Unit Trust Diversification Question

barny_100

I've realised that the 2 of the funds I hold in my ISA are much more similar than I thought. A Trustnet comparison put them at 0.97 correlation.

%'s are of my overall ISA holdings.

First State Asia Pacific Leaders Class A 18.3% - Red line
First State Global Emerging Markets Leaders Class A 12.1% - Blue line



Any opinions? I'm thinking I might just move all the Emerging markets money into my other Emerging markets Fund (Aberdeen) or perhaps just leave it as is on the basis they are slightly different and you are always going to get a lot of overlap as long as Emerging often also means Asia-Pacific?

blinko

the performance is too similar to really distinguish and they are probably similar in holdings,

you can always pick another market, eg middle east or a specialist eg commodities

yelf

why would you want to change?

Annisele

It looks as though they're so closely correlated that you might as well have ~30% of your holdings in one fund.

If you're comfortable with that, it's no problem. Personally I'm not sure about more than 10% ish in more than one fund - so subject to CGT etc I'd probably move some of it (that's intended as a personal opinion as to what I would do; not advice as to what you should do). Where I'd move it to would depend on the rest of the portfolio; I'd try to choose some things that were different to what I already had.

sandsy

I know very little about funds but common sense tells me that a high proportion of global emerging markets are probably in the Asia Pacific region. Therefore, the correlation is not entirely surprising.

Jake'sGran

I have the First Choice fund and am very pleased with it. At the same time I bought a fund concentrating on India and one on China. These all seem to be doing quite well but the South America BRIC fund has not gained anything yet. Got to give it some time!
Can't get it right all the time even after doing some homework.