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

Newbie2saving

So with the drop in the EM funds would now be a good time to 'buy in'? Not suggesting anyone has a crystal ball, but I don't feel the EM bubble is ready to burst and they have the potential to bounce back. Just wondering whether this makes strategy makes sense? I don't believe in following a sinking ship, but this sector is far from sinking in my view.

NB. I am still finding my feet in the investment world - sorry if this is a daft question.

Mikeyorks

jimjames wrote: »

My Latin American investment is down from £7.80 to £6.56 in the last month. .

And about to get worse. Brazil is set to close around 2.4% down tonight ....... for the 2nd time in around 3 working days.

The Dow, which it allegedly follows, is marginally in the black

masonic

Newbie2saving wrote: »

So with the drop in the EM funds would now be a good time to 'buy in'? Not suggesting anyone has a crystal ball, but I don't feel the EM bubble is ready to burst and they have the potential to bounce back. Just wondering whether this makes strategy makes sense? I don't believe in following a sinking ship, but this sector is far from sinking in my view.

I'm really hoping we don't see a recovery for a couple of months at least. Makes the decision of whether to invest my 2011/12 ISA money sooner or later a bit easier.

StevieJ

Mikeyorks wrote: »

And about to get worse. Brazil is set to close around 2.4% down tonight ....... for the 2nd time in around 3 working days.

The Dow, which it allegedly follows, is marginally in the black

Brazil's government has said it will implement 50bn reais ($30bn; £19bn) of spending cuts in order to curb inflation and help prevent the economy from overheating.

http://www.bbc.co.uk/news/business-12412585

soulsaver

Mikeyorks wrote: »

And about to get worse. Brazil is set to close around 2.4% down tonight ....... for the 2nd time in around 3 working days.

The Dow, which it allegedly follows, is marginally in the black

I just sold out of IP Latin Am after up 0.74% today, down c4.0% since purchase. Worst of my 15 or so funds in my S&S ISA.

India & China p/e ratios were like 17 & 20 last time I looked and to me felt oversubscribed.
I sold out 3 months ago as I don't have the stomach for stuff I think (rightly or wrongly) is defying gravity. I prefer to get out too soon as opposed to too late.

StevieJ

My overall portfolio has held up quite well recently considering I have reasonable exposure to Asia and EM's around 40% of the shares and funds part of my portfolio and 27% including cash. I am down less than 0.5 % from peak.

relaxtwotribes

I bought into two emerging markets funds late 2009 after those markets had performed very well, so I might very well have made a big mistake. The 2 funds went up by about 40% by the end of 2010 so I thought I was pretty clever. Then they started to go down.

Now here is the rub - the intelligent investor is prepared to take this latest 10% fall on the chin and get out out to bank some profits. Whilst the amateur stays with it because he believes that it was once so high, therefore it must be so again one day.

It is never wrong to take your profit if that is what you are comfortable doing. Just don't look back and wonder what would have happened if you had stayed in the EM funds.

I have banked my 30% profit and moved on to other things. Hopefully, they will do better but I won't be looking. That's a recipe to feel ill!!.
rtt

Linton

relaxtwotribes wrote: »

I bought into two emerging markets funds late 2009 after those markets had performed very well, so I might very well have made a big mistake. The 2 funds went up by about 40% by the end of 2010 so I thought I was pretty clever. Then they started to go down.

Now here is the rub - the intelligent investor is prepared to take this latest 10% fall on the chin and get out out to bank some profits. Whilst the amateur stays with it because he believes that it was once so high, therefore it must be so again one day.

It is never wrong to take your profit if that is what you are comfortable doing. Just don't look back and wonder what would have happened if you had stayed in the EM funds.

I have banked my 30% profit and moved on to other things. Hopefully, they will do better but I won't be looking. That's a recipe to feel ill!!.
rtt

Unfortunately this scenario has a number of holes..

1) How do you know the "something else" you went into will do any better? If you dont, why bother selling?
2) A 10% drop in EM is fairly small - how do you know that it's not just a temporary blip. For example one of my EM funds dropped 20% in the first 2 months of 2009. Your "intelligent investor" would have got out. But in the following year it doubled.
3) Presumably someone bought what your "intelligent investor" sold. Were they unintelligent or were they intelligently waiting for a dip? You can get into the ridiculous situation where what you just sold is an ideal candidate for what you buy in its place.


If you buy these sorts of funds and you are an investor rather than a day trader the only intelligent thing to do is to think long term and dont worry about the short term. In 5 years time today's fluctuations wont matter.

What is very intelligent in addition is to invest in a number of different higher risk sectors and in some low risk ones. Then on an infrequent but regular interval, say 1 year, you rebalance so that the % holdings return to their original levels.

ANGLICANPAT

Varying ideas in this thread as to how long to hold funds that may be underperforming or maybe close to hitting a ceiling. Im interested in peoples experiences as to what happens if your investments are through an IFA - do they only review your stuff routinely every year , or do they timely contact you to pull you out of Brazil, tech, or metals, or whatever suddenly looks precarious for any reason ?

relaxtwotribes

Linton wrote: »

1) How do you know the "something else" you went into will do any better? If you dont, why bother selling?
2) A 10% drop in EM is fairly small - how do you know that it's not just a temporary blip. For example one of my EM funds dropped 20% in the first 2 months of 2009. Your "intelligent investor" would have got out. But in the following year it doubled.
3) Presumably someone bought what your "intelligent investor" sold. Were they unintelligent or were they intelligently waiting for a dip? You can get into the ridiculous situation where what you just sold is an ideal candidate for what you buy in its place.


If you buy these sorts of funds and you are an investor rather than a day trader the only intelligent thing to do is to think long term and dont worry about the short term. In 5 years time today's fluctuations wont matter.

What is very intelligent in addition is to invest in a number of different higher risk sectors and in some low risk ones. Then on an infrequent but regular interval, say 1 year, you rebalance so that the % holdings return to their original levels.

Unfortunately this scenario has one big hole...

You seem to espouse never ever selling a holding as though making an investment is an end in itself. For me, investing is only a means to an end.