Anybody with Investment Fund Experience Please?

expeditionist

Hi guys

I'm trying to get my head around some investment funds please. I normally just buy funds that invest in equities, however, two of the funds available to me have been doing quite well recently, but I've always given them a swerve because I'm not clear what market triggers are likely to send the value of these funds up and down. One fund owns long dated UK gilts and the other fund owns foreign debt bonds:

https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=ESLDG1

https://www.trustnet.com/Factsheets/Factsheet.aspx?univ=P&fundCode=0AFLS

Does anybody have experience of these fund types please?

Thanks

Eric_the_half_a_bee

What asset allocation are you aiming for?

Pincher

Does June 23rd 2016 mean anything to you?

WeBuyAnyBonds.com , or QE?

expeditionist

Eric_the_half_a_bee wrote: »

What asset allocation are you aiming for?

A complicated answer to that, but in short, my health isn't good and because of my circumstances I'm only really interested in attempting to grow my wealth as quick as possible, I'm not really concerned about having a balanced portfolio - so high risk, possible high return, never mind about a balanced asset allocation.

I do have other equity funds in things like gold/precious metals sector equities and emerging markets equities and I'm not proposing to just ditch those because they're looking good. That said, the two funds above have done quite well in the last week or so and I'd like to know what the triggers are, just for understanding as much as anything else.

I'm thinking that the UK gilts fund went up due to the BOE base rate cut and the foreign debt fund went up due to the value of sterling. Is that correct? And what other triggers might happen in the future?

expeditionist

Pincher wrote: »

Does June 23rd 2016 mean anything to you?

WeBuyAnyBonds.com , or QE?

Obviously, but what triggers might subsequently cause the fund investing in UK gilts to slow down or fall in value?

Pincher

expeditionist wrote: »

Obviously, but what triggers might subsequently cause the fund investing in UK gilts to slow down or fall in value?

With Fixed Income, interest rate and credit rating are main factors.

Watch The Big Short, where credit rating of bundled mortgage debt was fraudulently kept high. And then splat. :eek:
Heard of 2008, credit crunch?

expeditionist

Pincher wrote: »

With Fixed Income, interest rate and credit rating are main factors.

Watch The Big Short, where credit rating of bundled mortgage debt was fraudulently kept high. And then splat. :eek:
Heard of 2008, credit crunch?

:question:

OK, so from that I could guess that the sharp rises in the value of the fund invested in UK gilts are short term and unlikely to continue indefinitely and that the value of the fund will settle eventually - because the triggers were Brexit and the UK's credit rating drop and then the BOE base rate cut, there aren't new triggers happening daily like with equity funds?


I've seen The Big Short and thought it was brilliant, maybe I need to watch it again!


What about the foreign debt fund? https://www.trustnet.com/Factsheets/Factsheet.aspx?univ=P&fundCode=0AFLS

What triggers are causing a fund like that to rise or fall over a longer duration?


:question:

bigadaj

Emerging market debt will be performing well for a range of reasons. Low interest rates means it's more attractive, the fall in sterling will have helped given that much if it is demoninated in dollars.

More simplistically people are chasing yield and are just simply more happy to take on more risk, the quality of the debt hasn't really changed but to maintain an income people are keener and more accepting of higher risk investments.

Pincher

Another trigger:

http://www.bbc.co.uk/news/business-37031793

Bank of England bond-buying programme hits trouble

The Bank had offered to buy government bonds, or gilts, as part of its new quantitative easing (QE) programme to stimulate the economy.

But the bank fell £52m short of its £1.17bn target when it failed to find enough sellers.


Even Kamikaze buying won't work, it seems.

So if they announce another QE, will it count as a "trigger"?

sorcerer

The answer to me is very simple, don't buy something that looks expensive. In practive this is hard to do, but if you find investments at a fair value, i don't think you will get much wrong.

I don't believe Gilts or certain bonds are fair value at the moment.

ChesterDog

I'm a bit uncomfortable with your focus on triggers.

The underlying trends - driven by many different factors, both short and long term - and the market sentiment to which they give rise often do not lead to readily-identifiable triggers but their effects can be great.