Sanity Check

TCA

TCA wrote: »

I've just tried to manually buy some funds this Saturday morning (via debit card) and each attempt to purchase is being knocked back for being below the (incredibly high) minimum amount.

Quick update - all orders successfully placed this Sunday morning.

JohnRo

In my experience, and it seems yours too TCA. Saturday mornings at Best Invest are best avoided.

JohnRo

3 months in and the investments seem to be cruising along reasonably well. I've recently opened an account with TD to try and take advantage of their cost free regular investment account & platform (can't last forever I suppose but might as well give it a go) and switch some of the investment plan into their lower ongoing charge funds.

One such fund I'm looking at making future contributions towards with TD direct is the Kames High Yield Bond B inc which has the lower 0.5% AMC when compared to the 1.0% AMC A class I currently hold with Best Invest, but then bizarrely incurs a 0.5% fund charge with TD which brings it right back in line with the cost of the A class units I'm currently purchasing/holding. Frustrating..

The retail investment environment strikes me as a right mess when it comes to clarity, talk about muddy waters.. and I can certainly understand the need for and sentiment behind the RDR. Just hope it does all pan out for retail investors as intended this year.

JohnRo

I'm still trying to develop a clear investment strategy, one question mark is about profit taking. A bird in the hand.. and all that..

Just posting to canvass opinion and gain some insight, I can't see the point in not taking any profit periodically if a set of conditions are met. One consideration I have is looking at the portfolio every 6 months or so and cashing in a fund entirely if a set percentage gain of say 15% is achieved in that period.

I'm 3 months in to this portfolio and some funds are showing 10%+ gains which had initially been (perhaps unrealistic) an annual target for me with this plan. The complication is that the funds are predominantly income unit flavour which I'd chosen for allocation flexibility and I can't quite get my head around how that would play out by regularly cashing in and rebuilding versus staying all in and collecting the periodic distributions on an increasingly larger pot. The other complication is the ISA wrapper which would lock in cash at 0% interest unless I withdraw it and just play the game with the annual allowance.

Any thoughts on fund portfolio profit taking and what amounts to effectively resetting an investment plan periodically?

The portfolio returns are shown below, % is the ROI at last valuation. There's a small chance the (far too long imo) fund transaction and settlement delay could sting me but I'd be willing to take that risk with a fund showing something like a 15% gain.

Perhaps ETFs would be better suited to this type of plan.

currently,

Core Holdings - regular monthly contributions

BLACKROCK GLOBAL PROPERTY SECURITIES EQUITY TRACKER A Acc +7.2%
KAMES HIGH YIELD BOND A Inc +2.7%
VANGUARD EMERGING MARKETS STOCK INDEX GBP Inc +6.0%
VANGUARD FTSE DEVELOPED EUROPE EX-UK EQUITY INDEX Inc +9.6%
VANGUARD FTSE UK EQUITY INDEX GBP Inc +3.6%
VANGUARD GLOBAL BOND INDEX GBP Inc +0.1%
VANGUARD GLOBAL SMALL-CAP INDEX Inc +8.4%
VANGUARD JAPAN STOCK INDEX GBP Inc +6.7%
VANGUARD PACIFIC EX-JAPAN STOCK INDEX GBP Inc +5.4%
VANGUARD UK INVESTMENT GRADE BOND INDEX GBP Inc -0.3%
VANGUARD US EQUITY INDEX Inc +5.4%

Pricing opportunity Funds

ABERDEEN GLOBAL ASIAN SMALLER COMPANIES D2 GBP Acc +10.3%
ABERDEEN GLOBAL EMERGING MARKETS SMALLER COMPANIES D2 GBP Acc +9.5%
AXA FRAMLINGTON BIOTECH R Inc +6.9%
AXA FRAMLINGTON GLOBAL TECHNOLOGY R Inc +6.6%
AXA FRAMLINGTON HEALTH R Inc +7.9%
F&C US SMALLER COMPANIES 1 Inc +10.8%
FIRST STATE GLOBAL RESOURCES A Acc +3.6%
INVESCO PERPETUAL GLOBAL FINANCIAL CAPITAL R Inc +8.1%
LIONTRUST UK SMALLER COMPANIES Inc +1.8%
M&G JAPAN SMALLER COMPANIES A Inc +11.7%
THREADNEEDLE EUROPEAN SMALLER COMPANIES C1 Inc +13.2%

