Starting Cautiously

The_Fiddler_2

I'm thinking of starting to build up a portfolio of funds. I would like to start with cautious funds so I was thinking of Property and High Income Funds. Are there any other sectors I should consider?

cloud_dog

The_Fiddler wrote: »

I'm thinking of starting to build up a portfolio of funds. I would like to start with cautious funds so I was thinking of Property and High Income Funds. Are there any other sectors I should consider?

I would think that property might be considered slightly high risk considering the point of the cycle (although no one has a crystal ball).

To answer your question it depends on your age, how much you have to invest, and your timescales. Additionally the markets are very nervy at the moment so any investment is high(ish) risk.

cloud_dog

BMWobbleU

cloud_dog wrote: »

I would think that property might be considered slightly high risk considering the point of the cycle (although no one has a crystal ball).

Good call, look what happened to British Land and Meadowhall property today http://business.timesonline.co.uk/tol/business/markets/article2595484.ece

dunstonh

Property funds come in various risk profiles. You can get the higher risk property share funds or lower risk commercial property bricks and mortar funds and then a number of proprety funds that do a bit of both. Pure bricks and mortar funds are still ok.

As for high income, are you talking high yield equities or high yield bonds or both?

The_Fiddler_2

I haven't picked out particular funds yet, but would I be right in thinking the bonds would be slightly less risky.

I am edging towards equity type funds though I think.

The_Fiddler_2

Might it be an idea to stick in a tracker fund or 2 as well?

jimatko

For property funds you may wish to look towards property investment trusts. These are trading about 25% discount to net asset value (or they were last week), yet they were earlier in the year trading at nav. If you invested in a property oeic or unit trust you would be buying at nav.

There are more risks with them as often they will have borrowing and of course the discounts can widen. That said many asset managers are getting their property exposure through investment trusts.

You can have a look on Trustnet for more information and see variouos time periods etc (this will show nav and share price). The one I looked at last week was the Invista Foundation Property Trust (although it is still listed as Insight).

Remember that most investment trusts do trade at a discount to nav so they may never go back to this.

The_Fiddler_2

What is nav?

cheerfulcat

NAV = Net Asset Value, or what the underlying investments are worth ( very simple answer ).

LittleVoice

NAV = Nett Asset Value. For funds this often means value/price per share. That is total value of fund divided by the number of shares.

EdInvestor

The ITs also have lower charges and pay higher dividends, typically 5% or more these days.