Defensive suggestions.

AnotherJoe

bowlhead99 wrote: »

PAT has been mentioned on the board a few times before. It's one of my core defensive holdings. Their objective is to "protect and grow (in that order)" your money, which will cause you to miss out potential gains from equities if they're not in the mood to buy them.

Feeling that a lot of potential investee companies are expensive, they are considerably ex- equities at the moment compared to what they hold when feeling more bullish, and some of their bonds or non equities have come off a bit, with increases in interest rates or exchange rate changes. As a result, they have bobbled around the £400- a share level for a year or so, give or take a tenner. So if you're down, you're only mildly down.

It's easy of course to say with hindsight they should have been more bullish or bought into different types of companies, or that you should have bought something different because you wanted more upside. It's probably also clear though, that with the position they've taken and the types of companies they hold, if equities had crashed 60% or some specialist markets 80%, an investment in PAT would have looked like a smarter thing to have bought.

Almost exactly 13 months, its down 4.28% compared to Dow, FTSE100, FTSE 250, Fundsmith all of which are anywhere from 4%-15% up and Lindsell Train 25% up!

I didnt expect a fund whose job is to "protect my assets", to be down over an up period. Maybe its my expectation. Flat was what i was expecting.

Yes, I agree its hindsight and that with a crash maybe it would have done much better but my possibly flawed thought process is, if its down in a substantial up period, whats it going to be like in a down period? :eek:

bowlhead99

AnotherJoe wrote: »

I didnt expect a fund whose job is to "protect my assets", to be down over an up period. Maybe its my expectation. Flat was what i was expecting.

per Trustnet, starting at Monday 12/6/2017, its total return to today is negative 2%

Maybe you are not looking at total return, and are ignoring dividends received and reinvested - then you'd get negative 4% on account of taking money out of the product. If so, care should be taken to ensure you are also taking comparable figures from other funds (ie the version of the performance figures which assume you throw the dividends in the bin instead of keeping them or reinvesting them).

Anyway, if flat is what you say you are expecting you can't really complain about something that bobbled around up or down 2 to 4 percent. In the context of potential find performance, that's basically flat.

Yes, I agree its hindsight and that with a crash maybe it would have done much better but my possibly flawed thought process is, if its down in a substantial up period, whats it going to be like in a down period? :eek:

The whole point of funds that aim to preserve your capital is that when the highly concentrated equities-only fund falls 60%, they don't.

It's not like you can say, "ok this fund underperformed an equities index by 10% or more in a market positive for equities, so my expectation is that when the market is negative for equities and an index drops by 50%, this fund will underperform the index again by 10% or more and be down by 60% plus... EEK emoticon help help what is going on this ain't what I bought it for".

It seems to be doing what it said on the tin albeit a better result would have been preferred. It's not like you didn't know they were bearish when you read the reports and looked at the composition of their holdings before you bought.

AnotherJoe

First deal: 15 June 2017

Overall gain/loss: (4.28%)


And thats a good point I've ignored dividends so it is actually about 3% however the numbers i posted above for Fundsmith etc etc also ignore dividends.


I'm probably not cut out to hold defensive funds.

talexuser

I've already got PNL and bought it for the next downturn. If I'd wanted a good return while the bull still runs I'd have bought another fund and accepted the increased overall risk (but not Lindsell Train at a 20% premium!).

chockydavid1983

eskbanker wrote: »

Well, three mobile centre-halves with wing-backs pushing on seems to be working out OK at the moment, but if you really don't fancy the traditional flat back four you could always try deploying a sweeper....

Not sure this is the best defensive suggestion atm :-).

talexuser

I think I'll split the difference with Bankers in the ISA for the yield and Capital Gearing outside the ISA for the bonds and property (even though it's largest fund is Vanguard Japan ETF which I already have!).

Prism

I don't try and find a single fund that mixes assets to make it defensive but split my total pool into two. Cash (and theoretically bonds though I currently don't have any) for now and downturns. Equity funds for growth.

I do however try to be defensive in my fund selection. So I have large percentage holdings in Fundsmith and Lindsell Train along with a health tracker. Small cap UK funds are also very low on the volatility scale, although would eventually struggle like most other funds in a full scale crash. I know that some will be scratching their head at my belief that two huge global active funds and UK small caps are in any way defensive but I am hopeful.