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The importance of reviewing investment funds
Many people invest in pensions, ISA’s, investment bonds, endowments etc. without actually giving much thought to the funds in which they are investing.
Invariably we find that the money has simply been invested in a “managed” fund and little thought has been given historically to investing in a decent fund or portfolio of funds in line with the investor’s attitude to investment risk at the time the investment was taken out.
Over time, people’s attitudes to investment risk do change and it is vitally important that you regularly review what is happening with the funds in which you are invested.
Not Matching Attitude to Investment Risk
Many portfolio’s and funds are out of keeping with the spread/diversification of portfolio into which many people should be investing. For example, we tend to find that many “managed” funds are nothing more than equity funds – not necessarily investing 100% in stocks and shares, but certainly in a proportion which far outweighs what that person ideally should be invested in given their attitude to investment risk.
Poor Performance
Many funds are lacklustre – they have historically performed in a mediocre, if not, terrible fashion. Although many might argue that past performance is not a guide to the future we tend to believe that there may be a correlation between performance and such factors as fund manager, investment style, research methodology, liquidity of the fund etc.
This leads nicely into diversification…..
Funds not Diversified in line with Attitude to Investment Risk
Many people are unaware that under many pension and investment contracts you are not limited to investing in just one fund. Most modern plans will allow you to invest in up to 10 or more funds and a choice of both internal and external funds may be available. We strongly suggest that you contact your pension/investment provider to find out what fund(s) you are currently invested in as well as to obtain a list of the funds into which you can switch.
Also enquire as to whether there are any switching costs involved – most policies will allow some or all fund switches free of charge.
Reviewing Funds – Performance, Construction etc
In terms of reviewing your existing and potential investment funds there are several sites which you should consider taking a look at. The good thing is that the information they provide is free of charge!
Trustnet
Trustnet offers information on a very wide range of funds in terms of performance etc. The first tab on the site shows “Investments”. if you hover your mouse over the various sections – “Unit Trusts and OEIC’s”, “Investment Trusts”, “Pension Funds” etc – you will see a dropdown menu. We suggest initially that you click on “A-Z Group Factsheets” – this will show a list of pension/life companies for whom they hold fund information.
The information is updated on a regular basis is comprehensive in terms of what information is provider – such as performance, what is invested in the portfolio, charges, information on the manager, graphs showing performance against the sector average etc.
When you have found the fund in which you are invested you may be able to access the providers own fund factsheet by looking down the right-hand side of the screen.
Morningstar
Similar in make up to Trustnet – it really comes down to personal choice with regard to which site you prefer.
Summary
It is important that you review the funds in which you are invested on a regular basis and the above two sites will provide valuable, independent information in respect of your existing funds, as well as information on funds into which you may decide to switch within the universe of funds provided by your pension/life company.
Important: Before making any decision to switch we suggest that you consult an Independent Financial Adviser as to whether any choice of investment fund into which you may switch is suitable for you.
We would love to know what other online resources you use – please leave a comment below.
Back by popular demand is the 2011 A4 Year Planner.
