Investing - Chasing the bubbles or a diverse, solid grounding?

rl290

Mr Fishbulb:
You can find plenty of fund information about fund on websites like trustnet or hargreaves lansdown. The issue, of course, is where to start. Personally, I identify themes, sectors or regions I want to invest in from a whole host of investment advice magazines, websites, etc. Then I go to trustnet and see which fund has the best record in that field, and read the investment memos that the fund managers publish to see whether I agree with their views going forward. Finally, I log onto Hargreaves Lansdown (who I buy funds through) and check their advice. Though, to be honest, many of the funds I have invested in are not covered by them (regardless of whether they are stellar performers!)

Wombat:
First, you say that "Most Absolute return funds have not done very well...." This is true of most funds, but not all... so I pointed out one that has gone up c40% in a year.
Second, you erroneously say that the fund I mention is a bond based fund (it is not) and that making money in bonds is easy at the moment (it is not).
Third, you then say "Well it looked very scary when it suddenly tanked 17% last July." Now, this makes no sense. If you were under the impression it was a bond fund, and it was easy to make money in bonds, then your previous comment is poorly thought out. In any case, the plunge last month was no where near 17% (it was 10% high to low, being generous to you!) and overall the month had net growth in value!

What is it that you have against this fund to shrug it off so easily? Either you didn't research you comments before posting, or you have some kind of chip on your shoulder?

The L&G fund you tout has made a measly 3.5% in the 5 months since it was opened. The Ruffer European fund I mention outperformed over this time-scale*, and has a proven track record: it is one of the top performing funds (of any sector) on a 1, 3 and 5 year basis. Tried and tested. So why shake the boat with a new L&G fund? Oh, and before you say it: The Ruffer fund is hugely diversified - bonds, equities, cash and commodities. The only this it lacks is short positions.

R

* And the Octopus fund did even better, fyi.

wombat42_2

rl290 etc - I am only interested in absolute return funds as a relatively safe bailout fund after I have made a killing on commodities (I hope). As long as I consistently get something a bit better than cash I am happy. It looks to me like the L&G fund is the safest of the Absolute Return funds. It is 90% cash, the remaining 10% goes into longing or shorting currency movements, commodity indexes, share indexes or interest rate movements. So it is extremely diversified and non-volatile.

More volatile absolute return funds are very dependant on the skill of the fund manager. Maybe the manager of the Octopus is a genius but what happens if he goes sick. The Octopus fund is far too volatile for me wanting a safe haven fund, for example it plummeted 17% in no time last July, Some absolute return funds have done badly. Blackrock Absolute Return did superb for about 18 months but lousy for the last 6 months. Maybe Octopus will start going haywire and the manager shorting what he should long and vice versa. The Threadneedle Absolute Return Fund is looking pretty good as well but volatile.

rl290

Fair enough. BTW, I would suggest you take a look at Personal Assets Trust - which has the goal of wealth retention over wealth creation. The result is a very conservative approach to investing, which saw them go almost totally into cash about a year before the credit crunch hit. That said, they have not been totally unaffected by the crunch.

R

jon3001

wriggly wrote: »

Second, for alternative assets (real estate, commodities, etc), look at 5-10%, definitely no more than 20%. Take that portion out of your shares portion. So 60-40 might become 50-40-10.

Roger Gibson wrote an interesting book on asset allocation and making use of alternative assets.
http://books.google.co.uk/books?id=q80oFFsiI3kC

He advocates much higher allocations to alternative assets such as REITs and commodity futures. For someone on an 80/20 equity/bonds portfolio he'd suggest as much as 16% of that in REITs and 16% in commodity futures. The other 48% would be in domestic and international stocks. (and 20% bonds of course).

The theory (backed by decades of data) is that annual rebalancing of portfolios containing highly uncorrelated asset clases produces higher returns with lower volatility.

I'm applying these principles to my portoflio.

clairbear_3

For the average PI who has perhaps 1-50K you dont need to look beyond UK equities.Most lose money on global investments they have no understanding of.Keep things simple and bet on what u know.Afterall the main reason for the credit crunch is banks and bs got involved in global deals they clearly didnt understand.
Put simply if u make a few £ betting on football UK results why then try predicting Japanese and Russian results .It just creates a lot more research and risks.
Keep it simple
CB

Aegis

clairbear wrote: »

For the average PI who has perhaps 1-50K you dont need to look beyond UK equities.Most lose money on global investments they have no understanding of.Keep things simple and bet on what u know.Afterall the main reason for the credit crunch is banks and bs got involved in global deals they clearly didnt understand.
Put simply if u make a few £ betting on football UK results why then try predicting Japanese and Russian results .It just creates a lot more research and risks.
Keep it simple
CB

"Creates more risk" is somewhat misleading. If the UK economy is in fact the slowest to recover from this global financial crisis, then investing solely in UK equities could result in fairly significant performance risk. A little exposure to the rest of the world can act as a good diversifier, and this can actually reduce your overall risk.

sabretoothtigger

trade shares at home and funds and trackers abroad would seem more balanced to me