JPMorgan Natural Resources -48% down but still hanging on

InvestInPoker

Don't feed the troll

jabbahut40

Hi,


I got an email from HL this weekend advising me that JPM Natural Resources is no longer part of their Wealth 150 funds. This is not a big issue for me as I suspect that this is more a marketing list for them however did make me challenge why I am still holding onto this fund. I checked my SIPP via the HL website and its currently reporting 56% loss for this one fund which is a hard pill to swallow as per my previous mails.


Rather than switch out completely I was thinking of switching 50% of my holdings in this fund into another sector (probably Europe or EM) as I think these have more chance of growth over the next 5-10 years and I am lighter in these areas in my SIPP. I used the 50% switch technique before as it helps me feel more confident about rebalancing my portfolio piece by piece rather than just making big changes overnight and loose out due to bad timing of trades.


What do others think? Am I crazy realising my losses or should I hang on?


As always, comments welcomed.


Jabba

JohnRo

Jabba, I haven't gone back through the thread but have to ask, have you bet the house on this fund or something?

If it's part of a balanced portfolio then now would seem as good an opportunity as any to be rebalancing this by adding more of it not flogging it off at less than half what you've paid for it?

noggin1980

It's entirely up to you, no one is going to know what will happen, I read an interesting article yesturday though that the investors who use Fidelity as a broker the ones that have done best are the dead ones, the ones who have done second best are the ones who had forgotten they were invested with Fidelity. Investors are just generally our own worst enemy and picking a strategy and sticking to it is more likely to succeed.

Thats not advice though I literally have no idea which of your choices will do better over the next few years.

jabbahut40

JohnRo wrote: »

Jabba, I haven't gone back through the thread but have to ask, have you bet the house on this fund or something?

If it's part of a balanced portfolio then now would seem as good an opportunity as any to be rebalancing this by adding more of it not flogging it off at less than half what you've paid for it?

Hi JohnRo,

No. I suspect that people won't call this balanced however here are the funds I hold in my SIPP with HL. As you can see JPM NR is only a small part of my holdings albeit it used to be a much larger % prior to the loses over the years.

Schroder US Mid Cap Fund 16.4%
Jupiter European 14.4%
First State Asia Pacific Leaders 13.6%
Fidelity UK Smaller Companies 11.1%
Neptune UK Mid Cap Class 11.1%
CF Woodford Equity Income 10.8%
Fidelity Emerging Markets 9.6%
JPMorgan Natural Resources 6.8%
Legg Mason ClearBridge US Aggressive Growth 6.4%

Not sure I want to hold commodities within my SIPP any more let alone buy more JPM NR fund that has performed like a dog. Thanks,

Jabba

masonic

jabbahut40 wrote: »

I got an email from HL this weekend advising me that JPM Natural Resources is no longer part of their Wealth 150 funds.

There you have it, pretty much a 'sell at the bottom' recommendation from HL. Great example of why market timing doesn't work - if HL had any foresight, they would have removed it 4 years ago. I wouldn't take much notice of their hindsight.

JohnRo

JPMorgan Natural Resources 6.8%

That's a hefty allocation imo, personally, at the very least I would just hold what you have in NR, assuming you have an allocation and rebalancing plan that is designed to include it. Let new money in to the others out grow it and use that way to shrink the NR allocation.

It seems completely bonkers to me flogging something off at less than half the price you paid unless you never really wanted it there in the first place and simply took a punt on it going up significantly and cashing out.

If you don't want it there for reasons other than the performance then sell it all, buy something you do want and chalk it down as an expensive but valuable lesson.

I hold BRWM currently ~35% down, which I used to reduce the allocation from 4% to 2% because I want to include a 2% allocation of BRCI, I'm looking forward to the point at which my spreadsheet tells me it needs rebalancing, which will reduce the paper loss significantly and keep my exposure to that investment vehicle at roughly the same level. What I'm not doing is fretting at the "loss" and looking to bail out before it gets worse. If the paper loss gets worse then the rebalance simply becomes even more valuable.

All that said it could be many years before things pick up so there is an element of judgement required in setting the allocation, but I'm convinced the only way to give yourself a fighting chance to come out "winning" is to have a balanced asset allocation and rebalance it methodically. The target allocations might change over time slightly but if you can only use new money in to the others to rebalance your NR exposure then you won't have crystallised any losses at all.

There is a bit of a divestment campaign gathering pace with regard to fossil fuel mining and it may start to have a longer term impact on the wider sector, I've decided to hedge my bets somewhat with a pending investment in TRIG but no idea how it'll all pan out in the final analysis.

Thrugelmir

jabbahut40 wrote: »

What do others think? Am I crazy realising my losses or should I hang on?

Some of your capital has been irrevocably lost. As the companies held in the fund have gone bust. So expecting a full recovery will is totally pointless as will never happen.

marathonic

I've just looked at my pension statement and, since my re-balance 2 months ago, the order of performance, from best to worst, is shown below:

1st: UK Smaller Companies
2nd: SE BAQ UK Equity
3rd: SE JPM Natural Resources
4th: SE BAQ European
5th: SE BAQ US
6th: SE BAQ Pacific Rim
7th: SE JPM EMERGING MKTS

In other words, are you being blinded by your original purchase price when assessing your investments? There's nothing that's happened over the past 2 months that should cause concern in relation to JPM Natural Resources.

masonic

Thrugelmir wrote: »

Some of your capital has been irrevocably lost. As the companies held in the fund have gone bust. So expecting a full recovery will is totally pointless as will never happen.

Surely you do not mean to say that this fund will never recover to its previous high? Unless the fund closes, there is opportunity in the future for a full recovery of the capital value this fund has lost over the past few years.