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Original poster

Please help Child Trust Fund

23 replies

dikkertjedap · 14/02/2013 14:30

I just don't know what to do. I invested lots of money (maximum allowances) in my dd's child trust fund with F&C. From all the money I invested about 70 per cent is left, so I haven't made any gains at all, just large losses. I mainly invested in shares. Although the shares have gone up a lot in value there has been massive massive share holder dilution, so many of my shares are worth a lot less than before as so many new shares have been issued.

Also, many of the better performing funds in which I had invested were closed to the child trust fund so I was forced to sell and invest them in something else, incurring lots of fees in the process. This happened about five times.

I have today received a letter that on top of existing fees I am going to get an annual fee of £25 plus VAT. I really have had enough of F&C. I want to switch to another provider but have no idea of any of the others are more honest or are equal rip off merchants.

Please help - what shall I do? Any suggestions who is a better provider? If it goes on like this no money at all will be left in my dd's child trust fund by the time she is 18 (suffice to say, I am no longer using may annual allowance to top up the account as it is money down the drain).

OP posts:

CogitoErgoSometimes · 14/02/2013 14:38

How long before the fund matures?

Original poster

dikkertjedap · 14/02/2013 14:39

Eleven years (18th birthday) ....

OP posts:

drjohnsonscat · 14/02/2013 14:39

Yes I just got the same letter. I rang F&C to complain because their website still says "no annual charges" which is now untrue. They tried to argue it was still true because the charge will be levied in April so not right now this very minute! They changed it today on the website (I called them on Monday to complain) I just (January) paid in a reasonable sum to the CTF for my two DCs on the basis that the fees were not eating into the principal but that's no longer true and I can't get the money out.

I haven't had as bad an experience as you on the funds though. Mine is in the Graphite PE fund which has not done too badly. The problem is not many people do CTFs any more. I briefly looked into it and found Leeds do one but I wasn't sure if they actually operated it or if theirs was operated by the Children's Mutual Fund. To be honest I was too cross to look around much further but will have another look later when I am less annoyed.

CogitoErgoSometimes · 14/02/2013 14:45

In the next 11 years, if you added nothing to the fund, the chances are that it would recover or even make money. My DS was born in 2000 so too early for CTFs but I took out a unit-trust type fund for him anyway. It lost a lot of value in the 2008 crash but I kept buying units throughout on the basis of 'buy low, sell high'. Now it has recovered a lot and those cheap units are making a lot of cash. By 2018 when it matures, who knows?

Maybe you should keep buying units with F&C?

Original poster

dikkertjedap · 14/02/2013 14:46

the mistake (?) I made was to invest in all available funds ('spreading the risk' I thought) and thus incurred a lot of trading charges especially as gradually more and more of these funds no longer became available to the child trust fund (they still exist but not if you are child trust fund account holder), so lots of forced selling.

I feel so upset about this, I thought I was doing the right thing (at great cost because it wasn't that the money was just sloshing around) and it has so so backfired.

To now here that there are not many trust funds any more, what to do????? I can't get the money just out and invest directly. I don't want just a cash account because I will be left with no gains in that case as well.

OP posts:

drjohnsonscat · 14/02/2013 14:48

Also I was annoyed at how disingenous the letter from F&C was. You are already paying underlying charges which are not visible but they appear to suggest they have previously been running this product for free.

I read elsewhere that the Children's Mutual are also looking to offload their CTF business so there really aren't many options.

BabyRoger · 14/02/2013 14:50

I know nothing about all of this (!)

But

Martin Lewis was just on radio 5 talking about this. He was saying you have the right to transfer the money to a junior isa which is more competitive and better.

Maybe his website has some info?

Lonecatwithkitten · 14/02/2013 14:52

There are CTF funds that are linked to other funds example would be the Invesco Perputal through Children's Mutual. The CTF just uses the allowed funds of the main fund. This fund has outperformed the market as have all the other Invesco Pertual Funds you just need to do your research.

BabyRoger · 14/02/2013 14:52

Just looked at his site and the last entry on there said the government said you can't transfer it.

He did just say on radio 5 that you have the right to move the money.

(Sorry, no help at all!)

Original poster

dikkertjedap · 14/02/2013 15:21

Oh what a pity you are not allowed to transfer to the junior isa, I would really have liked to do that ..... I wonder why it is, that there are so very few options left.

I will look into Invesco.

OP posts:

CogitoErgoSometimes · 14/02/2013 15:34

There's no guarantee that a Junior ISA fund - even assuming the value can be transferred - is going perform any better or be lower in admin costs than your existing provider

drjohnsonscat · 14/02/2013 15:42

OP I think your main problem is the forced selling. I wonder if there's an argument that you could make a complaint to F& C on the basis that this was intended as a long term investment and allowing you to invest in funds which you were then forced out of very quickly was never going to be appropriate for the purpose of CTF which should last 18 years. Might be worth throwing a complaint at them and then referring it to the ombudsman.

