Unlike most competitors, the Family Investments stakeholder child trust fund (CTF) invests globally, not just in the UK. This is a good idea; after all it’s what most investors do with their conventional investment portfolios, so why not a CTF?
When Family Investments originally launched this CTF it employed New Star to run the fund, a seemingly clever move at the time. However, New Star’s investment performance bombed versus the competition (as did New Star themselves) so Family Investments quite sensibly switched to index-tracking funds (managed by Santander) in April 2009.
Your child’s investment will be split between funds tracking the FTSE 100, FTSE Europe ex UK, FTSE USA and FTSE Developed Asia Pacific indices. Santander can alter the balance as it sees fit, but around half is usually exposed to the FTSE 100 with the balance split equally between the other three indices – disappointing this isn’t clearly displayed on Family Investment’s website.
Annual charges are the stakeholder standard 1.5%. This is excessive for tracker funds, but I’m afraid that’s just the nature of the stakeholder CTF beast. F&C’s charges are lower, but then you’re restricted to a UK only tracker fund.
There are no initial or exit charges, minimum top-ups above the basic CTF voucher are £10 and the investments will be progressively moved towards less risky investments between your child’s 13th and 18th birthdays – as per stakeholder CTF rules.
This CTF is also marketed by the Post Office, Sainsbury’s Bank, Bradford & Bingley and The Early Learning Centre amongst others. Family Investments pays small initial commissions and annual trail commission of up to 0.4% a year (not available to financial advisers), although this does not affect the charges you pay.
Overall this is a sound choice if you’re looking for a stakeholder child trust fund. It’s more diversified than competitors which should bode well longer term. However, it’s still expensive for a tracker and I’d like to see Family Investments follow F&C’s lead by shaving charges – after all, they can afford to pay commission to introducers.