Investment Trusts (Russia & Japan markets)

Franko43

Folks – I have about £3k of savings I put by. As a way of making this money work I’d thought of putting it in a Investment Trust, anything that would go over the best bank interest rate would be a bonus. I was looking to Neptune’s Russia Fund and maybe Axa Framlington’s Japan. Russia performed well last year and Japan is tipped as a good long term option. Anyone any previous experience in these areas…

brasso

I bought Neptune Russia in mid July. Currently 31% up, my best performing fund. Also doing well is Allianz BRIC (Brazil, Russia, India, China).

Of course, these funds may well plummet tomorrow morning, so please do not take this as a recommendation.

I keep reading that the smart money is on Japan but they have so far failed to deliver. My one Japanese fund (not the one you mention) has gone down about 10% in 15 months. I'm keeping hold of it but I wouldn't expect an immediate return.

Once again, you may well have a totally diffrent experience, but I wouldn't make a recommendation either way. You have to do your own research and make your own decisions based on your attitude to risk.

Emerging markets are volatile. You may win, you may lose. Most have done well in th elast 3 years or so but the bull run must end sometime. Who knows when?

Good luck.

dunstonh

The funds you mention are not investment trusts but unit trust/OEICs.

Crystal ball says Japan may have rocky first half of 2007 but better after but too many variables to know. Russia is expected to have a good year but expect a fair bit of volatility.

I have Neptune Russia in my portfolio (and Allianz BRIC stars) but I am holding back on increasing my Japanese exposure at this time. I think that is one for my next tax year ISA.

All these areas are high volatility and should be kept an eye on and rebalanced periodically to get the most out of them over the long term.

Your 3k could be 6k within 2 years with these funds or it could be £1k. Thats the sort of volatility you would expect.

EdInvestor

All high risk choices,with extra currency risk.Not the best way to start out investing IMHO.

This kind of "punting" approach is invariably followed by losses (the tech bubble was the last big case) which is followed by people going round saying the stockmarket is a gambling casino and putting people off.

It ain't necessarily so.:)

Try a good UK Equity Income fund. Much more reliable returns, 20% or more in recent years, year in, year out, crash notwithstanding.

https://www.citywire.co.uk/Funds/Home.aspx

look up the category, choose from the top 10 over 1,5 and 10 years.

Franko43

Cheers All
Have had some experience with UK & European Blue Chips before but my problem was that it was with a poor performing fund i.e. Gartmore. The guy at Neptune seems to have a good track record in Eastern Europe. Also see Venesuala and Peru are good returning markets but don't think I'd take the risk that far. Dunstonh - what do you mean by 'rebalancing periodically' i.e. moving to more stable markets if the BRIC's become increasing violatile?

dunstonh

Dunstonh - what do you mean by 'rebalancing periodically' i.e. moving to more stable markets if the BRIC's become increasing violatile?

The funds you are looking at are more volatile. Any gains you may make are only on paper, as are any losses. With £3000, you dont have a lot of scope but lets say in 12 months it is £4000 which is quite possible with your funds, then you should move £1000 into a fourth fund, then £5000, move another £1000 into a 5th fund. Spread it wide as often as you can. When the inevitable correction comes (and it will be bigger with the funds mentioned so far), you havent got all those eggs in one basket. If you have moved the gains into lower risk funds, you will not be hit as hard. After the drop, you can move the lower risk funds back into the higher risk end again.

Do not invest in these funds if you are working on past performance. These are high risk funds and great to have as part of any portfolio but they are not there to be the backbone of the portfolio. That said, your risk profile may be fine for that.

EdInvestor

Have had some experience with UK & European Blue Chips before but my problem was that it was with a poor performing fund i.e. Gartmore.

Was it the fund or was it the timing?Major western markets crashed badly over the 2000-2003 period.

dunstonh

Ed makes a very valid point there.

Countless number of times we hear people say that the investments they have now are so much better than the ones they had 5 years ago. Often, there is little or no difference in the actual investment, it was just timing and what happened in that period.

Franko43

bit of both to be honest - I went in at the wrong time but the fund consistently underperformed the market in the 5 years I had it. If it had have outperformed I would have sat it out until the market took its upward turn - which it did in 2006

Liz_the_Whizz

dunstonh

sensible as ever in your postings - out of interest, how many different funds do you hold at any one time?

dunstonh

I have 34 funds currently. I am relatively high risk in my investment profile and if you are, you should spread it wide. I also rebalance often by switching gains into lower risk funds.