low rates and can invest to earn more than the interest they pay (which is usually the case), the gains are enhanced. This activity is a bit like the effect of having a mortgage to buy a house, and using the fixed debt incurred to buy the house which over the years usually goes up by more than the cost of the mortgage.
c) Investment trusts do not need to pay out all the dividends they collect from the investments they make, and if they do keep some back, it allows them to keep paying out to investors in lean years by running down those reserves. Unit trusts and OEICs are not permitted to do this, so their dividends may fall in lean years.

Looking at the more iffy aspects of ITs v unit trusts and OEICs :
In bad times, people are less willing to buy or hold investment trusts than they are in the good times, so the market price often falls, through lack of demand, to a bigger discount relative to the underlying holdings of the trust. Conversely, when an investmnt trust becomes more popular, in rosier times, the discount usually narrows, so the investor makes a bigger potential profit on sale than the rise in the value of the underlying assets only. This means that investment trusts may drop more than unit trusts/OEICs in the bad times but rise more in the good times (and overall do better because good times exceed bad times!)
Unit trusts and OEICs have a pricing problem in severe downturns, because the mangers can't transfer units sold back to them to new purchasers in a 'dead' market, but have to sell the underlying shares in the market, usually at pathetically low prices, and they price the units not relative to the buying price of the holdings in the market (the 'offer' basis), but to the selling price (the 'bid' basis), where the shares are worth less because of the dealing spread. This means that those selling unit trusts and OEICs in bad times may have their unit prices dropped down from 'offer' basis to 'bid' basis to allow for the temporary market conditions, quite apart from the reduced prices that shares themselves fetch in bad times.

Because of all these factors, my own reaction is to try to buy investment trusts rather than unit trusts or OEICs for the most part, especially if the ITs are quoted on a big discount to asset value; conversely, if the IT is selling at a premium to underlying asset value, I will favour unit trusts or OEICs to avoid a potential decrease in the premium on ITs, or go to cash on the grounds that if ITs are selling at a hefty premium, the market as a whole is probably over-priced relative to underlying value for money and ripe for a fall!

Hope that helps.
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