Top up funds when theyre low?

hyposmurf

It's meant to be best to buy low sell high regarding funds, but why I have noticed over the last few days is that a few of my funds have just been decreasing.This seems to be across the board with the majority of funds dropping a little.Not too alarming yet but would it advisable now theyre a little lower to buy more units?Or maybe hold out as theyre likely to keep dropping slightly with the US sub prime problems, until this crisis clears up.I don't currently have enough surplus to buy a wedge in another fund but have enough to top up my two existing funds by a small amount.I have a BRIC & natural resources fund.

debbie42

I'd like to buy low and sell high on all my investments: shares, funds, everything else for that matter!

You can read lots of different views on the markets at the moment. Some mainstream FTSE shares have dropped 20-40% this year already: Tate and Lyle, RBoS, Premier Foods to name but a few. Now they are low are they buying opportunities or have they further to fall? Who knows?

You have to invest what you are comfortable with, at the end of the day. Sorry I can't be more help with the specific funds.

hyposmurf

Its probably the hardest part to funds, knowing when to buy and sell.It's possible I may have bought just before things started to dip a little,so although I made over £100 on my investment in a few weeks I have now lost a little on my initial investment.Its tempting to top up my funds as I will be buying new units at a lower rate.But will I be pouring money into something thatll plummit further.Plus the funds could fall further,so I couldve bought them for less or conversally they may start to go back and I'll have missed out on cheaper units.
I think I'll sit around and wait and see what happens.I reckon they have further to gradually fall and I'll sit on it a while until I can see a sign they could be improving.Even then its hard to pick out the true signs from the mass of media coverage on markets.Even a slight trough could be a sign things look better but its alot of guesswork to.I think some of the media arent helping with all their doom mongering.
Am I right in thinking that many of the investors who read articles that proclaim there will be a recession and plummiting shares,panic and sell up and sit on the cash are actually compounding these negative effects in the markets.

steve_IOW

When I have bought fund units in the past,the transaction is not very quick, I think it takes about 2 days in all, that means the Markets could have Risen/Dropped in the meantime, the FTSE has recently gone down about 3% or so in a couple of days,so its a bit of a gamble IMO.
If anybody knows of a quick way to buy Fund units,I'm sure they will post Info.;)
Regards Steve

hyposmurf

Yes there is a delay which is incredibly frustrating.Shame you cant just buy the units for the price they are that day.Bit like going to shop paying for something on your card,the transaction goes through the next day and theyve put the price up the next day so your charged more than you were originally shown.

purch

that means the Markets could have Risen/Dropped in the meantime

Thats the whole point........funds are not a trading vehicle, they are aimed at 'long term' investing

Buying into, or selling out of a Fund is not a decision that should be taken lightly or quickly, or for the short term

If you decide to sell a UK equity fund because the FTSE 100 ( and that index isn't really a good barometer to follow ) has fallen 600 points, then really you should be expecting it to fall at least by the same again pretty soon, or it would be pointless to do so

purch

Its probably the hardest part to funds, knowing when to buy and sell

I think that decision is probably the easiest

The hardest is deciding on your Investment strategy, and deciding how you want to shape your portfolio of funds

Checking the price of your Funds any more frequently than weekly, is a 'mugs' game IMO

Browntrout_2

The reason for the delay is the price is only set once a day, and depending on when your order is rec'd (cut-off) it may be delayed a further day, and even further if redemptions or purchases are abnormally high.

How do Unit Trusts work?

All units of the fund rank equally and at any one time, the value of a unit reflects the total value of the funds under management divided by the number of units in existence. This is known as the Net Asset Value (NAV). Therefore, the value (price) of a Unit Trust is a direct function of the value of assets held by the trust.

Unit Trusts have dual pricing this means there is a price at which you can buy them and a price at which you can sell them. The difference between those prices is called the spread.

They are 'Open Ended' so when new monies are received by the managers, new units are created. When investors withdraw their money from the pool, the units are cancelled in exchange for their cash value, which is returned to investors.

When new monies exceed redemptions, the managers will have additional cash to invest, but if redemptions exceed new monies, then it may be necessary to liquidate some of the fund's underlying investments to meet these redemptions.

See also OIECs

Aegis

purch wrote: »

I think that decision is probably the easiest

The hardest is deciding on your Investment strategy, and deciding how you want to shape your portfolio of funds

Checking the price of your Funds any more frequently than weekly, is a 'mugs' game IMO

I check mine daily

However, I make no changes based on the daily movements, it's purely to satisfy my own curiosity!

As such, I'd say that checking AND ACTING ON your fund prices more than weekly is a mug's game is more accurate, but in reality I suspect that significantly altering your portfolio more than once every few months would be the true mug's game.

FWIW my portfolio has been more or less left alone for the last couple of months now despite a huge surge in value and now a rather large drop. I'm in it for the long run even if I track the value in the short term.

purch

............I couldn't have put it better myself !!

Actually......I could have put it better and Aegis just did :eek:

munk

purch wrote: »

The hardest is deciding on your Investment strategy, and deciding how you want to shape your portfolio of funds

The trouble for me personally as a newbie investor is that I spent ages and ages researching portfolio diversification and analyzing funds so I'd spread the risk across as many sectors as possible. After all that research, I'm eager to see how the investments are doing... so I check my investments every day. However when the markets fall consistently for more than a week or so this is very difficult to see and quite painful - for me at least!

I only started investing back in late august - just after the last 'trough' in the market when the run on the bank had happened. We spent all September and October in a blissful state of idling where no news had been released about banks' 'indebtedness' re subprime, and things were on the up. Personally I was thinking to myself - well this is easy money... if my portfolio continues to rise as it has (about 2.5% in a month) then I'll be well chuffed.

Since then though throughout September the portfolio has fallen on more days than it's risen and now it's actually down by 3.5% or so which is a lot more gut wrenching than I'd thought it'd be - even though my downside risk tolerance for this portfolio was supposed to be 10%. The falls are a lot more painful than the gains are rewarding - a *lot* more.

What gets me is that I've done everything I can to diversify the portfolio but it seems every sector has been hit equally - property, bonds, equities, resources - and all of them are falling in price! And then there's the thought 'what if it just carries on going down' - which amidst all the knowledge of how the markets have been on a bull run for 4 years now doesn't seem so unlikely.

Anyway, starting to sound like the diary of a newbie investor...!

My point I guess with relation to this thread topic is that as a new investor, you hear about how when there's a marked drop in the markets it can often be a good time to rebalance your portfolio - shifting profits from better performing funds over to less well performing funds. However if you've only just started out that's pretty much pointless because your investment hasn't had time to do a lot. What are you supposed to do - just hang tight I guess and try not to check on your investments so often when things are going down (yeah like that's going to happen )...