Saturday, 5 July 2014

In Anticipation .....

I received a secure message from Interactive Investor 10 days ago telling me that my ISA transfer would be showing in my account in 3 days time. Despite several phone calls my funds still haven't arrived, although I am assured that this is just due to a backlog and they will be with me very shortly.

I know (from reading the numerous posts on the subject on that all the platforms are struggling with the volume of transfers at the moment. II is one of the better value flat rate services and so I appreciate that it is probably struggling more than most. I am (and I have been) prepared to wait but it is quite disconcerting to get an automated mail saying that your transfer is finalised, hold onto your hat, you'll be able to trade very soon, and then..... nothing.

However, in the meantime, I thought I should some concrete plans about what I'm actually going to do when the magic moment finally arrives.

My transfer will consist mainly of the CIS UK Growth Fund (around £40,000 on a good day) and a tiny bit of the CIS US Equities Fund (£70 - somehow a bit got left behind when I sold most of it a few years ago).

Due to the UK fund being by far my biggest holding my portfolio is very top-heavy in UK equities and I know that I need to rebalance. However I do need to watch out for dealing charges. Interactive Investor charge £10 per buy/sell but I will be credited with a total of £50 credit plus £20 cash when the transfer completes due to the quarterly credit plus transfer offer. So I will have £70 to spend over the next 3 months which also needs to cover 3 lots of monthly investments at £1.50 per line.

My first priority is to sell a good chunk of the CIS UK fund - I'm was thinking that I would sell £10,000 and redistribute it into my trackers as a start. So something like £3,000 into BlackRock Emerging Markets, £3,000 into HSBC FTSE 250 and £4,000 into HSBC European Tracker. Well at least this was my intention until I saw this:

(Telegraph 26 Oct 2013 - Dan Hyde

This article has made me question my plans because it seems that (if the analysis is to be trusted) the areas in which I have already bought trackers are actually the areas where, if I'm going to use active funds at all, I should be using them. It seems that somehow I may have got it completely the wrong way round. Until you look at the effect of the fees of course :-)

One thing I can be clear on is that I do need to put a fair bit of money into the US as I have very little exposure to the US markets at the moment (around 4%). But this is such an expensive area as the S&P is soaring. I would be buying very high.

Perhaps a global tracker would be a better idea that a US specific fund at this point in time (I do also have an ex-UK tracker in my AVC fund). In this way I cover both the US and Europe and can beef up either/both when the markets fall a little. So I've decided to make the following buys:

  • Vanguard Developed World ex-UK tracker - £5,000

I'm inclined to continue to cover Emerging markets with a mixture of active and passive

  • BlackRock EM CIF - £1500
  • Aberdeen Asian Smaller Companies - £1000

Europe is a bit of a biggie as I have very little invested here and according to the chart this is the one area where low cost active management (if you can find it) can really pay off. So my fourth buy will be a European investment trust (possibly property based) although I haven't done enough research to know which one as yet.

  • European IT (tbc) - £1500.

This leaves me with £1000 to add to my regular £500 contribution this month and I so will invest £300 in each of the following:

Herald IT
Ishares Clean Energy
HSBC 250 Index
BG Shin Nippon

Total dealing charges: £56.50. This means that I will have £13.50 credit remaining for the rest of the quarter - I'm happy with that.

This is the plan. I just need to wait for my transfer to complete and then I can get on with it!


  1. Good to hear that your transfer is pretty imminent, but what a pain having to wait all this time.

    "224% - Growth of the best UK fund over 5 years, compared to 39% by the average tracker" - shame the article doesn't state which fund, but then, it probably doesn't matter, since past performance is no guarantee for the future, etc etc! But it would have been interesting to know!

    The HSBC 250 Index is one of my current trackers and funnily enough, I'll be buying into Vanguard Developed World ex-UK tracker this month and also BlackRock Emerging Markets at a later date, to replace a couple of my active funds.

    I too don't currently have a lot of exposure to the US but I agree with you about the S & P 500 - with it breaking records recently, perhaps it's not a great time to buy now.

  2. Hi weenie, it's a pretty fiddly business trying to rebalance without incurring dealing charges (I believe you're with HL - do they charge for buy/sell?) but I think that's a good thing on the whole as otherwise I'd probably mess with things too much. I'm still waiting to put my plan in place but at least now I have found my loww(ish) cost European fund now - TR European Gwth Tst (TRG).

  3. Hi Cerridwen, HL don't charge for buying/selling funds/trackers, hence make it quite easy to rebalance. There are dealing charges of £11.95 (less if you deal regularly) for shares/ETFs.

    However, I'm trying to be patient and not tinker about with my portfolio too much, want to wait til I get some more gains before switching/selling my funds.