Diversifying for downturns

mattih5

Hello,

I have been investing in 5 funds for the last 18 month, as with most investments they tanks (some more than others) during the recession but they have grown exponentially since March.

I'm slightly concerned my portfolio isn't positioned well enough in the event of a sudden drop, downturn or major correction.

The funds I invest are:-

1. Baillie Gifford Emergeing Markets Growth A Acc
2. Blacktock Gold & General A Acc
3. Blackrock UK Absolute Alpha P Acc
4. Invesco Perpetual High Income Acc
5. Neptune Balanced A Acc

I noticed throughout the recession funds 3, 4 and 5 didn't suffer as much and in reverse haven't performed as well as funds 1 and 2 (which I would note as being `risky`).

I'm interested to know which asset classes, sectors and investment vehicles people use to protect against a negative turn.

Thanks,

ses6jwg

I have fund 3 and it is showing a 2.34% gain after one of the strongest rallies in history.

Disconcerting.

Lokolo

Absolute Return and Bonds are usually the ones to go for (3 and 4 of yours). Well from this past recession anyway!

Linton

mattih5 wrote: »

Hello,


I'm interested to know which asset classes, sectors and investment vehicles people use to protect against a negative turn.

Thanks,

I dont believe you should seek specific classes/sectors/geographies to protect against a negative turn, as some future negative turn may well have different characteristics to our recent one.

So I would suggest you invest in a range of investments that cover many unconnected areas. What I use is a safe base (eg cash, bonds, gilts, strong FTSE companies) to prevent a massive loss and then have a portfolio of the risky areas that as you note can suffer badly, but then recover very quickly.

Thrugelmir

mattih5 wrote: »

Hello,

I have been investing in 5 funds for the last 18 month, as with most investments they tanks (some more than others) during the recession but they have grown exponentially since March.

I'm slightly concerned my portfolio isn't positioned well enough in the event of a sudden drop, downturn or major correction.

The funds I invest are:-

1. Baillie Gifford Emergeing Markets Growth A Acc
2. Blacktock Gold & General A Acc
3. Blackrock UK Absolute Alpha P Acc
4. Invesco Perpetual High Income Acc
5. Neptune Balanced A Acc

I noticed throughout the recession funds 3, 4 and 5 didn't suffer as much and in reverse haven't performed as well as funds 1 and 2 (which I would note as being `risky`).

I'm interested to know which asset classes, sectors and investment vehicles people use to protect against a negative turn.

Thanks,

You need to keep your portfolio in a balanced spread. Taking profits at peaks and reinvesting elsewhere. Not actively trading as such but monitoring the situation.

Personally I see little prospects for Corporate bonds or Fixed Interest Funds currently. Interest rates are only going one way, and many top graded corporate bonds are trading almost at par. So no upside in capital gain either.

I've been hedging a falling £ by investing in high yield European shares. Surprisingly there are a good number of quality companies that pay above a 4% yield. You can get good exposure by buying these through investment trusts. Many of whom are gearing up currently.