Linton

JohnRo wrote: »

I'm still trying to develop a clear investment strategy, one question mark is about profit taking. A bird in the hand.. and all that..

Just posting to canvass opinion and gain some insight, I can't see the point in not taking any profit periodically if a set of conditions are met. One consideration I have is looking at the portfolio every 6 months or so and cashing in a fund entirely if a set percentage gain of say 15% is achieved in that period.

........

A mistake in my view, particularly with funds which because of their broad investment base are much less likely than individual shares to be temporarily over or undervalued due to a local market quirk. Having cashed in the fund what do you do with the money? Leave it in cash and possibly miss further market rise? Take a punt on another fund, presumably one you explicitly or implicitly rejected when you chose to buy the first one? Why should the second fund do any better than the first?

No, funds are for the long term, to be bought because you believe that what they invest in has a good chance of long term return or possibly because they fill a gap in the diversification of your portfolio.

gadgetmind

All of these (with the exception maybe of IP Global Financial Capital, which I also hold) look like long-term holdings and you should do little other than rebalance every year or so. Depending on how your pot compares to ongoing contributions, you could just use these to rebalance.

You may want to consider if value has been outed in the IP fund and perhaps also look at quite how many smaller companies funds you hold.

But the main thing is to start thinking about asset allocation rather than recent performance.

atush

I agree, I would not sell funds unless I was rebalancing or market conditions had changed so much I wanted the money elsewhere.

with single shares, I most often take profits in the 50-100% up range.

Jegersmart

I disagree that all fund holdings have to be held for years. I rebalance when market conditions warrant it, not some annual exercise to ensure average returns. It is so annoying when people continuously spout this rubbish ad nauseum....

imho

J

Linton

Jegersmart wrote: »

I disagree that all fund holdings have to be held for years. I rebalance when market conditions warrant it, not some annual exercise to ensure average returns. It is so annoying when people continuously spout this rubbish ad nauseum....

imho

J

You shouldnt get annoyed when people disagree with you nor immediately assume that what they are saying is rubbish.

I would say that worrying about market conditions is what a trader should do. But trading is for individual shares and perhaps indices. Many funds are very different beasts, it makes no great sense to trade them in my view. One doesnt rebalance to get average returns, one rebalances because one has pre-decided that a given proportion of funds in different areas gives the desired overall risk/return and diversification. Having done this it makes sense to rebalance when the actual %s vary significantly.

In any case rebalancing is very different to selling at a specific gain. If all funds increase at the same rate then one wouldnt rebalance but presumably the OP would sell some of all of them and buy something different.

srcandas

Jegersmart wrote: »

I disagree that all fund holdings have to be held for years. I rebalance when market conditions warrant it, not some annual exercise to ensure average returns. It is so annoying when people continuously spout this rubbish ad nauseum....

imho

J

Yes couldn't agree more. Each situation has to be considered on it's merits.

But I understand when one sees what looks like a short-term unexpected rise, like the 25% in Japan's main index in 2 months, that one might feel the need to protect that profit.

However the questions I think one needs to ask are:

• is nn% a large movement for the fund?
• Is the current fund value above the long-term average?
• Are there factors that make you think the current positive run will come to an end?
• Can you find somewhere better for the money (as others have said)?

If one is tempted to jump ship on say 15% profit because it seems like a big mustn't loose profit perhaps the funds are too volatile for the investor's risk tolerance. They might also like to ask if they would jump ship if the 15% was a loss and not a gain?