Do you take profits from top performing funds

Thrugelmir

homerhotspur said:

Thanks, all interesting points. I think I was more thinking about banking some profit from successful funds rather than re-balancing as such.  I probably got distracted by an article which must have been about individual shares and, in theory, it should be down to the fund manager to do this on our behalf.

The fund managers remit will determine what stocks they hold. They'll never liquidate the portfolio and move into cash. That's not what investors are expecting. Don't expect the fund manager you make all the decisions for you. 

[Deleted User]

coyrls said:

You can only rebalance if you have an asset allocation model to rebalance to.

What does that even mean?
Anyone can rebalance by reviewing relative performance of investments at some date (a date which is necessarily arbitrary).
This is a function your financial adviser would like to undertake for you.
But  now the financial services industry advocates "fluid holdings", "satellite funds" and "hybrid portfolios."
Which is a tacit acceptance (without liability for the lost years of growth) that rebalancing generally does not work.

[Deleted User]

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

Broadly speaking there's harm in running your winners. 

With respect, Thrugelmir, that's completely the wrong way round on the evidence of the last ten years.
You have been sitting out certain stocks/sectors for about a decade. Where do you get the authority for your quote above?

I don't recall ever publishing my portfolio or my trading activity. Likewise I have the advantage of having more than the past 10 years evidence to call upon. That's no quote it's a personal opinion. 

If, broadly speaking, "there's harm in running your winners," what is your justification? What is your evidence?

Thrugelmir

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

Broadly speaking there's harm in running your winners. 

With respect, Thrugelmir, that's completely the wrong way round on the evidence of the last ten years.
You have been sitting out certain stocks/sectors for about a decade. Where do you get the authority for your quote above?

I don't recall ever publishing my portfolio or my trading activity. Likewise I have the advantage of having more than the past 10 years evidence to call upon. That's no quote it's a personal opinion. 

If, broadly speaking, "there's harm in running your winners," what is your justification? What is your evidence?

Experience. 

Long term returns (over 10 years held) 

Hasn't stopped me top slicing and buying back in on dips. 

[Deleted User]

A three emoji front.
You win.

AnotherJoe

homerhotspur said:

I've had isa's for a few years now with a diverse bunch of funds. I tend to do a bit of a re-balance of sorts each year based on general advice but have never actively reduced my holdings in my best performing funds to re-distribute elsewhere. I know many people will have a set position such as once a fund has made a certain percentage gain they will sell half and re-invest elsewhere. I have , probably, 3 or 4 funds which have performed exceptionally. On the basis that you don't actually make a gain ( or loss) until selling, should I really be taking some profit as a matter of course to put elsewhere? Or, should I have faith in the fund manager that they will effectively already be doing this within the fund itself? I'm wondering if this practice is more relevant to single share investing?

Thats a value judgement. Unlike most here i dont rebalance, i run my winners be they funds or shares.

IMO rebalancing is more suited to bonds vs equity ,or maybe sector vs sector.

But if you bought a fund for the manager, ora share for the company, then while you think the manager is sticking to the original plan (or a new better one) or the company is still on track, makes no sense (to me) to sell. I can see why others might, but in that case, just buy a whole of market equity fund (or ETF etc) which does that inherently.

dunstonh

homerhotspur said:

Thanks, all interesting points. I think I was more thinking about banking some profit from successful funds rather than re-balancing as such.  I probably got distracted by an article which must have been about individual shares and, in theory, it should be down to the fund manager to do this on our behalf.

The fund manager doesn't rebalance unless you have a multi-asset fund.   The fund manager won't necessarily sell shares in companies that they are considered viable to hold and remain within the fund objectives.

[Deleted User]

The trend of the last ten years is that rebalancing has made poorer the investors on whom it has been practised: 
which is to say nearly everyone reading here..

Linton

ZingPowZing said:

The trend of the last ten years is that rebalancing has made poorer the investors on whom it has been practised: 
which is to say nearly everyone reading here..

What about the previous 10-15 years when failure to rebalance could have lost you a lot of money during the .com boom/crash or the next 10 years during which no-one knows what will happen?   People whose investing experience is limited to the past 10 years are sonner or later going to have an almighty shock.

Better to fail to attain the frothy peak of a boom than to risk the core returns gained when prices were lower.

[Deleted User]

Linton said:

ZingPowZing said:

The trend of the last ten years is that rebalancing has made poorer the investors on whom it has been practised: 
which is to say nearly everyone reading here..

What about the previous 10-15 years when failure to rebalance could have lost you a lot of money during the .com boom/crash or the next 10 years during which no-one knows what will happen?   People whose investing experience is limited to the past 10 years are sonner or later going to have an almighty shock.

Better to fail to attain the frothy peak of a boom than to risk the core returns gained when prices were lower.

Granted, earlier phases may have validated rebalancing. 
The trend will change again but it won't revert to its earlier template: that would be like looking in halfway through a Grand Prix and expecting the finishing order to revert to the starting grid. It's possible but it's never happened yet.