Original poster

dikkertjedap · 14/02/2013 16:11

thank you, I hope I kept all their letters telling me that I had to exit certain funds, although otherwise I can see it on my statements as I only get into action when I am told I have to sell ...

OP posts:

Original poster

dikkertjedap · 14/02/2013 21:09

Just read bad things about Children's Mutual, basically that they are offloading their child trust fund to poorly performing Forester life without the account holders having any say in it

It all seems one big scam out of which some of the finance companies do well at our expense - so nothing new there. Doesn't help that this crappy government doesn't allow CTF accounts to be switched to junior ISAs. Over my dead body that I still put money in my dd's CTF, I was naive to ever invest in this scam.

Cogito there is much more competition for junior ISAs and much better rates are available at lower costs compared with the few CTF which are still around (and who knows for how long they are still around).

SCAM SCAM SCAM - Another way of ripping off ordinary people

Long live this brilliant value creating UK finance industry - yeah

OP posts:

TreadOnTheCracks · 14/02/2013 21:15

Marking place as I have one CTF with F&C (but an okay fund - it's made money) and the other with children's mutual (which I'm pretty sure Martin Lewis recommended in 2005).

CogitoErgoSometimes · 15/02/2013 07:34

"better rates are available at lower costs"

You don't get a 'rate' with Junior ISA that is invested in the stock market. The investments, like your current fund, go down as well as up. That's the nature of the product.

Original poster

dikkertjedap · 15/02/2013 10:28

Don't be pedantic, you get a return on your investment.

OP posts:

CogitoErgoSometimes · 15/02/2013 11:59

Pedantic? No wonder you lost money if you don't listen. Cash ISAs give a guaranteed return but Junior stocks and shares ISAs always come with the following warnings...

The value of investments and any income can fall, so the Junior ISA could return less than you invest
Returns on investment funds are not guaranteed

etc.

drjohnsonscat · 15/02/2013 12:17

cogito I think the OP knows that. She was just putting her thoughts down quickly. I knew what she meant.

Anyway I think the general point is that there is a problem with F&C or at least with the funds she chose because any gains there were have been wiped out by trading charges. I have been thinking about this overnight and have more or less decided to stay where I am because there are no other decent options atm. But OP it sounds like you need to consolidate into one or two fund (if you haven't already by default because they've closed all the others)

Original poster

dikkertjedap · 15/02/2013 17:32

As drjohnsoncat said, I lost a lot of money due to being forced to sell my shares in funds which still exist (and quite a few of them actually performed well!) but are no longer open to child trust fund holders. So I had to sell them and buy shares in other funds (incurring non-avoidable charges). Unfortunately, it has happened that some of those funds then were also closed to child trust fund holders (so the whole palava again, including more charges). Furthermore, I lost quite a bit when the stock market started picking up but I suffered massive shareholder dilution wrt several of the funds I had invested in. Again there was nothing I could have done to avoid this.

If, I hadn't been forced to exit funds and if, I hadn't suffered massive shareholder dilution, my dd's CTF would actually have done very well.

It is true that I am still in as many funds as available except the funds marketed as actively managed (the others which are not marketed as actively managed are actually still based on stock picking because F&C does not enable CTF holders to track indices in the true sense of the word (that is what I really would have liked).

OP posts:

MandMand · 15/02/2013 20:24

You can transfer your f and c stocks and shares ctf to a f and c stakeholder one which is a ftse tracker fund with what are nominally high fees for a tracker.

You can't swap a cft to a jisa which is a scandal in the making.

Also if you have just had your ctf statement, mine came this week, you will see a recovery to end december with more to follow following the increase in the markets since Christmas. The fees on the f and c for dealing are not huge so i am surprised by your comment and I too was forced to sell some funds that were doing well. I have now consolidated to four funds to give some diversification and that pay a good dividend, as that's what will make the difference over the years. My advice carry on and rebalance your shares once you have the latest statement.

Just so you know my sons ctf is 6.5 years old we have paid in nearly the full amount and we are now about 25 to 30% up. But we're 50% down at one point that's just the stock market. You prob started at about the peak in the market hence perhaps your loss. I blame the banks!!!!

Original poster

dikkertjedap · 15/02/2013 21:46

MandM would you mind telling which are the four funds you selected?

OP posts:

Original poster

dikkertjedap · 15/02/2013 21:48

I remember discussing the tracker fund with one of F&C's advisers. He said that the tracker fund is not a pure tracker but still based on selecting a number of stocks (you have of course no say on how these stocks are selected) that is why I felt that it is not a proper tracker.

OP posts:

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