So, why is my Emerging Markets fund tanking compared to other holdings?

Mikeyorks

edinburgher wrote: »

I do keep up with at least the basic market news and am interested in such things, but I'm struggling to see quite why there's been such a dip.

The major catalyst to the dip is Brazil ..... which is down some 12% over the last 3 months. All my 'emerging' funds where Brazil is the major component are suffering similarly. As I said a few days ago .... I'm still not certain why Brazil is stumbling so much :

http://forums.moneysavingexpert.com/showpost.php?p=40919158&postcount=7

And China is not helping, as it's still wallowing from the significant dip in Apr / May 2010.

Russia / Greater Russia has been the one to have over the last few months. Up 20% since they hijacked the 2018 World Cup! But perhaps best to get out before the infrastructure costs, for that, are totted up.

hbakhshi

Newbie2saving wrote: »

I have an Indian fund and that is down a lot from last year, apparently largely due to the high level of inflation hitting food prices across the country. This is set to improve once the new harvest comes in.

I sold my NII fund and bought into agriculture for this reason

bendix

China was the worst performing major market in the world in 2010. Brazil has fallen 8% since peaking at over 70,000 a couple of months ago, and India has tanked lately - down from 21000 to 17000 in a month or two.

There's renewed confidence in developed markets, and the strength of the pound too has negatively impacted returns.

Nothing to worry about in my view. Just a normal part of the investment cycle.

mike88

It is not unusual for emerging market funds to be more volatile than those in other sectors. But to say your fund has tanked is rather an overstatement. Look at the facts.

Over the last 12 months the average emerging market fund has increased by 25.8%. Your fund has increased by 31.7%. It is the top performing fund in its sector over 3 years.

Over the last 3 months your fund has increased by 8.4% against the benchmark for the sector of 9.49%. This is not that bad a performance and is consistent with the way many of these funds behave.

If we were all concerned about short termism we would continually be chasing performance which is a recipe for disaster. Perhaps you should not be in this sector at all if you are concerned about volatility.

I have taken profits from Emerging Market funds and invested the proceeds in Equity Income and Absolute Return funds as that strategy satisfies my objective of reducing volatility and my quest for income.

Even if you were to sell out now you would still be showing a healthy profit assuming you have held the fund for more than 12 months. But much depends on your age and risk profile.

Masomnia

Linton wrote: »

You mean selling when the price is low?? So you can buy when the price is higher. Sounds like a bad idea to me!

Of course not!

It's still showing a ~20% profit, and the only thing I can see it doing is going down, so I'm thinking of taking profits now and reviewing my position as I say in a years time. I just think the money could be put to better use.

hbakhshi

Masomnia wrote: »

It's still showing a ~20% profit, and the only thing I can see it doing is going down, so I'm thinking of taking profits now and reviewing my position as I say in a years time. I just think the money could be put to better use.

Absolutely right..!!

For some reason we suffer from a collective insanity which says investing in shares is only for the long term, 5 years or more(I agree). We translate that to mean if our shares are going down we should still hold on to them if its within the 5 year time frame, (I disagree).

There are a huge number of funds out there with good track records of being well managed, if your fund in one sector is going down, get out and put your money into another sector that is going up.

Don't react to every twitch but if it has been going down for three months, that's a trend, do something about it..!

Masomnia

hbakhshi wrote: »

Absolutely right..!!

For some reason we suffer from a collective insanity which says investing in shares is only for the long term, 5 years or more(I agree). We translate that to mean if our shares are going down we should still hold on to them if its within the 5 year time frame, (I disagree).

There are a huge number of funds out there with good track records of being well managed, if your fund in one sector is going down, get out and put your money into another sector that is going up.

Don't react to every twitch but if it has been going down for three months, that's a trend, do something about it..!

Exactly my thoughts :money:

Mikeyorks

Masomnia wrote: »

I'm thinking of taking profits now and reviewing my position as I say in a years time. .

I was thinking of doing the same with Neptune Russia / Greater Russia. Having increased 90% in the part year to April that I'd held it .... it was then in severe doldrums. Didn't get round to it for a few days - which was fortunate - as it's increased by 20% over the last couple of months.

But it is Brazil (down 1.4% today at the time of writing) that's bucking the trend and taking a lot of funds downwards. Most of my 'emerging market' and 'Latin America' funds are suffering similarly.

edinburgher

It is not unusual for emerging market funds to be more volatile than those in other sectors. But to say your fund has tanked is rather an overstatement

I said compared to other holdings Other funds are up by 10% or higher since I started buying last year, it's down by 1%. It's all relative, but a difference of 11% compared to some fairly tame UK and US choices is significant in the short term.

Thanks guys - cracking comments on China, Brazil, India, volatility and confidence in established markets. Scary stuff this globalisation :rotfl:

jimjames

My Latin American investment is down from £7.80 to £6.56 in the last month. Thats a drop of nearly 16% in one month but is not uncommon.

Different markets move in different directions. UK seems very fairly valued at present so I can see why money would move in compared to emerging market funds.