Stocks increase but fund decreases?!?!

NewKidOnTheBlock_2

How can it be that the individual stocks that the fund is invested in are up 1.5%, 2.3%, 0.89% etc but the fund is down 1.7%?

I just don't get how that is possible. The last few days the stocks are pretty much always been positive but the fund just keeps losing money. It's down like 4% now despite a week straight of positive stocks. /

bowlhead99

Do you have a full list of the 50+ stocks that the fund holds and the proportions in which it holds them? If not, how do you know that the stocks are all up and the fund has moved in the opposite direction from the weighted average company value?

What is the fund? Last Friday afternoon the FTSE100 index was at 7040 and on Monday morning it was at 7080. As of this Thursday it was down to about 6970 at close, having been below 6900 earlier in the day. So, stocks have not been going up straight for a week. Of course, your fund probably doesn't hold all the FTSE100 stocks in the same proportions as the index anyway.

If the stocks you are looking at are US ones, be aware that a $158 share is now worth £100 but two weeks ago when the rate was only $1.51 to the pound, that share might have had a lower price (say $155) but was worth more pounds (£103). So with a US fund all the share prices are up but the pound value of your fund is down.

Also be aware that there is probably a delay between you seeing the share price of a company and the fund value being published once a day, the next day. If it is an investment trust, the price of the trust can go up or down independently of underlying value of the assets, due to supply and demand.

Also if a fund goes ex-dividend its price will drop (because it now officially owes the shareholders their dividends) even if the individual shares it holds in the portfolio are the same or slightly up from where they were a week ago.

So, there are lots of reasons why the fund price might not be moving directly in line with observed share prices. However, the most likely explanation is that you don't have all the data on what is held and in what proportion.

NewKidOnTheBlock_2

I can't see every stock but I can see the top 10 which covers 50% of the fund and they're all up by 0.50% to 2.50% and the fund will say -1.70% but how can it be possible?

Then sometimes it says the fund is +0.40% but when I check the value of my shares it will be less than it was the day before. So even though the fund is +0.40% I will still have lost some money somehow.

The psychological game is starting to come into play... When the fund was making money it was all good but now it's starting to lose money I'm trying not to panic. I just keep telling myself markets do this all the time... doesn't mean the market is going to crash just because it's lost 5% in 1 week right? lol

Glen_Clark

NewKidOnTheBlock wrote: »

The psychological game is starting to come into play... When the fund was making money it was all good but now it's starting to lose money I'm trying not to panic. I just keep telling myself markets do this all the time... doesn't mean the market is going to crash just because it's lost 5% in 1 week right? lol

Thats what shares do - move up and down. More successful investors than me have said you should only check your share prices once a year when you rebalance. Checking them more often leads to elation and depression, which leads to bad decisions

In_For_A_Penny_2

What is the fund?

masonic

NewKidOnTheBlock wrote: »

I can't see every stock but I can see the top 10 which covers 50% of the fund and they're all up by 0.50% to 2.50% and the fund will say -1.70% but how can it be possible?

Then sometimes it says the fund is +0.40% but when I check the value of my shares it will be less than it was the day before. So even though the fund is +0.40% I will still have lost some money somehow.

There are a couple of factors that can lead to this. First of all, the top 10 holdings will tend to be in the largest companies that make up the fund and be relatively less sensitive to price falls. They only make up 50% of the fund, so even if they are up a couple of percent on average, the other 50% of the fund could be down 2%, or 5% or 10%... It might also be the case that the top ten holdings are in sectors that are doing better than those that make up the rest of the portfolio. It is also possible that the valuation you see of your portfolio is not using the latest unit price and you are not comparing like with like.

The psychological game is starting to come into play... When the fund was making money it was all good but now it's starting to lose money I'm trying not to panic. I just keep telling myself markets do this all the time... doesn't mean the market is going to crash just because it's lost 5% in 1 week right? lol

Are you invested above your risk tolerance? It certainly sounds as if you are. The market might crash in the coming weeks. If you are invested appropriately, you shouldn't particularly care what it does in the short term.

dunstonh

Depending on the fund, it can be priced upto 3 days behind (1 day or 2 days behind is most common).

The psychological game is starting to come into play... When the fund was making money it was all good but now it's starting to lose money I'm trying not to panic.

You should not micromanage the investments like this. You know they will go down as well as up. Some of the moves on a daily basis could scare you and you are just making it worse. You know they will zig zag so let them get on with it. If you cannot accept the level of volaility you have then adjust it to a level you can accept.

Kendall80

Underlying currency relationships can seemingly lead to the disconnect between fund value and share prices mentioned. I have a europe fund hedged back to Sterling. Usually it rises in line with euro economies but in periods where sterling is depressed (ie leading up to the election) it can return significant losses despite gains on the continent.

NewKidOnTheBlock_2

It's not so much that I'm investing more than my risk tolerance it's just that I'm new to investing and with most things you try for the first time, you're a little nervous. Cheers for the help.

InvestInPoker

OP it's understandable you are nervous. Did you know precisely what you were getting into before you bought into stocks and shares funds? If so then relax and understand to get the long term high return you must have the volatility that comes on the way, it is absolutely necessary.


Spare a thought for all those "clever" people who sold just before the election and missed out on the solid gains on the Friday following.

kidmugsy

If you are a fretter and fidgeter, maybe investing in shares isn't for you.