Time to get started on an investment ISA.

cheerfulcat

al_yrpal wrote:

It isn't a tracker though, its a managed fund.

The two are not mutually exclusive - there are plenty of closet trackers out there...

EdInvestor

And do be aware that you do have the currency risk with a European fund.

Here's an example of what I mean in the FT today:

[url=http://news.ft.com/cms/s/f164121c-7e67-11da-aefd-0000779e2340.html
]Korean Government mobilises to weaken currency[/url]

So if you hold Korean shares, the value of your investment will go down (probably, because we are talking about the exchange rate against the US dollar here, not sterling .)

And it might be counteracted if you hold shares in Korean companies which mainly do exports, because the measure is designed to help them and their share prices might go up.

But if your fund is heavy on, say, shares in the local mobile phone company, it could have the opposite effect.

All in all it's a complication/risk that I personally can do without.

dunstonh

And do be aware that you do have the currency risk with a European fund.

Here's an example of what I mean in the FT today:

Korean Government mobilises to weaken currency

EU expansion must have gone crazy if Korea are now in

You are of course right that currency fluctuations will have an impact. Western European economies will have a lower impact than emerging economies. Just think if you were German. Would you invest into UK funds?

There is a natural inclination to invest in your own country but it can be very short sighted to do that nowadays.

tomstickland

Personally, I believe that the opportunities in Europe, especially Eastern Europe are far greater than in the UK. My opinions are based on what I see working for a company that exports all around the world in a medium tech market. UK sales are hobby level, US sales are not the largest anymore, central europe is variable, Eastern europe has loads of potential, China, Korea, etc also.

Anyway, in the spirit of getting on with then I'm going to compare what the 3 main Internet Brokers have and buy into a European fund of some sort. Getting on with it is the name of the game; I want the money working for me ASAP.

al_yrpal

Tom,

Great to see you making investment decisions based on your own observations, but beware, the fund you mentioned holds hardly any ex-communist country's shares. However there are others that do, and they have shown truly spectacular growth in the last few years. The recent shananigans with Russian gas show the future potential of this region, and its potential for damaging fluctuations and therefore increased short term risk.

My advice is don't listen to the currency Jonahs who prefer to invest soley in the UK backwater. Read the Korean article - would you prefer to invest in a nation with an economic performance like ours, or theirs with exports growing at a rate of 11.7% pa? I held a Korean fund last year, and it grew 80%, nulifying any short term currency risk. Korea is on a roll, not only economically, with Korean culture and media just now the darling of Asia. Currency fluctuations can help or hinder your investments, but they are not a reason to desist from investing in the worlds fastest growing regions. You have to balance any currency risk against growth potential. Thus avoid funds that offer just a small return with a currency risk. Currency devaluations can actually spur national financial growth.

If you are going for high risk investments, keep on your toes, ready to sell quick. You can't be a lazy investor and win.

BTW can someone please expain that if a currency moves against the dollar it doesn't move against the pound too? , and can someone please advise how British companies who operate overseas are totally insulated from currency fluctuations (the value of their overseas buildings and plants for instance), or has the person suggesting that got their knickers in a twist?

EdInvestor

tomstickland wrote:

My opinions are based on what I see working for a company that exports all around the world in a medium tech market. UK sales are hobby level, US sales are not the largest anymore, central europe is variable, Eastern europe has loads of potential, China, Korea, etc also.

Quite so. And if this company was listed in the FTSE and you bought shares in it, you would get all the benefit of the profits it makes from exploiting the overseas opportunities without taking any currency risk because your shares were bought in pounds sterling, right?

It's just something that IMHO is worth bearing in mind.The pound has been very strong in recent years against the dollar and this has negated any profits made in the US stockmarket ( look at the returns made by US funds - woeful, all because of the strong pound).

If you are sure the pound is unlikely to rise strongly vis a vis the Euro, then don't worry about it: if you worry, then seek international exposure through UK based funds (or directly invest) in large UK companies which have a strong international business.

UK investors are actually very fortunate in this respect - we are one of the largest foreign investor countries in the world so there are loads of choices.

Want China ? Try HSBC Bank, it dominates Hong Kong and has been in China since the mid 19th century, a household name. Want India? Unilever is one of the biggest local companies. BP and Shell? Two of the world's largest oil companies. Anglo American, Rio Tinto, BHP Billiton? Three of the world's largest mining companies.....etc etc.

In some countries the most profitable companies are foreign-owned and thus the benefits go straight back to shareholders in the UK, that's us :T You can't invest in those companies via country funds, they buy shares in local firms.

Some UK companies only operate in the domestic market - but who said that was puny? Aren't we the fourth largest economy in the world?It's a big mistake to think the UK is a backwater IMHO,it's always been a major player in global finance and trade going back to the industrial revolution.

dunstonh

Aren't we the fourth largest economy in the world?

Which means there are three bigger which you would miss out on, if not used. Plus, just consider where the UK may be in 20-30 years time. I wouldnt be surprised if we dont make the top 10 then.

EdInvestor

Which means there are three bigger which you would miss out on, if not used

The top three are the US, Japan and Germany. The latter two have been in the doldrums for quite some time (15 years in Japan's case!)and the former's gains have been negated in the last couple of years by the strong pound.


But a good debate all round, we've covered a lot of the pros and cons.:) It's a personal choice in the end.