Market Collapse

[Deleted User]

The current retracement is very necessary and healthy. The reason it has been so fast is that there have been very many margin calls and traders have been forced to close and/or sell other shares in order to cover their margin. There are traders worldwide these days due to the high speed internet and so the market falls had a knock-on-affect. The speed has engendered a sense of panic, which then draws in the sheep, resulting in a snowball effect

Anyone investing in shares and/or funds should get themselves the knowledge to be, at least, a little pro-active. The winners during the past few weeks are those that sold at stop losses, thus releasing cash as the market fell lower again. There are many stock bargains about at the moment. I personally sold out of two funds on a partial basis as I do not believe that the retracement is fully over

I do however believe that we are bottoming, albeit with volatility, and I have been using the opportunity to get my high yield portfolio up to speed.

[Deleted User]

My initial portfolio, prior to the retracement, is also down about 3%. Anyone contemplating buying funds would do well to look at the morning star data, as many funds are down over 13%. It will take them a long time to recover

moneytroll

Dunston: "My FoF of choice has an initial charge of 0.25% at HL. When you compare the limitations of FTSE trackers and the poor performance against sector allocated FoFs, that 0.25% (or even 5.25% at full cost) is insignificant."

What about a single, global diversified fund to start with for somebody who is new to investing? (like GAM global diversified) It might be a cheaper option than Fund of Funds (and certainly better than trackers, IMO) and it also covers most sectors + it´s managed by one of the best managers around. I know we are not supposed to recommend funds, but it doesn´t have to be this particular fund... I´m just trying to provide good alternatives to fofs and trackers...
I can imagine what a dissapointment it must be when you are just starting out with investing, only to see markets go down 10% a few weeks later! Such is the risk one has to pay for that extra premium of income percentage one hopes to achieve over long-term...
One just has to be patient and not too greedy (which is not easy when you see certain investments go up for 3 years in a row over 100%!) and maintain a balanced portfolio, invest on dips etc etc
All often counter-intuitive stuff.

dunstonh

I can imagine what a dissapointment it must be when you are just starting out with investing, only to see markets go down 10% a few weeks later! Such is the risk one has to pay for that extra premium of income percentage one hopes to achieve over long-term...

Not if the FoF you have invested in includes areas which havent gone down in that period.

moneytroll

I wouldn´t have thought there was a single asset class that hasn´t gone down in the past two weeks (except fixed interest of course, but the gains weren´t at all significant to absorb too much of the fall in all the other classes it appears. though yes, some sectors did fall more than others). It was still a somewhat uncomfortable example that even with plenty of diversification, one still remains at the mercy of the capricious and entirely unpredictable Mr Market :-)

moneytroll

ps: I am just not that convinced that FOFs are that good in practice. At the beginning of the thread, it was mentioned that many managed funds just track down an index (but with higher charges). Hence, a FoF might just end up beeing a very expensive equivalent of an index tracker.
Surely, even with a small amount (eg 4k) one can choose 4 different, high-quality funds which are managed by top managers at a reasonable charge. (Fof often have a TER close to 3%, sometimes more!)
But of course you couldn´t buy 15 funds with 4k, like you could through fof.

baldbloke_2

dunstonh wrote:

Not if the FoF you have invested in includes areas which havent gone down in that period.

I imagine Moneytroll was offering a sympathetic ear to the problem as I described it earlier in the thread - and I thank him for that.

With the limitations imposed by an investment of £4k pa - and possibly drip-fed over the 12 mths - it is difficult to gain as great an advantage as the professionals who have far greater sums to invest and spread across many cross-balancing risk and fund-types.

baldbloke_2

moneytroll wrote:

ps: I am just not that convinced that FOFs are that good in practice. At the beginning of the thread, it was mentioned that many managed funds just track down an index (but with higher charges). Hence, a FoF might just end up beeing a very expensive equivalent of an index tracker.
Surely, even with a small amount (eg 4k) one can choose 4 different, high-quality funds which are managed by top managers at a reasonable charge. (Fof often have a TER close to 3%, sometimes more!)
But of course you couldn´t buy 15 funds with 4k, like you could through fof.

This is of great interest to me. I rather wish there were a simpler way for the novice to start out on the road. I thought my original investment was sensible spread across 8 trackers and an Ethical Fund with L&G - and they will probably turn out to be just fine in the long term. But I have been unsettled by the new advice regarding Equity Income Funds and FoFs all of which look well worth considering next time round. Every time I read that Trackers are the best introduction and need less 'managing' by the investor I realize that someone else who is very knowledgeable has an alternative type of fund that merits equal consideration. I should love independent advice but as Dunstonh said - I am unlikely to receive that on an investment of £4k per year. So it is difficult to get things right. As long as I have reasonable cash savings I don't see the need to be overly-cautius when investing but I am definitely cautious by nature. I am probably a hopeless case

EdInvestor

Baldbloke

OK let's get a bit more scientific and have a look at the basics: your attitude to risk, and how your money should be allocated to reflect that.

Have a fiddle around with this calculator and let us know the results.

Then we can break down the fund universe a bit, into categories which suit your allocation requirements.That will make it a lot easier to pick the top- rated ones.

[Deleted User]

Don`t give up baldbloke. Ishares are a good substitute for funds. There is a good uk dividend ishare, which gives a dividend 4 times a year. The dividends can roll up to add to your investment the following year. Ishares carry no stamp duty and can be traded like shares. The particular uk dividend ishare has a charge of 0.4% per year

I invested in this particular ishare a few days ago. If you want the name of this ishare then pm me as I don`t think I can mention particular vehicles on this board