Lower cost Child Trust Fund?
|Kids | Investing for Children
Asked by wagontrain, submitted
06 August 2012.
My second Grandchild is now two months old & therefore we can invest in a Junior ISA for her.I'm an HL customer but don't like their recently introduced additional Tracker fund charges.The initial investment of £100 would be followed by £50/month until she is at least 18 years old.We are looking at an HSBC UK index Tracker fund & phoned them direct ,they suggested a BEAR Fund as they do not operate a Junior ISA.We also like Vanguard Funds but it seems that HL have cornered the market for small investors in these products with those charges.
We also invest the same £50/Month in our first 2 year old Grand child's CTF in a FTSE 100 tracker fund,this has a very high 1.5% Annual management charge for a Tracker fund.
What I'd like to know is how we can make the most of a reasonable basic UK Index Tracker fund with an initially modest investment & avoid overly investment sapping charges.Also the CTF market is now small & shrinking,any ideas on a better deal for the CTF until the such time as the Treasurey see sense & merge JISA's with CTF'S.
I would appreciate your input so i can take it into account when I sit down with the Children's busy Parents & make suggestions on the accounts they should setup / transfer into. Thanks in anticipation of your response.
Answered by Justin on 07 August 2012
Starting with the Junior ISA; Fidelity FundsNetwork currently offers the HSBC FTSE All Share Tracker and its own Moneybuilder UK Index fund within its Junior ISA, both track the same Index with total annual charges of around 0.3%. You can also access FundsNetwork via discount broker Cavendish Online, at no extra cost, and enjoy full trail commission rebates - although as neither of these tracker funds pays commission you won't make a saving unless you hold commission paying funds in future.
If the Treasury has any sense (which I often doubt!) it will merge Child Trust Funds (CTFs) into Junior ISAs. Meanwhile the cheapest CTF tracker fund is the F&C Stakeholder CTF (FTSE All Share), which charges a total 1.05% (0.35% for the fund and 0.7% for the CTF 'wrapper'). This is still high versus conventional investing and Junior ISAs, but sadly stakeholder CTFs have always been on the expensive side. You can transfer the existing CTF into F&C, if you wish, but let's keep our fingers crossed they're merged into Junior ISAs sooner than later.
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Comment by wagontrain at 9:21pm on 07 Aug 2012:
Thanks Justin, A prompt response & the usual common sense content i have come to to rely upon from you.