Time to switch

Robie

Simple question really & probably stupid one at that :0)

When is it best to switch from one fund to another, i.e. while market are down (e.g. today) or when they are (comparatively) up?

I know some of my funds are just not performing and thinking of switching to other (currently) better performing funds. Obviously, no guarantee they will do better there but still...

Thanks.

Robie

dunstonh

What investment strategy are you using or is it just hit and hope/a bit random?

How would the switches affect your strategy?

jimjames

If you switch a poor performing fund into a good performing one then that is no guarantee of good performance continuing and may actually be the opposite. The latest hot fund might actually be overvalued and a bubble waiting to burst.

Imagine in 1999 switching your equity income fund (poor performing) to a brilliantly performing tech fund. 1998/1999 tech funds rose massively leaving equity income funds to perform very badly despite being fundamentally good investments unlike many tech businesses.

In 2000/01 tech funds crashed, some by 60%+ and many have not reached their peaks again 10 years on. If investors had remained in the equity income fund they would be sitting on substantial profits unlike the massive loss in the tech fund.

Robie

dunstonh wrote: »

What investment strategy are you using or is it just hit and hope/a bit random?

How would the switches affect your strategy?

Thanks for the response Dunston.

This is in my portfolio. Some of these were taken out a long time ago (e.g. most of the Jupiter ones). For example, Lazard, Jupiter European, Jupiter Income. etc are doing badly. Still working on what to replace them with, of course.

  [FONT=Arial]1 Jupiter High Income                                                       15.9 UK Equity & Bond Income[/FONT]
  [FONT=Arial]2 Jupiter European                                                           15.9 Europe Excluding UK[/FONT]
  [FONT=Arial]3 Jupiter Income                                                               13.3 UK Equity Income[/FONT]
  [FONT=Arial]4 Jupiter Fund of Investment Trusts                                     11.5 Global Growth[/FONT]
  [FONT=Arial]5 Jupiter Growth & Income                                                 11.2 UK All Companies[/FONT]
  [FONT=Arial]6 First State Asia Pacific Leaders Class A                            4.6 Asia Pacific Excluding Japan[/FONT]
  [FONT=Arial]7 First State Global Emerging Markets Sustainability Class A 4.5 Global Emerging Markets[/FONT]
  [FONT=Arial]8 GLG Technology Equity                                                    4.1 Technology & Telecommunications[/FONT]
  [FONT=Arial]9 Allianz RCM Brazil Class A                                              3.8 Specialist[/FONT]
  [FONT=Arial]10 M&G Recovery Class X                                                  3.0 UK All Companies[/FONT]
  [FONT=Arial]11 Jupiter Financial Opportunities                                        2.6 Specialist[/FONT]
  [FONT=Arial]12 AEGON Investment Grade Bond Class A                        2.5 £ Corporate Bond[/FONT]
  [FONT=Arial]13 Artemis High Income                                                    2.5 £ Strategic Bond[/FONT]
  [FONT=Arial]14 Lazard (Ireland) Global High Quality Bond                      2.5 Fixed Int-Global[/FONT]
  [FONT=Arial]15 Invesco Perpetual Tactical Bond                                    2.2 £ Strategic Bond[/FONT]

jamesd

The time to switch is when the markets are up, when the markets are down and whenever your circumstances or fund performance changes make it appropriate.

up: might want to switch some money into lower volatility investments to protect gains after a long up run.
down: might want to switch out of low volatility into higher volatility to gain more from any recovery.
your circumstances: retirement getting closer, marriage, divorce, job change, whatever else that might change your risk tolerance.
fund: manager changes, being the right or wrong type of fund or manager attitude and approach or the current situation.