Are you a risky investor? What is your take on negative funds?

NewKidOnTheBlock_2

So I'm just browsing through the seemingly endless list of funds and stumbled across the Artemis Global Emerging Markets Class I - Acc (GBP)

I know emerging markets are risky as hell and as you can see by clicking on the Chart Performance tab, you can see it;s got off to a bad start. Does the starting success of a fund have an impact on whether you would invest or not?

Your first thought is "the fund is doing bad, avoid it" but I've seen funds that drop -20% when they first start and go on to net +70% over the next 5 years.

So do you avoid negative funds all together or do you see them as a good but risky opportunity to exploit the low share prices in the hope it will stabilise and pick itself up?

Just curious.

**EDIT**

Or it could just keep going south like Sherman

Drp8713

Well first of all you can't really judge a funds performance after a month.


It has underperformed the Emerging Markets index and Investment Trusts like Genesis and Templeton over that period.


But you can't tell why, as I can't even find a factsheet for the fund as its so new, so you can't tell if its underperformed because they have bought badly, or because they are geographically overweight in some countries that have done badly in the last month but actually have good long term prospects.


So buying into a sector or country in a slump is a good was of making sure you don't overpay and might even get a bargain, but a few per cent either way in a funds first month isn't really a buying opportunity for me. Especially when you cant see what it invests in.


I am topping up EM at the moment with GSS though.

Thrugelmir

I'd look at the top 10/20 fund holdings held and the rationale behind the fund managers selecting these companies. Emerging markets hold a multitude of risks for the unwary.

masonic

If it were a fund / manager with a good track record and an investment style that suited me, then I'd see a recent spell of poor performance more as an opportunity than a hindrance.

NewKidOnTheBlock_2

masonic wrote: »

If it were a fund / manager with a good track record and an investment style that suited me, then I'd see a recent spell of poor performance more as an opportunity than a hindrance.

How is it possible to see a list of all the funds that a manager manages? I wouldn't mind looking at their performance. Thanks for th tip.

masonic

NewKidOnTheBlock wrote: »

How is it possible to see a list of all the funds that a manager manages? I wouldn't mind looking at their performance. Thanks for th tip.

On Trustnet, there is a whole section of the site devoted to fund managers, their performance and which funds they manage (here). For example, your Artemis fund is co-managed by Peter Saacke and Raheel Altaf. The former manager might look ok, but most of his record has been built managing developed markets - in fact, it appears he's only been involved with this fund for a month. The other guy, from what limited evidence we have, looks a but unlucky.

Thrugelmir

masonic wrote: »

The other guy, from what limited evidence we have, looks a but unlucky.

Isn't that the nature of fund management. However good a fund manager is. They've no control over the performance of the underlying companies.

masonic

Thrugelmir wrote: »

Isn't that the nature of fund management. However good a fund manager is. They've no control over the performance of the underlying companies.

I used the word unlucky advisedly. Ignoring the index tracker he "managed", all we have is a few years data from a European fund called "Fidelity FAST Optimised European Market Neutral", which doesn't sound like the sort of fund that gives the manager a wide remit to adapt to market conditions. We also know nothing of what he did while he was at Fulcrum Asset Management.

Nevertheless, the data that we do have is not positive. It is not enough data to suggest he is either good or bad, but the fact that it paints a rather negative picture means that he was unlucky, if not in his stockpicking in his assignment to that fund at that time.

bowlhead99

NewKidOnTheBlock wrote: »

you can see it;s got off to a bad start. Does the starting success of a fund have an impact on whether you would invest or not?

As the others said. It's been going a month. In that time it's a couple of percent below the average for the sector. You can try to extrapolate that and say that after a year or so it will be ~20% behind everyone else in the sector, or you can ignore a one month performance stat (which might perhaps include an element of one-off establishment costs?) as an irrelevance. The second stance is probably fairer.

The fund has 3 key themes at launch: Taiwan, China and India accounting for 50%+ of the model portfolio. They use a proprietary model to screen a universe of EM stocks for what they think has good prospects. You can decide that you are not going to invest with them until you see demonstrable results of their approach in this specialist area for a certain period of time, as Artemis has not previously done a dedicated EM fund ; or you can decide that they have had reasonable results from a fairly high EM component within their Global Growth fund using the same or similar stock screening model, and that you like the particular countries or industries in which they say they'll focus, and go with it.

There will certainly be some people that would say to ignore the fund until it has built up its own track record, because Artemis are not known for their strength in EMs and are not touting dedicated teams on the ground in all the key markets; simply they have an approach which they think can work and a person running it who has used similar themes and screening systems in running his European Growth and Global Growth fund for a decade or so with the support of their internal tools and research.

Such people would probably say that a lack of fully segregated performance data for the relevant regions means you can't judge that they are going to deliver something worthwhile for their 1% OCF. It's true that future performance is inherently an unknown, and they are no doubt a credible fund house, but there would seem to be no particular reason to place your money with these guys other than reputation of the fund house itself, and of the individual managers, and of the other growth fund strategies that they have employed in the past.

Doing an adequate job of convincing you of their capabilities is the challenge that all managers face when launching a new product that does not have an observable track record across a multi-decade history. Whether you can obtain sufficient comfort over their strategic approach and historic individual performances to be fully swayed by their pitch and allocate a large proportion of your emerging market allocation to this fund - when the level of detail provided in marketing materials and media interviews for retail investors is inevitably scant (because retail investors are not judged sophisticated enough to receive the same marketing pitches as professional advisors or institutions) - is something that only you can decide.

I would tend to agree with the others that a recent spell of poor performance driving the value of a fund's assets downwards is not necessarily a bad thing, because if they 'revert to mean performance' over the longer term then there may be some baked-in 'upside' when it's their turn to be fortunate next. However, anything can happen in a month. The performance data of this fund tells you nothing.

The only thing that can be said is that if you don't want a relatively high exposure to Taiwan, China and India or to the various industrial or other sectors in which the manager or fund house is known to currently favour based on interviews or sales pitches around this launch, then you should steer clear. If you do want all those things and you do not find a sufficiently compelling opportunity available from other fund managers, and you are not dissuaded by the lack of an explicit track record for this particular combination of fund house, manager and fund strategy, then pile in.

masonic wrote: »

On Trustnet, there is a whole section of the site devoted to fund managers, their performance and which funds they manage (here). For example, your Artemis fund is co-managed by Peter Saacke and Raheel Altaf. The former manager might look ok, but most of his record has been built managing developed markets

He's been with Artemis since 2002 and has been managing / co managing the Global Growth fund for 11 years, and that fund has certainly been overweight emerging markets in recent years compared to many in the global equities sector which have a larger Developed weighting. This is of course different from being a dedicated Emerging Market specialist like, say, Mark Mobius at Templeton.

TH1878

This obviously doesn't apply to every single situation and I've not done any research into it but.....

I reckon that if you select the worst performing asset class over the last two years, it will be one of the best performing asset classes in the next two years, more often than not.

coyrls

VeronikaSmith wrote: »

Spam, spam, spam, spam..........

Reported as Spam, together with the other Zen Assets promoting post in another thread.