European Growth ISA - keep or sell ?

Lilaclily_2

I have a European Growth ISA with HSBC, which I have had since 1999/2000. Over those two years I had put in £14k, during the period since then the value has been up to £20k and down to £11k. Currently we are up to £21k, should I cut and run and put this money elsewhere or should I hold tight for a little while longer.

I would be greatful for any advice, especially if anyone else out there has investments in this fund.

Thank you.

moneytroll

best way to guide your intuition is reading the ft daily and see where the economy is heading and then make decisions based on the information rather than individual sentiments you catch online etc - that's what i gathered so far. i don't think anybody here will be able to tell you the right time for selling the fund.

to expand a little on the subject (without hijacking the topic), this is an area that started to interest me a lot in the last month or so. i come across a lot of different methods from reading the posts. some prefer 'sector rotation' by switching to funds frequently that perform better and others have the buy-and-hold approach (checking their funds only once a year, which is more common).

while i can sort of see the logic of doing a little bit of market-timing with shares (eg buy some when they are low) i don't quite understand why it would be beneficial when it comes to funds. surely slightly different principles apply (as opposed to a diy approach) as you have a manager who will switch between mini-sectors for you if really necessary (even if it is within one big sector, like EU). so by switching funds frequently when there are large fluctuations in the economy, you have the costs for trading shares within a fund (which are reflected in the performance of a fund i suppose) as well as the costs of switching to another fund if you do 'sector rotation' (if there are initial charges).

logically, best thing you can do is diversify yourself within different sectors and the market/good manager should do the rest. so if EU economy goes down for example your other funds would make up for it. the equities in general have produced at least 7 times higher returns over the last 100 years than cash. of course this figure doesn't mean anything if you are only invested in one sector.

IMO, when the global economy is doing well, swithing frequently from one fund to another (for the primary reason to chase the right sectors), I can see how some people have better odds to achieve above-average performance. and as people generally tend to see patterns in often random events, they think the effort they put into it pays off. i doubt that over 20-30 year period, a portfolio that keeps switching funds/sectors (every few months) will outperform a portfolio that is more passive (once every few years) and well-diversified. but that's only a personal view. anybody has any links to stats?

(also, did anybody read Malkiel's 'Random Walk Down Wall St' by any chance? i thought that's a really good intro into the world of market (mis)behaviour)

i would also be interested to hear what other people think as i am new to this too. eg, where are other good-quality sources to do research about sectors? it's not so hard getting ratings for funds/managers but getting to a decent source of information on market sectors seems to be quite hard) i also found that reading timesonline helped me a bit understanding certain tendencies better.

al_yrpal

That fund is ranked 58 out of its peers - see http://www.trustnet.com/ut/funds/perf.asp?sort=29&ss=0&txtS=&txtSS=&columns=&page=0&booIMA=0&reg=eur&sec=gth&ima=all&unit=all&type=all

As moneytroll says you could swop some into a higher ranker(for instance I hold the Artemis fund ranked 3 presently, although I am not recommeding it because that is not allowed on this board), and diversify a bit - some in a nice income and growth fund and some in something a little bit more racy. Depends on your attitude to risk.

I never leave money in a fund forever. Make it work

isasmurf

INVESTMENTS, SHARES ADVICE

Hi, Martin’s asked me to post this in these circumstances: Sorry, advice on investments, shares and other risk-based products is not what this site is about. This site is not FSA-regulated and so we’ve had to remove a post/thread directing people to specific investments. If you have any questions about this policy please email !!!!!!.

david78

isasmurf wrote:

INVESTMENTS, SHARES ADVICE

Hi, Martin’s asked me to post this in these circumstances: Sorry, advice on investments, shares and other risk-based products is not what this site is about. This site is not FSA-regulated and so we’ve had to remove a post/thread directing people to specific investments. If you have any questions about this policy please email [email="abuse@moneysavingexpert.com"]!!!!!![/email].

Goodness! It is much more risky to have all your savings in cash accounts than in funds. Why is it acceptable to recommend saving in a particular bank account, but not a fund run by a fund manager? The site doesn't need to be FSA regulated to discuss these things, does it?

dunstonh

why is it acceptable to recommend saving in a particular bank account, but not a fund run by a fund manager?

bank accounts are not regulated financial services products but unit trust/oeic funds are.

Discussion is not ruled out. Just recommendations on what you should do are.

For discussion, I think anyone who has just one fund in an ISA really needs to reconsider their investment strategy. Especially with £21k and even worse, invested with a bank.

al_yrpal

dunstonh wrote:

For discussion, I think anyone who has just one fund in an ISA really needs to reconsider their investment strategy. Especially with £21k and even worse, invested with a bank.

Isasmurf

As dunstonh says this is about strategy, not about specifics. Any seasoned investor or advisor will tell you that such a large one fund ISA, is not sensible. Its up to the OP to decide whether to accept or reject the opinions proferred.

If the OP goes to HSBC what do you think they will say - the banks are notorious for employing commission hungry so called advisors with no objectivity? The sensible choice is to either consult an Independent Financial Advisor, or go for the DIY investment route.

Martin himself warns against buying such products from banks or insurance companies. And, he recommends people like Chartwell and HL to purchase funds by the DIY route on this site.

moneytroll

isn't there a difference beween sharing personal experience and advice? discussing investments is ok without advising, right?

i wonder how long the fund would stay ranked 3 though - i haven't observed funds long enough to judge how quickly they change ranks. but i imagine switching funds too frequently could incur extra expenses (am I wrong to assume that?). also isn't it possible that some funds might work in cycles; sometimes they move few ranks down, sometimes up, just like shares in sectors and if you switch just before the upward trend, you might loose out. might be helpful to hear from people who had years of experience in those areas but I fear it'll probably be reported again..

i checked my post carefully to make sure there's no 'advice' anywhere :beer:

JackyF

My personal feeling is that I wouldn't buy a unit trust managed by a high street bank. Admittedly they are the first products that those new to stock market investing ever see but they tend to be poor performers compared to fund management companies. European Growth might be fine but maybe not with HSBC. If you do decide to swap funds, be sure to buy through a discount broker (assuming you are happy to do your own research and make up your own mind). That should save you most of the initial charge and even get you a small annual rebate. Apologies if I'm teaching Granny to suck eggs; I'm sure this advice must have been given elsewhere on the boards.

al_yrpal

moneytroll wrote:

i haven't observed funds long enough to judge how quickly they change ranks. but i imagine switching funds too frequently could incur extra expenses (am I wrong to assume that:

Yup - funds go up and down! :j

It usually costs absolutely nothing to buy or swop funds if executed through a discount broker. If you swop inside a particular fund company, they charge 1% or so but my broker refunds that too. Its the one recommended by Martin.

tonyivb

Don't be fooled by the rankings and all that '1st quartile' rubbish!

Funds will be catagorised into sectors, which is fine for your European Growth or UK Income, but when you start looking at funds that are a bit more exotic then they can all be lumped together into catagory such as 'Specialist'. Therefore you can have a property and a gold fund being compared against one another.

Also, a fund can increase in performance and drop in rankings... this would be because other funds in its sector have performed better.

Moral of the story... make sure that you do your own research from a variety of different sources.