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  • FIRST POST
    • Voyager2002
    • By Voyager2002 19th May 17, 11:39 AM
    • 11,455Posts
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    Voyager2002
    Responding to a crash
    • #1
    • 19th May 17, 11:39 AM
    Responding to a crash 19th May 17 at 11:39 AM
    One of my holdings (JP Morgan Brazil Investment Trust) fell by almost ten per cent in a single day yesterday, with further falls this morning. Should I get out while it is still worth anything, or double my holding since the Trust is now at a 15 per discount to the value of the shares that it holds?

    (The reason seems to be a corruption scandal involving the current president, whom the markets like. So the reforms that he promised are unlikely to happen: but in any case it is a large economy that includes some extremely profitable companies -- as well as Petrobras, which is a total financial disaster on an enormous scale.)
Page 1
    • Linton
    • By Linton 19th May 17, 11:51 AM
    • 7,892 Posts
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    Linton
    • #2
    • 19th May 17, 11:51 AM
    • #2
    • 19th May 17, 11:51 AM
    IMHO, if you are investing for the long term, and you should be particularly for risky areas like Brazil, then it would be sensible to allocate a relatively small fixed % of your portfolio to that country and maintain that % by rebalancing occasionally, say once a year. Dont buy or sell on short term movements in price. They are irrelevent to the long term investor and you could well get things wrong.

    Of course if you have good reason to believe that Brazil is going to collapse, never to rise again, then it may make sense to sell. Investing purely on the basis of an IT discount isnt necessarily a good idea - funds can maintain discounts for years.
    • Glen Clark
    • By Glen Clark 19th May 17, 12:05 PM
    • 3,706 Posts
    • 2,695 Thanks
    Glen Clark
    • #3
    • 19th May 17, 12:05 PM
    • #3
    • 19th May 17, 12:05 PM
    Share prices are driven by Testosterone fuelled boys in red braces who over react to good or bad news When they realise what happens to Trump won't make a deal of diffrence to world share prospects prices will stabilise again
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • EdGasketTheSecond
    • By EdGasketTheSecond 19th May 17, 12:07 PM
    • 131 Posts
    • 65 Thanks
    EdGasketTheSecond
    • #4
    • 19th May 17, 12:07 PM
    • #4
    • 19th May 17, 12:07 PM
    Maybe the middle ground would be best; don't sell or add but hold what you've already got.
    • economic
    • By economic 19th May 17, 12:12 PM
    • 1,496 Posts
    • 692 Thanks
    economic
    • #5
    • 19th May 17, 12:12 PM
    • #5
    • 19th May 17, 12:12 PM
    i would sell. the capital could be put to better use elsewhere. I am personally staying away from EM for now as I think we will see a huge dollar rise over the coming years annihilating EM.
    • dunstonh
    • By dunstonh 19th May 17, 12:23 PM
    • 88,088 Posts
    • 53,315 Thanks
    dunstonh
    • #6
    • 19th May 17, 12:23 PM
    • #6
    • 19th May 17, 12:23 PM
    One of my holdings (JP Morgan Brazil Investment Trust) fell by almost ten per cent in a single day yesterday, with further falls this morning.
    A very small movement in a highly volatile area. The fund is capable of 80% losses. In reality, that is all we know. We don't know what is coming next.

    So, you either accept the risk and volatility or if you cannot, you pull out. Emerging market corruption is incredibly difficult to predict outcomes on.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • ColdIron
    • By ColdIron 19th May 17, 12:41 PM
    • 3,157 Posts
    • 3,595 Thanks
    ColdIron
    • #7
    • 19th May 17, 12:41 PM
    • #7
    • 19th May 17, 12:41 PM
    If a one day movement is making you consider bailing you are probably invested way above your tolerance for risk
    • Reaper
    • By Reaper 19th May 17, 12:47 PM
    • 6,058 Posts
    • 4,091 Thanks
    Reaper
    • #8
    • 19th May 17, 12:47 PM
    • #8
    • 19th May 17, 12:47 PM
    To put it in perspective it is still up 35% over the last year despite the recent drop.

    As EM are always a roller coaster ride I don't think a 10% movement is anything worth reacting to unless you feel the markets have underestimated the problem.
    • Morphoton
    • By Morphoton 19th May 17, 12:51 PM
    • 37 Posts
    • 33 Thanks
    Morphoton
    • #9
    • 19th May 17, 12:51 PM
    • #9
    • 19th May 17, 12:51 PM
    I have a holding in BRLA (Black Rock Latin America) which is about 65% in Brazil. This IT has performed very similar to JPB over the past few years. It was down ~8% yesterday but that only takes it back down to what it was last month. So I am not too concerned. I have 4% of my SIPP in BRLA and just rebalance when it gets too high/low. I intend to keep this trust for the foreseeable future. I have been investing in BRLA for +10 years and Latin America for +20 years. A trust like this can easily lose 80%+ peak to trough so it may be advisable for you to review your weighting in JPB if moves like this are above your risk tolerance.
    • bostonerimus
    • By bostonerimus 19th May 17, 12:52 PM
    • 325 Posts
    • 178 Thanks
    bostonerimus
    One of my holdings (JP Morgan Brazil Investment Trust) fell by almost ten per cent in a single day yesterday, with further falls this morning. Should I get out while it is still worth anything, or double my holding since the Trust is now at a 15 per discount to the value of the shares that it holds?

