S&S ISA – Managed Funds Learning Curve

Npap28

Hi all,
MSE Newbie here!
In mid-Jan 2020 I took the plunge and invested £7.5k into a few managed funds via HL for the first time, after a lot of thinking/reading/learning from scratch. Not soon after...well, we are where we are as of the 9th March with the market doing what it's doing. Hindsight is a beautiful thing and timing was definitely off.
I was fully aware of the risks when I invested; this is money that I've put into play for the long term (10+years min), so I'm not looking to take it out amidst a sense of panic at watching my investment having dropped c.10% in the past two weeks. Nor is this money that I need immediate access to. 

However, I do have two questions that I'd like to ask as a learning novice (I appreciate both are entirely down to my investing goals/appetite etc so will be answered in general terms, but looking to give myself some context to better future decision making):

• Should I consider my investment as having irreparably failed if it exceeds a certain loss point – say 50%? Or should I trust in what I'm reading about sitting tight if you're invested for the long term, no matter what performance looks like over the next few months?
• In hindsight, is it a more common route to have invested in index funds over managed funds when getting started? 

Again, I realise these may seem like very broad-stroke questions – but any advice and insight from the experienced hive-mind would be fantastic.
Thanks in advance!

dunstonh

Should I consider my investment as having irreparably failed if it exceeds a certain loss point – say 50%?
The dot.com decline period was 43%.  As was the credit crunch.     You would only be looking at those levels if you have 100% equity invested.   Or you have picked high risk assets.   Failure or success is relative to your risk profile.  i.e. if you thought you invested low risk and suffered 50% losses then that is dreadful.

should I trust in what I'm reading about sitting tight if you're invested for the long term, no matter what performance looks like over the next few months?
Yes.    And do remember that so far, this is just a typical stockmarket crash.  It only became classified as a crash today.   You are going to see many of these.

In hindsight, is it a more common route to have invested in index funds over managed funds when getting started? 
When getting started, its more common to use mutli-asset funds rather than single-sector funds (whether managed or passive)

Alexland

It really depends in what investment asset you have bought into. My preference is to own assets that are broadly diversified to avoid the possibility of irreparable failure. If you have just started then a multi asset fund series such as HSBC Global Strategy or Vanguard LifeStrategy are both good. Once the account valuation gets much bigger than splitting the assets into multiple funds can make sense.

However it's cheaper to hold these types of funds elsewhere for example Vanguard Investor charge 0.15% compared to HL at 0.45% platform fee - 3x the price. Cavendish provide lots of fund choice at 0.25%. Or for large or inactive accounts the iWeb £25 setup + £5 per trade can be better value.

Npap28

@dunstonh & @Alexland – thank you both very much for the responses; appreciate the experience here, sincerely.

Ultimately, this experience has taught me a lot about market volatility, timing and risk appetite in a very short space of time.

My lasting worry is that I've chosen the 'wrong' managed funds to invest in (admittedly, this is perhaps more of a combination of seeing such a drastic loss in a short space of time and my naivety on the subject as I learn) – but it's fantastic to know there's a supportive forum of people like yourselves willing to take time out of your day to help. Thank you, both.

Alexland

Don't beat yourself up over timing as short term market movements are almost impossible to predict although having a view of asset valuations relative to long term averages can be useful. Many people do well ignoring timing and just making regular contributions over many years and reducing risk exposure in the asset allocation as they get closer to withdrawal.

What have you invested in?

Npap28

Apologies for the radio silence, @Alexland. I'm invested in the following funds:

Jupiter Merlin Worldwide Portfolio (-19.71% of initial investment)
Hargreaves Lansdown's Portfolio+ multi-manager, which consists of:
HL Multi-Manager Balanced Managed trust (-21.37% initial investment)
HL Multi-Manager Special Situations Trust (-23.57% initial investment)
HL Multi-Manager Strategic Bond Trust (-3.71% initial investment)

I'm trying to not look at the app on a daily basis, but it's becoming increasingly hard to know whether I've not diversified correctly and am not actually watching the market go down, but watching an incorrect combination of funds working in negative harmony (IE; does this look relatively 'normal' for what's going on now?)
As always, any opinion-based insight is welcomed.

dunstonh

 but it's becoming increasingly hard to know whether I've not diversified correctly 

You obviously like paying charges and that is far too many funds for a small amount like £7500.  You just needed one low cost multi-asset fund.

Alexland

I don't know much about those funds as I tend to skim over the expensive ones (fees act as a drag on returns) but on a recent investment those drops don't look unreasonable for the types of assets they probably contain. Raw stock market investments are around 30% down from their peak.

Npap28

Thanks @Alexland and @dunstonh for the replies.
@dunstonh – I've realised that in hindsight (learning as I go and clearly through experience right now!) My ideal plan from here would be to get back to a neutral position (if/whenever that may be) and then sell Jupiter Merlin and HL Special Situations Trust...and move to precisely what you highlighted.
For now, I'm stuck with my decision and have to learn to sit with the uncomfortable reality of watching money drop – but it is showing me how to deal with that situation (tres small silver lining there!)