Funds

The_Fiddler_2

How many different funds have people got? How much have you put or are planning to put into each of these funds?

Lokolo

Currently my S&S ISA I put in £100 a month split over 2 funds, £50 each.

I currently have
Fund A: £300 (value: £270)
Fund B: £300 (value: £260)

I plan on changing when I have deposited £1000 into each fund.

I should manage to put an extra £100 next month or so though to hurry it up a bit.

SeanW

I have 7 unit trusts which I drip fed, then topped up, to a total of £6000 over two years, what was, mini s&s isa.

I also invested £700 in a tracker ETF and £700 in an Investment trust through III's sharebuilder, these where commission free lump sums.

StevieJ

I have about 20, I also have some UK and US trackers and individual shares.

gregz0012

There was some research done about this many moons ago by Markowitz which shows after diversifying across around 20-30 different stocks there becomes no benefit of diversifying further. Considering most managed funds will hold 40+ shares they have already done the job for you. If you have less than £5,000 one fund is enough as long as it is well managed and you do your research and are happy with the mix of investments within it.

Is not paying commission on a tracker fund a reason to accept their poor/mediocre performance? In my experience you get what you pay for.

SeanW

gregz0012 wrote: »

There was some research done about this many moons ago by Markowitz which shows after diversifying across around 20-30 different stocks there becomes no benefit of diversifying further. Considering most managed funds will hold 40+ shares they have already done the job for you. If you have less than £5,000 one fund is enough as long as it is well managed and you do your research and are happy with the mix of investments within it.

Should I leave just £6000 in Blackrock Gold & General, or Invesco Global Smaller Companies? Might have many stocks within, but it hardly makes that a diversified asset class?

gregz0012 wrote: »

Is not paying commission on a tracker fund a reason to accept their poor/mediocre performance? In my experience you get what you pay for.

Sorry I meant I paid no comission on the buying of the shares through the broker, hence why £700 was a suitable sum. I understand I will pay £10 when I sell.

Lansdowne

Gradually building up to 10 or 12 probably, will probably go for diversity by choosing some corporate bond funds and ordinary share funds, and different world sectors.

The_Fiddler_2

Lansdowne wrote: »

Gradually building up to 10 or 12 probably, will probably go for diversity by choosing some corporate bond funds and ordinary share funds, and different world sectors.

Do you think bond funds are better than investing in bonds themselves.

jon3001

gregz0012 wrote: »

There was some research done about this many moons ago by Markowitz which shows after diversifying across around 20-30 different stocks there becomes no benefit of diversifying further. Considering most managed funds will hold 40+ shares they have already done the job for you.

That must be 20-30 stocks within a particular sector (e.g. UK Smaller Companies). You need enough securities within a particular asset class to remove the diversifiable systematic risk. Academic research within Burton Malkiels 'A Random Walk Down Wall Street' indicates that 30 stocks gets rid of most of the risk but 60+ is better.

That's diversification with a single asset class, which is what a single fund usually provides. You still need additional, uncorrelated, asset classes if you want the best risk vs reward (i.e. targeting the 'efficient frontier'). Highly uncorrelated asset classes might include: bonds, commodities and property.

Lansdowne

The_Fiddler wrote: »

Do you think bond funds are better than investing in bonds themselves.

Don't have enough knowledge to answer that question, would be interested in the views of others.
Likewise the pros and cons of buying shares in Investment Trust or similar rather than their funds.

purch

Do you think bond funds are better than investing in bonds themselves

It is the fixed (known) maturity of a Bond that gives it a lower risk.

By using a Fund you the investor loses that fixed maturity which increases the risk factor.

Using a Fund to invest in Fixed Interest Securities is perfectly fine as long as you understand this, and don't fall for some of the incorrect "hype" that touts these Funds as low risk when sometimes they can be anything but.