    (The reason seems to be a corruption scandal involving the current president, whom the markets like. So the reforms that he promised are unlikely to happen: but in any case it is a large economy that includes some extremely profitable companies -- as well as Petrobras, which is a total financial disaster on an enormous scale.)
    Originally posted by Voyager2002
    Before buying such a risky and expensive fund (OMG I suppose you know the charges) you should have known what you would do in a "crash". Owning highly volatile funds puts a lot of pressure on your trades and rebalancing. IMHO no retail investor should own such funds as they are one step removed from gambling. If this was a developed market tracker I'd probably buy more, but who knows with Brazil.

    As I have no idea how this fund fits into your overall portfolio and investment plan I can't really say what to do, But as a strategic matter I would not own volatile actively managed funds and concentrate on a UK and developed markets index trackers.
    • Linton
    • By Linton 19th May 17, 1:17 PM
    • 7,892 Posts
    • 7,697 Thanks
    Linton
    Before buying such a risky and expensive fund (OMG I suppose you know the charges) you should have known what you would do in a "crash". Owning highly volatile funds puts a lot of pressure on your trades and rebalancing. IMHO no retail investor should own such funds as they are one step removed from gambling. If this was a developed market tracker I'd probably buy more, but who knows with Brazil.

    As I have no idea how this fund fits into your overall portfolio and investment plan I can't really say what to do, But as a strategic matter I would not own volatile actively managed funds and concentrate on a UK and developed markets index trackers.
    Originally posted by bostonerimus
    I see no problem with Brazil as a long term investment, 20 years perhaps. In those circumstances it isnt ganbling but a reasonable punt on the future. It would be an omission to ignore such parts of the world to focus purely on currently developed markets. But it should held as part of an overall asset allocation and an ongoing portfolio managment strategy.

    The one question I would raise is the % allocation to Brazil. Anything more than say 2%-3% would be excessive in my view as there are plenty of other emerging market countries around. And any holding of less than £3K is arguably not worth the effort, so this suggests you need a £100K + portfolio to consider this type of focussed investment. For a smaller portfolio just go for more general EM funds.
    • bostonerimus
    • By bostonerimus 19th May 17, 1:42 PM
    • 325 Posts
    • 178 Thanks
    bostonerimus
    I see no problem with Brazil as a long term investment, 20 years perhaps. In those circumstances it isnt ganbling but a reasonable punt on the future. It would be an omission to ignore such parts of the world to focus purely on currently developed markets. But it should held as part of an overall asset allocation and an ongoing portfolio managment strategy.
    Originally posted by Linton
    Emerging markets are a sector that people might like to have some small percentage of their assets. But I would not focus on a single country; the fund expenses and volatility are not right for the retail investor.....as shown by the OP.
    • Linton
    • By Linton 19th May 17, 1:55 PM
    • 7,892 Posts
    • 7,697 Thanks
    Linton
    Emerging markets are a sector that people might like to have some small percentage of their assets. But I would not focus on a single country; the fund expenses and volatility are not right for the retail investor.....as shown by the OP.
    Originally posted by bostonerimus
    There isnt a "one size fits all" answer to investing. "Retail investors" cover a wide range of people. Those who post on these boards vary from newbies wondering what to do with £5K to experienced investors with 6 or 7 figure portfolios. Single country investing and higher volatility may be wrong for one group and perfectly appropropriate for another. There are a range of views on the importance of charges. Some may take the extreme view that the first thing to do when considering a fund is to look at the charges. Others believe what the fund invests in and its strategy and how both fit into one's wider portfolio are what's important, charges are secondary along with performance history. Others regard the track record of the manager as a major consideration.
    • bostonerimus
    • By bostonerimus 19th May 17, 2:39 PM
    • 325 Posts
    • 178 Thanks
    bostonerimus
    There isnt a "one size fits all" answer to investing. "Retail investors" cover a wide range of people. Those who post on these boards vary from newbies wondering what to do with £5K to experienced investors with 6 or 7 figure portfolios. Single country investing and higher volatility may be wrong for one group and perfectly appropriate for another. There are a range of views on the importance of charges. Some may take the extreme view that the first thing to do when considering a fund is to look at the charges. Others believe what the fund invests in and its strategy and how both fit into one's wider portfolio are what's important, charges are secondary along with performance history. Others regard the track record of the manager as a major consideration.
    Originally posted by Linton
    We have different approaches to investing.....I'm definitely cynical about active management and have pursued a passive indexing/rebalancing approach for my investing. It's kept my blood pressure low through several major market crashes and produced good returns; it might be better for the OP if volatility is worrying. I don't think the risk and volatility of investing in a single emerging market is appropriate for the vast majority of investors. It certainly isn't appropriate for the OP as they are phased by a sharp drop in value. I'll adjust my advice now and maybe the OP should sell the Brazil fund and buy a low cost emerging markets tracker.
    Last edited by bostonerimus; 19-05-2017 at 2:52 PM.
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