Critique my selection of funds - please!

nzseries1

Alright, so after finally signing up for share dealing, here's my selection (% is % of portfolio):

16%: THREADNEEDLE INV EURP SMLR COS 1 RETAIL
18%: INVESCO MGRS PERPETUAL ASIAN ACC NAV
23%: THREADNEEDLE INV AMERICAN SMALLER COMPANIES
12%: UBS GBL ASSET MGT UBS US GROWTH A ACC
31%: BAILLIE GIFFORD MANAGED A NAV ACC

I was going for something with "moderate" risk with perhaps slightly above average growth prospects, but now that I've seen my Asian fund drop 7% in six weeks, I'm starting to wonder if I've been too risky, and I'm starting to lose my nerve in the whole share-buying thing! Is that considered a relatively large drop? The other funds all haven't moved much.

I'm certain that I'll leave what I've got for now but I'm wondering where you would put future monthly subscriptions in order to spread the risk a bit.

nzseries1

Probably should have added that I'm looking to invest for around the 5-8 year term, or until the pound strengthens dramatically against the NZ dollar, in which case I'd consider sending all my money back to NZ (but given that two months ago against the NZD the pound was the weakest it has ever been in the history of the NZD, I don't see that happening any time soon).

Imnoexpert_2

Like you I am new to all this and am putting together my own portfolio. Though my goals are different.

I haven't checked on the individual funds so can't comment on those, but I suppose my strategy is based on a wide asset allocation between a number of asset classes. This has led me to have more like 15 funds, with more on the way when the opportunity arises.

You seem heavily invested in the US and in smaller companies.

So is the US the worlds largest economy, a powerhouse of enterprise which will recover from current difficulties and founded on a stable democracy march forward into the sunlight? Or. Will the new eastern economies take over from the decaying superpower and their energy and dynamism and endless supply of cheap and flexible labour to keep the US in decline?

I have heard that smaller companies suffer in hard times but grow faster on the up. I have no idea if this is true but if so you are betting on recovery.

I think I am using a shotgun and you are using a rifle!

foxwales

Asian markets like the rest of the world are being hit hard by the increase in Oil prices and instability in the middle east, with analysts predicting that further oil price increases will start to slow economic growth.

Oil prices are extremely volatile at the moment with daily increases/decreases hitting between 200-250 points, so the potential to make and lose huge sums are quite high at the moment, this is causing people to stop investing in the oil markets and putting their investments in less volatile markets.

It's only a matter of time before Gaddafi is ousted and when Libyan oil production returns to full capacity there should be a surplus stock based on the recent increase in production by Saudi which means Oil futures will fall and market futures should rise as things return to normal.

So hold in there

nzseries1

Imnoexpert wrote: »

I have heard that smaller companies suffer in hard times but grow faster on the up. I have no idea if this is true but if so you are betting on recovery.

Exactly what I was thinking. I believe the the world's economy over the next few years can only be on the mend, but no guarantees of course.

Imnoexpert wrote: »

You seem heavily invested in the US and in smaller companies.

True, I was thinking that too, although the US GROWTH fund I've got there is mostly in the large US technology firms which for some reason I think is a good bet.

nzseries1

foxwales wrote: »

It's only a matter of time before Gaddafi is ousted and when Libyan oil production returns to full capacity there should be a surplus stock based on the recent increase in production by Saudi which means Oil futures will fall and market futures should rise as things return to normal.

So hold in there

I hope so! I feel like I contradicted myself earlier when I said I was investing for 5 years + just after I commented on the six-week progress of my fund selection. But hey, what can you do

I always thought I was too risk-averse to invest in shares, I think I just have to stop checking the valuation every other day!

foxwales

nzseries1 wrote: »

I always thought I was too risk-averse to invest in shares, I think I just have to stop checking the valuation every other day!

Ha! now that will drive you crazy.

For long term prospect's I myself am looking into the Chinese market, it's current rate of growth is immense and over the next 10 years I think it's highly likely that China will become the global economic power house generating huge internal growth in more advanced industries as it's economy develops further.

I think US economic growth will slow as a result but may pick up for a period when the Yuan currency returns a better valuation, as currently the Chinese Yuan is one of the most undervalued currencies in the world, which is driving their export market.

Surrounding Asian markets will also benefit from China's massive growth, so these are prospective investments too.

Imnoexpert_2

As you are aware if the points I made, it seems you have a strategy which you have thought out (and for what it's worth I think it is a reasonable one) and are 'betting" on so as long as you can afford to take the risk then go for it.

With regard to China (and you heard it here first). This is a squalid military dictatorship which shoots its protesters and locks up its poets. What is happening in Libya today will happen in China at some point in the future. When that happens there will be a bumpy ride!

B_Blank

Inflation could destroy you with that portfolio

nzseries1

B_Blank wrote: »

Inflation could destroy you with that portfolio

Care to elaborate? Inflation isn't something I know very much about. What sort of funds would you go for if you were worried about inflation?

DIY_Income_Investor

Umm...why are you even investing in funds? It has been discussed pretty widely that the initial costs and annual charges (plus the internal 'churn' costs) take a large proportion of your potential gains - and the vast majority of the funds don't beat the simple indexes. You are also exposing yourself to lots of currency risk (when presumably you want ££s in the end?).

A better approach IMHO is to take a simpler, more proactive DIY approach to your investments, centred on ETFs (if you are new) and then FTSE 100 dividend shares, UK gilts and UK corporate bonds.