Global tracker or managed fund for these troubled times...?

C_Mababejive

As an example, in my SIPP i have HSBC FTSE all world index C acc
I currently have a regular small monthly investment in it and am prepared to up the investment on the dips as i did a few months back.

But if I were invested in a managed global fund, could i expect that fund managers would seek to protect capital in times of stress or is this simply not part of their remit for many such funds? If not, then what are they being paid for? Surely capital preservation is important?

Having said that ,in times of stress do managed funds dip a lot less than index funds ?

eskbanker

It isn't really tenable to generalise about how managed funds are run or what their performance profiles are, but doubt that many are focused on capital preservation as such, as that can be achieved just by sticking your money in a savings account!  Each managed fund will have documentation outlining its objectives, approach, etc, (and it's compliance with those aims that the managers are paid for) so you'll need to identify what you're hoping to achieve and then find which vehicles are most appropriate for your needs....

bundoran

Times are always troubled. There's always something going on.  

If you've got a strategy you like then just carry on doing what you always do.  🙂

C_Mababejive

I know im painting with a broad brush so to speak but it just seems like common sense. Highly paid fund managers whos base remit is to generate wealth for clients,see clouds gathering ,signals in the system,,souldnt they seek to preserve wealth rather than let previous gains go down the plug hole? Sell holdings and buy back cheaper etc ..?

Moe_The_Bartender

If you’re interested in capital preservation, you should be looking at CGT or PNL or their OEIC equivalents, CG Absolute Return and Troy Trojan. They do exactly what it says on the tin.

Prism

The equity fund managers have got no idea better than anyone else which way the markets are going to move. The honest ones will openly tell you this. They might well react to changing conditions to a small degree when they see an opportunity but rarely move away from their general remit. Selling and rebuying lower rarely works for anyone.
The fund managers of the various wealth preservation and multi asset funds have more scope to move things around a bit but again you will find it is often reactively than somehow predicting what might be ahead.

ColdIron

Not all active funds are equal. Just because a fund is actively managed by a manager, rather than by a computer tracking an index, it does not that mean they all have the same objective. A fund with a wealth preservation remit would be expected to hold up well in falling markets but under perform in rising markets. Consider Troy Trojan with a large allocation to bonds and gold. A 100% equity fund would be more volatile, it would capture the gains in a rising market but suffer in falling markets. If I had invested in an equity income fund for the dividends, I would be more than a little put out if it abandoned that remit just because we were in the growth phase of the economic cycle

If not, then what are they being paid for?

They are being paid to achieve the fund's stated objective

dunstonh

But if I were invested in a managed global fund, could i expect that fund managers would seek to protect capital in times of stress or is this simply not part of their remit for many such funds? 

Both are 100% global equity and both will be required to invest 100% in global equity.      If you wish to look for more defensive options then you need a fund that caters for that.  Some funds are more flexible in their remit.

If not, then what are they being paid for? Surely capital preservation is important?

They are being paid to invest in global equities.    Capital preservation is not important in a fund that does not have that as a remit.

its a bit like asking why a European (ex UK) fund doesn't have Japanese holdings in it.

Having said that ,in times of stress do managed funds dip a lot less than index funds ?

It depends on the remit, risk and style of the fund.

Highly paid fund managers whos base remit is to generate wealth for clients,see clouds gathering ,signals in the system,,souldnt they seek to preserve wealth rather than let previous gains go down the plug hole?

If that is what you want then put yourself in a fund that does that.  However, don't expect a fund that hasn't got that remit to do it. 

Thrugelmir

C_Mababejive said:

Having said that ,in times of stress do managed funds dip a lot less than index funds ?

On the basis that funds are currently flowing inwards at the current time. Managed global funds can avoid buying the crude. 

C_Mababejive

Thanks all for your input. As i always say, the stupidest questions are the ones that are never asked

Prism

C_Mababejive said:

Thanks all for your input. As i always say, the stupidest questions are the ones that are never asked

I realised I didn't actually answer your question. For me its a managed fund but not for the reasons of protecting capital at certain times. I don't want them to chop and change or try and predict downturns for me. One of the reasons that I generally use managed global funds is because I believe that the managers will give me better protection from a downturn without making changes to their investment style - which has so far proven true, for me.