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Investments for a small downturn?

Heedtheadvice
Heedtheadvice Posts: 2,579 Forumite
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edited 2 June 2014 at 4:32PM in Savings & investments
Equities have done quite well for the past few years and I have some investments in ITs - a mixture of income generation and growth.

Given the probability of QE monies being recovered in the States and possibly a bit later on in the UK and Europe not really taking off too much I feel that now would be a good time to convert some of the gains to a 'safer' investment whilst keeping higher yielding shares for pension income.

Luckily I already have a cash reserve sufficient for my needs (no debts to speak of) and my natural inclination is to invest more in equities (generally for the long term) but feel now is not the time to do so.

At the moment I can only see cash as an alternative for a safer home even with the low rates of interest so I am considering selling some shares and holding as cash for a while and then maybe reinvesting in equities if there is a fall in the market.

I don't really wish to hold more cash owing to the inflation risk so can anyone suggest a good alternative? I am not savvy enough to know about hedge fund investing and the like so am generally not comfortable holding things I don't really understand.
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Comments

  • ChesterDog
    ChesterDog Posts: 1,129 Forumite
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    House Crowd? Peer to peer?
    I am one of the Dogs of the Index.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    I'm holding a fair bit of cash at the moment but am also feeding money into commercial property, EM, mining, and anything else that's been struggling lately.

    Even in high yielding blue chips, there is always something out of favour. Right now it seems to be supermarkets, with Tesco yielding about 5%, but there are lot of other options.

    I quite like buying into out-of-favour sectors via specialist ITs that are also on big discounts, so for example Blackrock World Mining though the discount on that has narrowed a lot recently.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Smithy101
    Smithy101 Posts: 37 Forumite
    Be careful of predicting a downturn just because markets aren't as cheap anymore.
    The issue you have is coming up with an alternative and that's because there isn't one, low interest rates & QE mean there's noting to be made from cash or bonds. This is why I believe equities will remain the place to be.

    I like Blackrock World Mining too because it has a good income stream through buying royalties in mining projects.

    I can't post links but there are a couple of good articles on the WhichInvestmentTrust.com website.
    Also there's a wonderful German Private Equity trust called DBAG. It's been making great money form long term investors since the 1960's. There's an article on the same website and also one on the LPEQ website .
  • juliazaman
    juliazaman Posts: 8 Forumite
    The government agency responsible for assisting and protecting the interests of small businesses, created small- and medium-sized business standards, which are usually stated in terms of the number of employees or average annual receipts.
  • IronWolf
    IronWolf Posts: 6,426 Forumite
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    You could invest internationally, not all markets are booming, EM in particular has done pretty badly the last couple of years
    Faith, hope, charity, these three; but the greatest of these is charity.
  • talexuser
    talexuser Posts: 3,503 Forumite
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    If the pointy is feeling bearish a fund that might suit is Artemis Strategic Assets. The manager thinks QE will turn lead to inflation and is absolutely not a painless panacea. He has underperformed in the recent bull run because keeps a lot of cash, gold, and pays out to hedge his bets to cushion falls in any forthcoming correction. Read up on it and make your own mind up.

    Whether the timing is right, ie we have a correction soon or another couple of years of gains will tell if he is right. Personally I kind of find it hard to believe the fundamentals in the UK justify current valuations.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    talexuser wrote: »
    If the pointy is feeling bearish a fund that might suit is Artemis Strategic Assets. The manager thinks QE will turn lead to inflation and is absolutely not a painless panacea.

    Ditto ITs such as Ruffer and PNL, but the former is something of a perma-bear.
    Personally I kind of find it hard to believe the fundamentals in the UK justify current valuations.

    My UK holdings are only 20% (ish) of my portfolio, and even for those much of the income comes from outside of the UK. Even if the UK stumbles, it's unlikely to impact me too much.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Wilkins
    Wilkins Posts: 444 Forumite
    gadgetmind wrote: »
    I'm holding a fair bit of cash at the moment but am also feeding money into commercial property, EM, mining, and anything else that's been struggling lately.

    I am following a similar strategy, though I would not say that commercial property is struggling.
    Even in high yielding blue chips, there is always something out of favour. Right now it seems to be supermarkets, with Tesco yielding about 5%, but there are lot of other options.
    Hmm . . . topped up on Tesco recently.
    I quite like buying into out-of-favour sectors via specialist ITs that are also on big discounts, so for example Blackrock World Mining though the discount on that has narrowed a lot recently.
    Although, I do not yet regard a big UK correction as likely, the possibility has increased over recent weeks, IMO, since earnings have been somewhat disappointing and there could be a flip in sentiment. As a result, I have more or less stopped increasing my direct equity holdings there (except for the aforementioned). Over the past few months, my main purchases have been ITs with an EM focus, coupled with a steady feed into P2P lending.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Wilkins wrote: »
    I am following a similar strategy, though I would not say that commercial property is struggling.

    A lot of what I've bought has increased 50%-80% on capital terms alone, but I still think it's got a lot more to give during 2014.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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