ISAs that look after themselves?

[angelfire]

Is there such a thing. Stocks and shares ISA in some kind of supermarket fund FOOTSIE tracker thing where the fund managers make the decisions for you. oR AM i JUST IMAGINING IT? OK, so I am a kind of money ignoramus!

Angelfire - there's a couple of points to address here.

1. You can get a FTSE 100 tracker very cheaply but all it will do is track the performance of the index (and in fact marginally underperform it because of the fees). These funds don't have managers as such as they don't need to make actual decisions. They are essentially run by computers. A tracker would 'look after itself' in that it should always reflect the performance of the index, but if the index goes down 25% then so will the fund.

2. You can get funds where the manager makes decisions for you. For instance you could use a multi-manager fund (where the fund manager builds a portfolio of funds run by other managers) or a 'lifestyle' fund like those offered by F&C, which aim to suit specific risk profiles and are regularly rebalanced to make sure they still meet these objectives. I think you would need to go to an IFA to get these sort of things, as they would need to work with you to ascertain your risk profile.

3. Another sort of 'looks after itself' option might be an absolute return fund. These generally aim not to lose you money (yeah, I know, you'd think that would be true of all investments, but most of them just aim to do better than a specific index, so if they lose 20% of your money but the index is down 25%, that's a 'good' result). Different absolute return funds work in different ways - they might hold short positions, like a hedge fund, or just invest in a mix of assets that they can change around (like moving mostly into cash) to protect gains if need be. Because it's hard to make meaningful comparisons with these funds, you might again be better off talking to an IFA.

You can look at performance etc of different funds at www.trustnet.com, or there are figures in the Telegraph or the FT.

Thanks angel for this thread and Lady for useful info - will have a look at that site.