Can funds actually go bust?

Chippy99

dunstonh wrote: »

That isnt a problem as if the OP cannot handle a small 25% drop now then they are not going to be able to handle a 25% or greater drop later. So, no point reinvesting into that area.

Until the OP understands currency risk and how currency fluctuations in both Sterling and the investment area impact on returns, they are probably best suited to limiting investment selections from areas of high currency fluctuations.

Why do you feel the need to lace your posts with this sort of condescending style, implying - no, pretty much saying - that you think people are stupid?

"Until the OP understands..." etc? Do you honestly think this subject is so immensely difficult that someone with a solid maths grounding cannot grasp the concept of currency impact on foreign funds? Leave out the snide comments eh?

Chippy99

[Deleted User] wrote:

Hi,
You first posted on Tuesday and have moaned since, so why didn't you sell on Tuesday and cut your loses?

Oh to have a crystal ball eh? We'd all be multi-millionaires.

In my original post, I explained that I am prepared to invest in this fund for the long term. I just don't like seeing losses or underperformance. Who does???

Chippy99

Prism wrote: »

Just that it is entirely normal for funds to behave like this. Some are more volatile than others - it doesn't make them bad funds or a bad manager. What are you going to do when all of your funds do this together during a crash.

One question is why is this drop bothering you? I assume you don't need the money any time soon?

I'm not overly stressed about it, merely a bit disappointed. I'm far from an expert in this field (obviously) and I am fortunate that the rest of my portfolio has done very well I think, having only started investing a few years ago. And no, I don't need the money for perhaps 15 or 20 years or so.

aroominyork

And now, back to the records.

This thread, and the other one this week about Jupiter India, opened my eyes to something I had not quite understood about the benefits of passive investing. I’ve been DIYing since last summer with an active portfolio not too different in regions/sectors from VLS (maybe slight higher risk and more smaller companies) and have outperformed VLS by a couple of percent.

What this week made me realise it that it is in falling markets where passive investing gives an edge to investors without rock steady nerves. Because you cannot trade your index fund in its constituent parts you are more likely to stick with it, whereas an active investor might look at, say, a European smaller company fund that is falling faster than other sectors and panic sell at a low.

So it’s not so much that passive investing performs better – it’s that it protects you from yourself.

ColdIron

It's not really a feature of passive investing, you can get India trackers as well as other single sector trackers and if you make a horlicks of the allocation or have them as distinct funds where you can meddle you can get into the same position. The advantages you relate are a property of global or highly diverse funds where someone or something else determines the allocation for you and tucks it away in a single fund. You get that 'protection' regardless of active or passive

aroominyork

True, ColdIron. I should have said that I was thinking about after you have chosen your % equity allocation and whether to go for global all cap or UK/home bias... and having just one (or, in boston's case, three) funds.

PS Yes, I guess there are some active equivalents like Baillie Gifford Managed.

Linton

Chippy99 wrote: »

Of course, I was just responding to the suggestion that Nifty 50 is down 7% over the last 12 months. It is 4.3% up.

Let me try to explain it to you. The nifty 50 may be up 4.3% in rupees. However if you as a UK investor wanted to invest in it 1year ago you would need to switch your £ s into rupees and buy the shares. Then to realise your alleged 4,3% gain you would now have to sell the shares to get the proceeds in rupees and exchange those rupees for£s. Sadly the amount of £s you got would be rather less than the number of £s you started off with a year ago because the value of the rupee has fallen against the £ more than the 4.3% rise in rupees.

The same thing happens with you buying units in the Jupiter fund. You pay in £s. The fund exchanges the £s for rupees and buys shares the fund manager likes. If you want to know the value of your units in £s today it would be translated from the rupee price using current exchange rates.

Chippy99

Linton wrote: »

Let me try to explain it to you. The nifty 50 may be up 4.3% in rupees. However if you as a UK investor wanted to invest in it 1year ago you would need to switch your £ s into rupees and buy the shares.

Thank-you and I can see you mean well, but please let me assure you, this is extremely obvious and I am fully aware of it.

I have many funds held in different currencies and am particular watchful of the GBP/USB exchange rate as it affects other funds I hold - such as Fundsmith Equity for example. When I started this thread, I was not aware that the Rupee had fallen by as much as it has against the pound, which explains some of the poor performance of the Jupiter India fund, but not all of it.

Thanks again.

RobStaffs

I have purchased around £12k of units of Jupiter India over the last few years and its currently valued at £9k. I actually switched some funds yesterday and used it buy some more units in Jupiter India. I am not panicking (yet). I don't see me touching any capital or income from my portfolio for another 5 years so I will sit tight whilst monitoring it. My emerging market portfolio is not doing so good either.

RobStaffs

Here is an article on Jupiter India which was published on Citywire on 5/10/18.
https://citywire.co.uk/money/jupiters-vazirani-reels-as-major-oil-call-backfires/a1162443