Should I invest some money in a equity fund?

jamesd

albertross, you do make good points, so I suppose I should say where and how I agree, lest it appear to Faz that we actually disagree more than we really do.

• The performance of whole market sectors - like global growth, UK, bonds, commercial property - varies and different ones do better at different times.
• Within a sector, different funds and different managers perform differently, including the effects of company and manager changes.
• Fund managers are usually required to keep invested or mostly invested in equities even when the value of equities is falling. The more narrow the scope of the fund, the fewer the options the manager has to avoid the falling trend. You must expect them to ride a downward trend as well as an upward one, because that's generally what their restrictions force them to do.
• It's up to the investor, not the fund manager, to act when a particular market segment is doing poorly.
• The past is already over and you can't invest in it. Your job is to try to predict what sector and which companies and managers will do well in the future.

What Faz can do about it is try to pick good choices from those available and to consider whether global growth, one of the most volatile sectors, is appropriate for the desired risk level, which could be moderated by mixing in some funds from other sectors, like UK equity income or commercial property or corporate bonds.

Still, for a new long-term investor, global growth fund of funds choices help to get more other people doing the work of trying to pick winners. It'll still be volatile year on year and needs watching, if only for the inevitable manager changes which toss the dice all over again.

Mojo71

Hi Dunston,

I realise you cannot give specific advice about funds, but why do you suggest this about Fidelity European?

I'm currently in the process of re-evaluating my investments with regard to short/medium-term needs versus long-term goals, looking at how much I have invested in equities versus savings, etc., and have actually been toying with the notion of either selling my entire holding in this fund, or withdrawing the equivalent total in smaller amounts from several funds I hold.

I've actually just done a fund switch into New Star's European Growth by using some money from a couple of their UK funds, in order to re-balance my percentages of UK funds versus non-UK funds.

But I'm still looking to reduce my equity holdings in general by a few thousand (purely to protect against a possible market downturn, whilst still leaving myself invested with an amount I'm comfortable to risk so as not to miss out on any continued potential llong-term upward growth).

I've got current holdings in 10 different funds, all of them I'm very happy with performance-wise, and when I want to withdraw money, I usually tend to withdraw from a fund that has started to lag behind, thereby continuing with the funds that are still doing well... a method that, for me, has worked out pretty good.

I've held Fidelity European since 1998, and it's done well over the years, and if I chose to sell this one, it's probably by-the-by anyway, since I'd stop following the progress of a fund that I no longer have any stake in.

dunstonh

Fidelity European had a change of manager (2003 I think it was from memory). Tim McCarron took over the running. It was from the end of 2004 that it started going downhill. All past performance before the new manager appointment is not applicable.

Like many of the Fidelity funds, it couldnt do much wrong. In many sectors, you knew you were on to a bit of a banker when you picked a Fidelity fund. However, like a number of their funds over the last year or two, it has dropped off. In general the Fidelity funds are not what they once were.

Using the 5 & 10 cumulative performance figures, it is top quartile in both. Until recently, it was also showing top quartile in 1 and 3 years as well. However, enough time has moved on to show it as quartile 3 over 3 years, and bottom quartile over the last 6 months and 1 year.

If you look at the last 2 years performance, it virtually mirrors sector average.

So, you did well between 98 and 2004 but since then you have been more or less getting sector average. So, in your case, it was the right fund to have at the right time.

Like any fund, it can change for the better again but the track record of the current manager on this fund isnt strong and better alternatives exist at this time.

carnet

Yes, Tim McCarron took over Fidelity European from Anthony Bolton in January 2003 and actually did quite well for his first couple of years.

However, as Dh says, performance, as with many of Fidelity's funds, has slumped in recent times.

Personally I believe its a size issue, a la Newton Higher Income, Liontrust First Income, Invesco Perpetual International Equity etc etc etc (yes, yes, we know, Ed, that certain individuals such as Woodford manage to surmount this "problem" but they are few and far between).

Faz

Wow - this topic really good off, just been reading through and got some really useful info! Thanks everyone.

I've saved the links from this topic to research into. I've done a little more background reading and I did end up investing in the Abbey fund (£500 1st month then £50 there-after), I was told that being an Abbey employee meant I didn't have to pay the 4.5% charge. I realise that this fund is only ranked around 50th as a growth fund, but never-the-less it's better (i hope) than keeping that money in a savings account.

Will look into other funds too. The neptune one caught my eye as being a really strong performer. However the skeptical side of me cannot understand why/how this fund has performed so well compared to others, and why more people aren't investing into it. Almost seemed a 'too good to be true' situation.

I'm very much a learner, but always willing

jamesd

Faz, most people look close to home - UK markets only - and most of the rest buy from their local bank instead of looking at the whole market. It's easy for other things to be ignored.

Do note the change of manager and performance for the Neptune fund, which currently makes it a choice that probably isn't worth going for.