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choosing mutual funds

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At work I’ve got a pretty good retirement package. The company matches twice my contribution, up to a maximum of 1.5% - I put in 1.5% and they put in 3%. The pension is run by Friends Provident and there is a small but reasonable selection of funds with relatively inexpensive fees (typical mutual fund fees in the UK run at 1.8%):

  • Stewardship Managed 0.5%
  • Cash 0.5%
  • BGI Consensus 0.5%
  • BGI UK Equity Index 0.5%
  • BGI Global Equity (50:50) Index 0.5%
  • BGI World Equity Index 0.5%
  • BGI European Equity Index 0.5%
  • BGI US Equity Index 0.5%
  • BGI Over 15 years UK Gilt Index 0.5%
  • BGI UK Index-Linked Gilt Index 0.5%
  • BGI UK Corporate Bond Index 0.5%
  • Newton Balanced 0.62%
  • Baillie Gifford UK Equity 0.5%
  • HSBC Amanah Global Index 0.5%
  • Artemis Global Growth 0.63%
  • Artemis European Growth 0.57%
  • Baillie Gifford Japanese Equity 0.56%
  • First State Asia Pacific Leaders 0.60%
  • M&G Property Portfolio 0.74%

I joined the retirement plan as soon as I started my job, but this was very much in my pre-investing knowledge days, so I decided to go for the default option, which is to invest all my money in the BGI Global Equity (50:50) Index. This is split between the UK (50%) and the US, Europe, Japan and the rest of the Far East. I think that this is a pretty reasonable choice for the default option as there is some diversification, but it is simple and so easy to understand.

Now that I have a little more knowledge of investing, I haven’t altered my choice. Its the cheapest way I’ve found to have foreign exposure in my portfolio (which I think I need) and its an index tracker (which I think is the only way to go).

In my other main investment, I’m with a fund supermarket where there is a lot more choice. I haven’t taken advantage of this choice at all, preferring instead to opt for a very basic FTSE All Share tracker. I sort of see the point of having lots of funds to choose from, but most of them are not as good as the index, and I can’t be bothered to spend too much time working out which ones are better.

Overall, I guess I’m a plain vanilla kind of investor. I think that’s ok and that vanilla’s a perfectly acceptable flavour.

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6 comments for “choosing mutual funds”

  1. Plain vanilla is probably better than most of the other flavors anyhow :)

    1.8%?! Ouch. Talk about a headwind.

    Posted by Jonathan | October 24, 2007, 12:51 pm
  2. There isn’t much competition over here on mutual fund fees :( . I think of it as an additional incentive to stick to index funds.

    Posted by plonkee | October 24, 2007, 3:53 pm
  3. I’m curious to know which ISA fund you chose. I’m gonna make a guess and say it was the MoneyBuilder UK Index???

    Posted by Angell | November 24, 2007, 11:21 am
  4. You guessed right :) . Cheap is good.

    Posted by plonkee | November 24, 2007, 12:05 pm
  5. Hi plonkee: Enjoy reading posts of people like yourself that take a personal interest in where and how their savings and retirement money is invested.

    I have been committed to these same values since my early retirement in 1996. Investment strategies have since been established that keep me from losing portfolio value during these times of market turbulence and taking advantage of investment opportunities as they arise going forward.

    For further investment strategies that may interest you, take time to peruse mutualfundwealth.com

    Doug T……The fund guy

    Posted by Doug T | March 15, 2009, 4:32 pm

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