This is a very straightforward stakeholder child trust fund (CTF) that invests in a fund tracking the FTSE All Share Index.
Once you’ve invested the basic £250 CTF voucher the minimum for additional top-ups is just £10, either lump sum or monthly.
Where the F&C CTF really scores over the competition is cost. Like all stakeholder CTFs there are no initial or exit charges. But whereas most stakeholder CTFs charge 1.5% a year, F&C’s total annual charges are just 1.05%. This comprises total annual costs of 0.35% on the underling tracker fund plus an annual child trust fund plan fee of 0.7%. Yes, the overall cost is still expensive for a tracker, but that’s the nature of child trust funds and it’s a lot cheaper than the rest.
As with all other stakeholders the investment will be progressively moved towards less risky investments between your child’s 13th and 18th birthdays.
Is a tracker fund a good idea for your child’s CTF? I think that in general it probably is. There’s risk, but 18 years should give plenty of time to ride out stockmarket volatility. And although the FTSE All Share is dominated by a handful of industries and companies (your money is not invested equally across all companies), it still tends to fare well against many of the active fund managers who are paid large sums of money to try and beat it. You can read more about index-tracking funds on the trackers page in our investment section.
If you want investment choice then a stakeholder CTF is not for you. But if you’re in the market for a tracker-based stakeholder CTF this should be at the top of your shopping list, thanks to far lower charges than the competition.