***New Questions***Advice on Fund Investing - all answers/comments welcome

ANGLICANPAT

Hope Bobsy doesnt mind, but whilst our knowledgable regulars are here on the case,I hoped I might slip in another general question on investing amongst his very useful ones , that I as a learner was wondering about . Hope its not too dumb.
As long as you check your funds are the right level of risk and in the right sector for your needs, good TER etc ,-- if you intend to allow income to accumulate anyway, does it matter whether you pick income or growth funds from a profits point of view?

bobsy31

thanks you for the replies so far, very informative and useful. As always the answers have raised more questions:

TER - Move to IT's or stick with Funds?
All points taken on this and someone said to look at Investment Trusts who's charges are lower than investing in funds. I have been researching IT's in the areas I am investing in (Russia, China, south America, Asia, India etc) and the performances of them don;t look as good in comparison.
No I know the old 'past performance is no indicator....' talk and don;t want to get into that, however looking at past performance does play a part and these IT;s I look at don't look as good/promising.

ReBalancing:
Understand this more now (thanks Ilya for your example) however if I have some funds that are up and (in my opinion) they will continue to go up then surely re-balancing would then have a negative effect as I am taking money out of my good performing fund?

Health/Pharma/Energy/Agriculture
The above are all necessities for all countries regardless of the economic client. To varying degrees we all need food, health/pharma is important for us all and so is energy as a 'product/service' - then why are these funds not performing as well?
What are peoples views on these fund focuses moving forward?
It seems a no brainer to invest in them but even pre-crash of c2008 these fund weren't firing on all cylinders?

CF RUFFER FUND:
I look at one of these funds (Europe one I believe) and it shows an upward curve for the last 8 years since it;s inception, showing no major effects of the crash we had 3 years ago. this is contrary to the majority of other funds who showed a sizeable dip in that period. Can anyone shed light on how this fund managed it?

Thanks again for your comments!

dunstonh

Understand this more now (thanks Ilya for your example) however if I have some funds that are up and (in my opinion) they will continue to go up then surely re-balancing would then have a negative effect as I am taking money out of my good performing fund?

They are not going to go up in a straight line though. Rebalancing improves returns in a volatile market.

Rebalancing does also reduce your risk on the portfolio as it keeps it consistent with your risk profile. If you dont rebalance then it will start to become higher risk. If you can accept that higher risk then why not start at that level in the first place?

All points taken on this and someone said to look at Investment Trusts who's charges are lower than investing in funds. I have been researching IT's in the areas I am investing in (Russia, China, south America, Asia, India etc) and the performances of them don;t look as good in comparison.
No I know the old 'past performance is no indicator....' talk and don;t want to get into that, however looking at past performance does play a part and these IT;s I look at don't look as good/promising.

ITs are an option but remember that they are typically a notch or two higher in risk than the equivalent OEIC/UT. If you understand the risk levels and accept that and are understand how they work then they can be a good option. If you dont understand it then it may be worth giving them a miss until you do.

FATHEROFTWO_2

Bobsy

Its a natural conclusion to say why would I take money out of the outperforming funds and put it into the underperforming funds and lose money but the better performing sectors will not always be better performing and likewise the underperforming funds will eventually come back and by that time hopefully you will have got in at the the ground floor..........if the portfoilo in your better performing funds do really well and your exposure is increasing and for example say it was exposure to japan and the recent tragedy unfolds then your whole portfolio takes a massive hit.You would have avoided this by moving exposure to say Europe and the US which is starting to improve.... its all about offsetting risk and diversifying and preserving wealth not high risk exposure to one market..hope this makes sense

pressuredrop_2

bobsy31 wrote: »

CF RUFFER FUND:
I look at one of these funds (Europe one I believe) and it shows an upward curve for the last 8 years since it;s inception, showing no major effects of the crash we had 3 years ago. this is contrary to the majority of other funds who showed a sizeable dip in that period. Can anyone shed light on how this fund managed it?

All funds release monthly/quarterly factsheets.

The clues are there.

Rollinghome

bobsy31 wrote: »

CF RUFFER FUND:
I look at one of these funds (Europe one I believe) and it shows an upward curve for the last 8 years since it;s inception, showing no major effects of the crash we had 3 years ago. this is contrary to the majority of other funds who showed a sizeable dip in that period. Can anyone shed light on how this fund managed it?

Because the manager, Timothy Youngman, had the fund up to 60% in cash in 2008 and only 30% in equities. Other Ruffer funds took a similar view.

That could mean he's a smart manager, which I think he probably is, or it could mean he was lucky the call was right. Had it been wrong he could have looked very inept. If you trust him you'll notice he's also substantially increased his cash position again since the end of 2010.

The difficulty for investors is that market situations never repeat exactly and so there's no way to be sure that a manager will adopt the right strategy for the next period or for the next crisis whenever it comes. If you look back there are any number of fund managers who were stars for years until a strategy that once worked for them stopped working and it all fell apart. "Every dog has its day".

jimjames

ANGLICANPAT wrote: »

As long as you check your funds are the right level of risk and in the right sector for your needs, good TER etc ,-- if you intend to allow income to accumulate anyway, does it matter whether you pick income or growth funds from a profits point of view?

In theory it shouldn't matter BUT ... some providers may either charge for reinvesting income or only reinvest income when it reaches a certain level like £100 for example. In those situations it would be better to have the ACC version of the fund as it will not cost you and your money will always be invested.

You can see the difference that reinvesting income makes by looking at the Acc & Inc versions of the same fund. The Acc will have a higher price as the income has been rolled up into it.

bobsy31

Thanks for the comments so far, any other comments, especially around the following question would be very useful:

Health/Pharma/Energy/Agriculture
The above are all necessities for all countries regardless of the economic client. To varying degrees we all need food, health/pharma is important for us all and so is energy as a 'product/service' - then why are these funds not performing as well?
What are peoples views on these fund focuses moving forward?
It seems a no brainer to invest in them but even pre-crash of c2008 these fund weren't firing on all cylinders?