Had decided a couple of months ago to definitely move from a unit linked fund to individual shares and have been mulling over which shares to go for...... The unit linked fund has not done so well over the 8 years I have had it so I am not relying on the fund management to batten down the hatches and minimise the damage.
It's not clear what you think you will achieve by moving things to shares. So just a couple of questions to help you clarify your decision:
- What makes you think that you can achieve better returns or time the market than the fund managers who currently manage your money?
- If you are picking individual shares, it's generally significantly higher risk for your money. Are you also happy to take the significantly higher risk of loss that goes with that strategy?
- If the unit-linked fund has not done so well, you need to be clear on the reasons for this. Is it the general market? Is it the fund choice you made at the outset? Neither of these go away with individual share choice, and in fact it could be argued the risk increases. Is the reason to do with charges? If so, you need to compare the costs of dealing in shares individually. See below.
- How much 'cost' will you put on the amount of time you spend managing your money versus the amount of time you save by leaving it to the fund managers.
- Have you also factored in the cost of dealing in shares. I've tried it and it's very expensive! 1% stamp duty on Irish shares, not to mind stockbroker costs. Do that even a couple of times a year, and you are incurring 3%-4% p.a. costs. Pretty difficult to achieve returns which offset that unless you know your stuff and spend a lot of time at it. Or at least that's my experience. Do you know roughly how much per annum you will spend on dealing charges? You should compare the costs of the fund you are in with the total cost of DIY fund management.
- When you refer to the fund management 'battening down the hatches', what do you mean by that and how does moving the money into shares achieve this (if you feel you can't rely on the fund management to do this)? If you are referring to fund management's folly in not avoiding the market downturn of recent times could you have not avoided this and moved your money into a cash fund in the funds you have at the moment?