Picking Funds

tryingtogetmyheadaround

OK I know what fund is right for one person isn't right for the next...... So Im not going to ask what fund would people recommend!!!! But I do have a few questions as someone taking a first step into investments and only every had a Vanguard account but now have an EQI account for a Lisa (as they are the only people that will allow a LISA transfer, due to being just over 40)....... So I have to pick some funds, I know I could pick Vanguard 100 / 80 like I already have but want to try something else, due to the lure of better returns!

Where do you start looking for funds, do you just look at the data on the platform you wish to invest in? Is there a website that talks about a funds sustainability? shows historical performance?

Are some Issuers but on the whole than others.

When do look at pulling out of a fund? IE the Baillie Gifford Global Discovery Fund B Accumulation has had what only to me looks amazing growth. In the past few months. I am guessing this cant last, so jumping in now is a higher risk of the investment shrinking or does it not? As If I had that fund for some time would pulling out now be the sensible thing to do and then pick another fund?

BananaRepublic

Quite right, today’s star fund may well be tomorrow’s dud or more probably a modest performer. I recommend you first do some research about investing, markets, bonds etc. 

My approach is to choose the markets and sectors I want to invest in, and then research the performance of funds in each market and sector over the last ten years, or longer if possible. I look for consistent returns, thus 8% a year over ten years beats 3% per year for 7 years followed by three years of high growth, even if the total returns are similar. The latter suggests a bit of luck, the former suggests talent. In some markets index funds are the natural choice, less so in others. Be wary of sectors and investment strategies that are doing well today. You are buying future performance, not yesterday’s. 

You’ll probably be told by many people that index funds beat active funds, and a global index fund is all you need. Decide for yourself. 

Linton

The most important factor when choosing a fund is what it invests in. Many high growth funds are high growth in recent years because they have a high % of tech.  Fine for one or two but you dont want all of your funds high in tech.  Better to ensure that your portfolio covers as wide a range of sectors, company sizes, geographies etc etc as possible.  Which means that whatever fund you choose has to fit in with those you already hold.  In my view medium/long term performance comes from having the right portfolio, not by focussing on individual high performance funds.

So I would always first make a short list of funds that met the right assets criterion. And then when choosing between funds it is a combination of relatively high and consistent performance.  But sometimes there arent any funds that meet the requirements.  It which case a gap may need to be filled by first adjusting the funds one already has.  It may be possible to combine some funds and then look for something that fills the different gap.  For example I use an EM fund both for the more merging side but also to supply one of my three key geographies - SE Asia.

Currently I have a problem with Europe Ex UK large companies.  Like I dont have much in that sector.  Most well performing european funds seem to be high in tech, of which I already have enough.  Perhaps I will reduce my pure Tech fund and partially replace it with a new European large company fund.  But that could mess up the balance elsewhere....

Thrugelmir

If you don't know where to invest , how are you going to achieve better returns?  You might do through luck, more likely you'll be disappointed.  Start with a multi asset fund and then diversify further as your knowledge broadens. 

comment_as...

First make predictions about the world, for example has the death of oil been exaggerated? Will Covid end the Japanese culture of overstaffing?
Then look on Trustnet and iShares for funds poised to do well if you're correct. Look at the top holdings, the sector and geographic breakdown, the management fees and the discount/premium.
Past performance doesn't tell you anything. Just look at what it costs today and what you get for the money.

tryingtogetmyheadaround

Thanks all of the advice.

JohnWinder

comment_as... said:

First make predictions about the world, for example has the death of oil been exaggerated? Will Covid end the Japanese culture of overstaffing?
Then look on Trustnet and iShares for funds poised to do well if you're correct.

That idea has immediate appeal. But what happens if some other big investors, or lots of small investors have already made the same predictions, and as a result bought into those shares pushing the prices up to a level which takes into account those predictions? You're now no longer getting something with special prospects, you're getting something with prospects that have been priced in as has happened with all other companies' shares. You might as well buy anything. For the idea to work, it would seem you have to be either more prescient than almost all other investors, or lucky. Which do you trust for your predictions?

pp556677

You may want to look at a core-satellite approach
I cant post link unforts