How much to invest in conviction funds

Thrugelmir

bostonerimus wrote: »

Buying Fundsmith etc is momentum only is as much as people buy the hot properties ie those with the strategies that are working now or have been working for the past few years.

Global trackers have been a form of momentum investing. As it's the wall of investors money that has driven stock prices higher. With just 110 global equities accounting for 80% of all trades in 2018. That's a very narrow selection given the thousands available.

David_Evans

Thrugelmir wrote: »

Global trackers have been a form of momentum investing. As it's the wall of investors money that has driven stock prices higher. With just 110 global equities accounting for 80% of all trades in 2018. That's a very narrow selection given the thousands available.

Regular passive tracker investment is value and momentum - depending on the market at that time.

Thrugelmir

David_Evans wrote: »

Regular passive tracker investment is value and momentum - depending on the market at that time.

Trackers are indisciminate. By their very nature they are weighted towards rising stocks. As new money flows in. Which creates a self fulfilling prophecy.

A lower price doesn't equate to value. Value occurs when a stock is oversold. Finding value is very difficult in the major indices as news events are tracked so closely minute by minute on the global exchanges.

bostonerimus

Thrugelmir wrote: »

Trackers are indisciminate. By their very nature they are weighted towards rising stocks. As new money flows in. Which creates a self fulfilling prophecy.
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Yes, I agree with this which is why things can get nasty when the bubble bursts. So whether you have a global tracker that has run up on the likes of Facebook and Amazon or a conviction fund, it's probably a good idea to take some profits off the table once in a while and I'm not sure how often people are doing that.

Aminatidi

bostonerimus wrote: »

You obviously have a well considered plan and understand the risks and I imagine will deal with them well, but most people don't which is why I'm dubious about conviction funds for the average investor and would prefer to see them in a multi-asset fund made up of index trackers.

I think that's a fair view on it.

I would never think I'm a better investor than Terry Smith or Nick Train or Keith Ashworth-Lord or I wouldn't entrust them with my money.

But I'm also not sure I'd hand them my money and then never ever look at what they were doing with it.

I like to be engaged and know where I'm invested.

If I wanted to "fire and forget" then I'd be much more inclined to go passive or active passive.