How many funds in a stocks and shares ISA is best?

[8-P]

Just wondering if there is an optimum number of funds to have in a stocks and shares isa?

Does it depend on how much money you have ie if you have more money, more funds can make more sense.

[Jawls]

8-P said:

Just wondering if there is an optimum number of funds to have in a stocks and shares isa?

Does it depend on how much money you have ie if you have more money, more funds can make more sense.

The minimum amount needed in order to:

1. Hit your asset allocation objectives
2. Keep fees low
3. Not be a total pain in the ass to manage

So what the actual number is will depend. But the fewer the better.

[JuanCarlosFandango]

Watching with interest.

I've probably got too many. My main share account has got 6. 3 fairly safe ones covering bonds, blue chips and resources, and 3 more growth ones covering emerging markets, S&P 500 and FTSE 250. Although the safe resources one has blown the rest out of the water in growth terms.

My strategy is to harvest growth when I get it and build up the safe ones to produce income.

I've then got another 6 relatively small amounts in Trading 212 which is more adventurous with Vanguard All World, Emerging Markets, Tech, FTSE 250 and S&P again, plus a Global X Super Dividend fund. Last one isn't all that adventurous, but I've put it there to keep an eye on it. If I like the look of it I'll add a decent amount to my main account.

I love Trading 212 for this. I top the account up just about weekly with small amounts and when it gets to a decent lump worth the commission I'll move it over to the other account.

I'm mid 40s and a relatively late starter, some way off retirement, at the same time I don't want to go all in on aggressive growth then hit a 10 year slump.

[8-P]

Well I have 4 in total at the moment with a plan to use them to grow up to 100k over the next 5 years and then take 80k out to pay off the mortgage. This feels ok and I’ve reduced down from 6 over the last 18 months.

[Simpo Two]

It's whatever you feel comfortable with. I know my portfolio has many overlaps but it doesn't bother me.

[Mankers]

According to modern portfolio theory, the answer should be 1 fund holding, containing around 30 stocks:

“Achieving Optimal Diversification to Reduce Unsystematic Risk. MPT shows that by combining more assets in a portfolio, diversification is increased while the standard deviation, or the volatility, of the portfolio, is reduced. However, maximum diversification is achieved with around 30 stocks in a portfolio.”

You will be unlikely to achieve this via an index fund / etf. So the challenge would be to find an active manger with a concentrated global remit, with consistent long term
performance. The currency overlay is also important, USD being a good case in point this year at least being an additional headwind for non USD domiciled investors.

[VR99]

The same subject has been on my mind recently, regarding my portfolio. I probably have two many funds(ETF's in my case) in both my SIPP and S&SISA but can justify those in the latter as am using Equities/Bonds/Gold ETF's mitigate some of the 'crashyness' of Equities.

In ref. to the SIPP, as I am in my early 40's I think there is a case to streamline to 1 or two Global Equity ETF's comfortable maintaining 100% Equities given I can't access untill 55/57 onwards...or whatever age it will be come my retirement.

Regarding OP query there is no right or wrong approach.

[MB140]

I started reading this thread with the idea of maybe starting a stocks and shares ISA. I have about £60k in a cash isa returning 4.8%.

This is why Rachel Reeves stupid fking idea of limiting cash in to a cash ISA to try and force us to invest in S&S ISA is a fking stupid idea.

I don’t understand a single word any of you are talking about. Seems like a great way for those of us who have no clue (because it wasn’t taught at school back in my day) to lose all our money.

Thankfully that dipst Rachel Reeves decided it maybe wasn’t such a good idea after the nations feedback (for now).

Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

[C69]

MB140 said:

Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

This explains the basics quite well: https://moneytothemasses.com/investment-basics

[White-Noise]

MB140 said:

I started reading this thread with the idea of maybe starting a stocks and shares ISA. I have about £60k in a cash isa returning 4.8%.

This is why Rachel Reeves stupid fking idea of limiting cash in to a cash ISA to try and force us to invest in S&S ISA is a fking stupid idea.

I don’t understand a single word any of you are talking about. Seems like a great way for those of us who have no clue (because it wasn’t taught at school back in my day) to lose all our money.

Thankfully that dipst Rachel Reeves decided it maybe wasn’t such a good idea after the nations feedback (for now).

Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

I found the book called" how to own the world" helpful getting started

[xeny]

MB140 said:

Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

https://monevator.com/why-a-total-world-equity-index-tracker-is-the-only-index-fund-you-need/

Followed by

https://monevator.com/best-global-tracker-funds/

The author of the first post also has a YT video(s) on the topic.

[okgo]

One fund across everything. Likely will consider a bond element in years to come.

[Simpo Two]

MB140 said:

I started reading this thread with the idea of maybe starting a stocks and shares ISA. I have about £60k in a cash isa returning 4.8%.

This is why Rachel Reeves stupid fking idea of limiting cash in to a cash ISA to try and force us to invest in S&S ISA is a fking stupid idea.

I don’t understand a single word any of you are talking about. Seems like a great way for those of us who have no clue (because it wasn’t taught at school back in my day) to lose all our money.

Thankfully that dipst Rachel Reeves decided it maybe wasn’t such a good idea after the nations feedback (for now).

Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

It's a fair comment; people who don't want to invest in the markets shouldn't feel forced to.

If you want one product that 'matches' a Cash ISA it's a money market fund. It basically does what the interest rate is doing (look at the performance figures):
https://www.fidelity.co.uk/factsheet-data/factshee...

[Phooey]

Impossible to answer - especially with it being an ISA because it depends when you will want to access it. If it was a SIPP and you had greater than 10-15yrs until you could touch it then you would be best wise to choose just the one fund - a global tracker. Once you get closer to retirement you would add additional funds (asset classes) to either add income and/or reduce volatility - which is of greatest importance in the early years of accessing.

Whatever you choose I think the greatest danger is adding too many funds. There's not much point in less than 5-10% of any position/fund because it won't add much weight to the portfolio. I always stick to a minimum of 10%, but prefer 20-25% for it to have any impact. No more than 5 or 6 funds would be my answer to "How many funds in a stocks and shares ISA (might be) best?"

[ooid]

Mankers said:

According to modern portfolio theory, the answer should be 1 fund holding, containing around 30 stocks:

“.

Are you really sure about that?

If we follow MPT in it's more logical Sense, first thing to avoid is "Active'. Any other assumptions like currency and number of stocks and etc.. completely random really.

[Panamax]

Old saying, "Don't put all your eggs in one basket.

Having everything in one fund is IMO running an unnecessary risk for zero benefit.

"Ah, but funds never fail." Anyone fancy a slice of Woodford Equity Income Fund? About 300,000 people lost money in its collapse.
https://www.bbc.co.uk/news/business-68253309

"Ah, but really big names never fail." At its peak, Equitable Life had 1.5 million policyholders with funds worth £26 billion. Many policyholders lost half their life savings."
https://en.wikipedia.org/wiki/The_Equitable_Life_A...

[ooid]

8-P said:

Just wondering if there is an optimum number of funds to have in a stocks and shares isa?

Does it depend on how much money you have ie if you have more money, more funds can make more sense.

Well, in practice, Three-Fund portfolio worked pretty well. You can explore below a bit, the three funds concept mostly for US but you can carefully craft into here too.

https://www.bogleheads.org/wiki/Three-fund_portfol...

[xeny]

ooid said:

Well, in practice, Three-Fund portfolio worked pretty well. You can explore below a bit, the three funds concept mostly for US but you can carefully craft into here too.

https://www.bogleheads.org/wiki/Three-fund_portfol...

Isn't that essentially a more flexible version of the two fund world equity and a suitable bond fund? i.e. you can vary the % allocation to the US. Question, especially at the moment is if you increase or decrease it relative to "natural" cap weighting.

[Jon39]

8-P said:

Just wondering if there is an optimum number of funds to have in a stocks and shares isa?

Does it depend on how much money you have, ie. if you have more money, more funds can make more sense.

Equity, or equity index funds will be investing clients money in businesses.
Take for example a FTSE 100 index fund. They would (to keep it simple) have investments in 100 businesses.

If you buy more funds, they are quite likely to be investing in some of the same companies, so you might end up paying extra fees and possibly investing several times in the same businesses.
More money therefore more funds, makes no sense at all. Just huge complexity and more fees.

I have always invested directly in equities (but an index fund is a very wise starting point), normally running about 25 holdings, which tend to be unchanged. That number provides reasonable diversification, for business sector, foreign exchange and geographic risks.
Remember also that many of the FTSE 100 companies, although listed in the United Kingdom, are in reality doing business all around the world.

[Jon39]

MB140 said:

I started reading this thread with the idea of maybe starting a stocks and shares ISA. I have about £60k in a cash isa returning 4.8%. ...

... Anybody recommend some reading for a moron on how to do S&S isa investment. :-)

Following on from my post above. Before venturing into business investment, you will obviously need to have adequate cash savings for unforseen requirements. An S & S ISA is simply a tax free way of investing in stocks (bonds) and/or shares.

You are of course familiar with your cash ISA interest rates, but you may be fascinated to see an equivalent income return (dividends) from a share portfolio. Note at this point, that UK listed companies tend to pay income to shareholders at a higher rate than USA.

I looked back to 1 Jan 2024, then last Friday, to see the actual figures.

1 Jan 2024 ....... Dividend yield = 6.6%
8 Aug 2025 ...... Dividend yield = 4.9%

The background to those two figures. During that 20 month period, many companies have increased the amount they pay to shareholders as dividends (generally possible because profits have increased). People might therefore have expected that percentage to have increased, but also during that period, some share prices have risen considerably, so although there is an increased income in Pounds, it has become a smaller percentage of the portfolio value.
Still, the current yield is higher than a cash ISA, so quite acceptable.

This investment stuff might appear confusing, but becoming involved in a sensible way is the best way to gain a better understanding.
I was just trying to point out, that the regular income from shares can be an increasing amount and in the example above, a greater income than from a cash ISA.

The problem with cash as a way to save is inflation and at present, the interest rate is almost the same as the inflation rate, so annual increase in the cash account value is zero.

Edited by Jon39 on Sunday 10th August 21:13