Deciding when to sell a losing fund

Peter.Siffredi · 5 January 2022 at 11:14AM

Hi,
Around 8 months ago, I invested £10K into a Baille Gifford fund (global discovery accumulation). I picked the fund due to good past performance, the fund sector, the top 10 holdings and information I could find on the managers and fund rating looked good/OK.

The fund has had one of it's worst performances on record over the last year (down 20%). I'm torn whether to leave the funds in or simply sell out now - currently I've set a price target of £19 before selling (it's currently at £22).

I'm after some advice/opinions on what others do when they're holding a losing stock or index.

Thanks,
Peter

MEM62 · 5 January 2022 at 11:51AM

Sell and all you do is crystalise your losses - a rookie mistake. 8 Months is a short time to hold an investment - you should be looking much longer-term.

Retireby40 · 5 January 2022 at 11:52AM

Stock doesn't always go up. Some years yes. Some years no. But over a long period of time 5-10 years things should even out and if it is a good investment you should see some profit.

When you invested, did you plan on taking the money out after 8 months?

If it was sitting at +20% would you withdraw it?

Like I posted in another thread. Patience is the key. What your stock looks like today and in 10 years could be 2 very different things.

london21 · 5 January 2022 at 11:55AM

Investing is a long term game.
8 months is short.
What were your objectives when you started, has it changed?
Although past performance do not always determine future performance.

I have a number of funds, only Baillie Gifford managed fund is in the red but not selling will ride it out.

Audaxer · 5 January 2022 at 11:55AM

I don't know the fund, but had a quick look and it is a high risk fund gaining 76% in 2020, so it is going to be volatile. The Annualised Returns over 10 years is over 19% which is pretty good. I personally wouldn't sell and chrystallise my losses unless there is some reason for you to believe it won't recover. I'm thinking more along the lines of it might be a good time to buy.

Peter.Siffredi · 5 January 2022 at 11:58AM

Thanks - all valid points! You're right I should think longer term :-).

I guess one of the main differences for me is that with an individual stock, you can look at company\business performance and make a "relatively" good assumption about future prospects, but for an index, it's a lot harder.

grumiofoundation · 5 January 2022 at 11:59AM

Peter.Siffredi said:

Hi,
Around 8 months ago, I invested £10K into a Baille Gifford fund (global discovery accumulation). I picked the fund due to good past performance, the fund sector, the top 10 holdings and information I could find on the managers and fund rating looked good/OK.

The fund has had one of it's worst performances on record over the last year (down 20%). I'm torn whether to leave the funds in or simply sell out now - currently I've set a price target of £19 before selling (it's currently at £22).

I'm after some advice/opinions on what others do when they're holding a losing stock or index.

Thanks,
Peter

What would you do with the money if/when you do sell?

Audaxer · 5 January 2022 at 12:08PM

Peter.Siffredi said:

Thanks - all valid points! You're right I should think longer term :-).

I guess one of the main differences for me is that with an individual stock, you can look at company\business performance and make a "relatively" good assumption about future prospects, but for an index, it's a lot harder.

If I had bought an individual stock and it had lost 20% in 8 months I would be worried, but much less so with a well-diversified fund or IT.

grumiofoundation · 5 January 2022 at 12:33PM

Peter.Siffredi said:

Thanks - all valid points! You're right I should think longer term :-).

I guess one of the main differences for me is that with an individual stock, you can look at company\business performance and make a "relatively" good assumption about future prospects, but for an index, it's a lot harder.

BG global discovery is not an index fund (and is not aiming to track an index)

maxsteam · 5 January 2022 at 1:10PM

Imho, the time to sell is around the time that you decided to call it a "losing fund". Markets fell in March 2021. If you bought almost any fund in April, May or June, after that fall, you should be looking at a profit now. It's got to be your decision but I think that by labelling the fund "losing" you have made the decision.