Share portfolios vs funds : a quick comparison

The Goal Of Investing
CC Investments Masters Class, used with permission

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welcome to this click explains finance video this week a question I get asked

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quite a lot which is better share portfolio or fun so let’s take a look

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it’s gonna be a snapshot comparison lots more information available elsewhere as

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i mentioned at the end so imagine you’re going to go out buy shares now we don’t

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recommend single stocks that is not a way of making sure you spread your risk

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so we’re looking at the choice between putting money into a diversified

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portfolio of say fifteen twenty twenty-five chosen equities and/or funds

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or simply handing you money over 21 fund manager and Neil Woodford for argument

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sake which of those options gives you the better exposure to equities and the

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Arthur’s ever is it depends now to summarize how would you go about making

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that choice so portfolio on the Left fund on the right all depends here are

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some criteria to think about if its simplicity and an easy life you’re after

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then a fun will give you that because you’re simply buying shares in an

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investment trusts or units in a fun handing over your money in return if you

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like metaphorically for one piece of paper nice and simple nice and clear

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that’s what you want that a standard off-the-shelf fund will give it to you

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however it may not be if you want to see what’s going on under the bonnet if you

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want to know what decision has been taken when and why then you’re gonna get

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much more visibility out of a direct portfolio run by a manager right because

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you can actually see what’s going on and indeed influence it and on top of that

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you’ll get more flexibility in terms of the way that the investment strategy

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works not explain what I mean by that in just one moment I’ll come back to that .

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now

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a lot depends on how much you’ve got to invest if you’re investing relatively

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small amounts as either lump sum or a regular monthly payment then to be

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honest a standard off-the-shelf fund is probably a better back for larger

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amounts your banker bark may I stress may be increased through some of the

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advantages of a direct portfolio for access again direct portfolios can work

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in your favor and try to get a big standard for manager on the phone the

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questionnaire

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strategy you will seriously struggling retail investor where is that is

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something that’s perfectly possible through better access with a direct

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portfolio tax planning is important to some investors around the end of the tax

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year for one or two things you can do to legitimately reduce your capital gains

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tax bill and that is easy with a direct portfolio usually been through a

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standard fund and finally administration are going to be honest here revert back

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to a fun to be simple low work administration you’re after then

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standard fun will tend to give that to you as they have it a blow-by-blow

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comparison let’s go back to flexibility as i mentioned why am I saying a direct

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portfolio gives you flexibility and some investors clicking larger sums this can

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be important because first of all you can follow a tailored mandate the

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problem with funds is you are following a standard mandate if you like and you

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don’t have much say over what the fun doesn’t doesn’t invest it

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so if vice is something you have a strong view on by which i mean alcohol

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tobacco and say gaining firms some people may want exposure to that some

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people absolutely want to avoid exposure to that with a direct portfolio animal

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tailored mandate you decide if you want to invest tactically you think crikey

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thanks to do the referendum result of pounds plunge dollar-denominated

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investments look like they can be phenomenal this year and you want to get

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in there now a little bit nimble and ninja-like then a direct portfolio gives

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you the ability to invest tactically where you might be kind of screaming at

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the screen wondering why fund manager hasn’t done the same thing

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and finally you can wait stocks according to the themes you like much

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more easily with a direct portfolio because you have much more say so if

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technology is your thing you might get frustrated by standard indices with

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their very low waiting is particularly in the UK on one something which gives

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you more buying to that sector or theme now some people said to me on a minute

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aren’t you missing something you said its direct portfolio or fund what about

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going completely passive stripping out the active managers on both sides and

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over exchange-traded fund

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where’s that well actually I’ve covered that elsewhere which is why i haven’t

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mentioned in this video and

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just a reminder anything how do I find these other videos just a quick reminder

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that we need to do is go to our comprehensive website kill explains .

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com

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alright a screen will pop up that gives you a menu down there so i click on

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funds are bloated up pics it will get smallsy click on the funds tab then look

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down and you’ll see videos categorized beginner intermediate advanced and cast

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your eye down and you’ll find water ETFs all about everything that’s what a fast

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how’d I know to look there if you simply type etf into the search bar up in this

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corner that video should come up you just click on it directly so that video

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in particular go through the different styles of ETF and the pros and cons any

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questions as usual editor acrylic calm and a reminder that website address once

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