UK Funds vs US Funds

masamoah

Hi guys
I have just signed up to Barclays and want to invest in funds. I am looking to have investments for about 10 years. I was talking to a friend yesterday, and he said you were better off investing is US funds instead of UK funds. His reasoning was that the US market is a lot better. How true is this? Would you guys agree that i am better off investing in US funds?

colsten

You should have a balanced portfolio. Just UK or just US isn't balanced.

Plenty of reading about on the subject of balanced portfolios. One is here: http://monevator.com/asset-allocation-construct/

Linton

masamoah wrote: »

Hi guys
I have just signed up to Barclays and want to invest in funds. I am looking to have investments for about 10 years. I was talking to a friend yesterday, and he said you were better off investing is US funds instead of UK funds. His reasoning was that the US market is a lot better. How true is this? Would you guys agree that i am better off investing in US funds?

I assume you mean UK funds that invest in the US rather than US based funds.

To minimise risk you need to invest in a wide range of things. So just investing in any one country is not recommended, whether its the UK or the US. As you are just starting off I would suggest you choose a general fund that invests across the world. Such a fund would normally hold more US shares than UK ones simply because the US is a much larger market. But it would also hold a fair amount of European and Far East shares.

Once you have say £10K-£20K invested you could reasonably consider adjusting the %'s by investing in specific countries or types of company.

economic

people will say US stocks look overvalued etc etc, however the price is the price and theres a reason there is more demand for US stocks over UK stocks. I would say medium-long term US stocks will continue to outperform especially with the dollar continuing to rise.


why has it outperformed? capital flight. I don't see the world improving considerably and more likely to get worse (EU, Asia, EM etc). and where is a safe place to park capital now? bonds - no. cash - no. commodities - no way. only real place is US stocks.

bigadaj

masamoah wrote: »

Hi guys
I have just signed up to Barclays and want to invest in funds. I am looking to have investments for about 10 years. I was talking to a friend yesterday, and he said you were better off investing is US funds instead of UK funds. His reasoning was that the US market is a lot better. How true is this? Would you guys agree that i am better off investing in US funds?

Just wondered why you have signed up to Barclays, I'm not aware it is the best deal for most people in mist scenarios.

Default asset allocation would be to follow the balance of world markets, so near 50% in the us, and around 10% uk, though home bias is followed by many so a little more uk and less us would be common for many uk investors.

mozboz

Balanced is best. Consider investing into a World MSCI.

dunstonh

masamoah wrote: »

Hi guys
I have just signed up to Barclays and want to invest in funds. I am looking to have investments for about 10 years. I was talking to a friend yesterday, and he said you were better off investing is US funds instead of UK funds. His reasoning was that the US market is a lot better. How true is this? Would you guys agree that i am better off investing in US funds?

Either option is a bad way to invest. You should aim for a balanced portfolio with amounts allocated to all major sectors. Not pick 100% in any one sector.

Your friend is also wrong about US being better than the UK as its not as simple as that.

The FTSE100 is an awful index for example. But the FTSE250 has performed much better. US Large Cap has outperformed UK large cap in 4 of the last 6 years. However, UK large Cap outperformed US large cap in 6 of the 7 years prior to that. you cant really go back much further than that and apply forward thinking as the US is no longer an emerging market but a developed market.

UK small cap has consistently outperformed UK large cap. Although the thing to remember is that none of these are on the same risk level. So, you need to factor in risk and volatility as well.

No-one knows what the future will bring. The under performance of US large cap i the early part of the millennium was mostly down to US specific issues. The US drives many global markets but can still suffer things specific to the US which will have less impact globally. In future, China is going to have ever increasing impact. Don't rule out Europe either. It outperformed US in 2 of the last 3 years. This is why you diversify. You dont know what is going to be best in future. So, you dont put it all in one area.

Dird

bigadaj wrote: »

Default asset allocation would be to follow the balance of world markets, so near 50% in the us, and around 10% uk

I'm 60% UK, 20% US, 9% JP, 9% EU :eek: up by £0.80 so far:T

dunstonh

Dird wrote: »

I'm 60% UK, 20% US, 9% JP, 9% EU :eek: up by £0.80 so far:T

Where is your Asia? Emerging market? Property? Fixed Interest? (the latter two are unnecessary if you are looking at speculative levels of risk)

Dird

dunstonh wrote: »

Where is your Asia? Emerging market? Property? Fixed Interest? (the latter two are unnecessary if you are looking at speculative levels of risk)

It's pretty much all in Japan:
Healthcare 21.60%
Technology 20.63%
Industrials 17.02%
Consumer Defensive 13.23%
Consumer Cyclical 11.54%

Portfolio overall is "35% cyclical, 37% sensitive, 28% defensive" for whatever that's worth...at least it looks kind of balanced between the 3. Bonds are less than 1%

mike88

The Original Poster's next question ought to relate to the best and most economical way to invest in funds. I would love to know why he thinks Barclays is the best bet.