Baillie Gifford American B Acc - What To Do?

GSP

masonic said:

GSP said:

dunstonh said:

aroominyork said:

Wow! Easy to read - harder to stomach.

It isn't that bad.  
Here is from 2020:

The things that pushed it up have unwound.

Seeing these types of investments (equities) can have the same cyclical themes, it does make you wonder when you see growth like this should you take your profit when it reaches a certain number, whatever that is for people?

As can be seen, the good times aren’t going to last forever!

The good times never last for ever, but it is impossible to predict when they will start or end. Every positive day could be the last for a while, likewise for each negative day. Investing throughout the ups and downs (in accordance with your risk tolerance) is a fairly reliable way to make a positive return over the long term. Investing regularly improves those odds.

If you rebalance your holdings when they move considerably out of line from your original allocations, then that will itself take care of such extreme moves. Would have involved selling up to 50% of the BG fund near its peak, meaning you'd now be buying some more units near your original price using those profits.

Yes agree it’s impossible to predict, though it seems on the whole these investments will go up significantly, and will go down significantly. To stay invested too long however without doing anything appears as a broadbrush to just waiting for any gains to be lost and going back to square one.

dunstonh

If you are going to use funds like BG American, you need to rebalance your portfolio. If you plan to be a lazy investor, you should avoid funds like that.

TBC15

dunstonh said:

If you are going to use funds like BG American, you need to rebalance your portfolio. If you plan to be a lazy investor, you should avoid funds like that.

How often should you rebalance?

NoviceInvestor1

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

Generally speaking the fund invests in blue sky junk at ridiculous valuations, at one point it was on 120 x earnings. It was a crash waiting to happen, yet the managers were insistent they wouldn’t be taking profits on stocks that had quintupled in a year.

As for your IFA, am I correct in my understanding of their strategy - they put you into yesterdays winners after a period of outperformance, wait for it to underperform and then dump them (crystallising a loss)? How has your overall portfolio performed using this IFA?

dunstonh

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

No. It has a history of having periods of outperformance over a number of years (usually followed by a hit when the cycle changes)

How often should you rebalance?

Once a year is fine.  You want them to go out of sync enough to make it viable.  Too often and you can chase losses in a negative period and miss out on gains in a positive period.

aroominyork

dunstonh said:

Once a year is fine [to rebalance].  You want them to go out of sync enough to make it viable.  Too often and you can chase losses in a negative period and miss out on gains in a positive period.

My guess is that many people do not rebalance 'correctly'. It could be very useful if you felt like writing a more comprehensive note/starting a thread on the theory and practice of rebalancing.

NoviceInvestor1

dunstonh said:

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

No. It has a history of having periods of outperformance over a number of years (usually followed by a hit when the cycle changes)

How often should you rebalance?

Once a year is fine.  You want them to go out of sync enough to make it viable.  Too often and you can chase losses in a negative period and miss out on gains in a positive period.

Outperformance compared to what? Anyone who wanted to overweight US growth stocks would have been better off just buying a cheap Nasdaq tracker for most of the past decade.

GSP

NoviceInvestor1 said:

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

Generally speaking the fund invests in blue sky junk at ridiculous valuations, at one point it was on 120 x earnings. It was a crash waiting to happen, yet the managers were insistent they wouldn’t be taking profits on stocks that had quintupled in a year.

As for your IFA, am I correct in my understanding of their strategy - they put you into yesterdays winners after a period of outperformance, wait for it to underperform and then dump them (crystallising a loss)? How has your overall portfolio performed using this IFA?

While this investment is down over this 50%, my overall pot is down c20% since last December. Be interesting as well to hear how others on here have fared?
And if they have let things ride, or taken action?

aroominyork

GSP said:

NoviceInvestor1 said:

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

Generally speaking the fund invests in blue sky junk at ridiculous valuations, at one point it was on 120 x earnings. It was a crash waiting to happen, yet the managers were insistent they wouldn’t be taking profits on stocks that had quintupled in a year.

As for your IFA, am I correct in my understanding of their strategy - they put you into yesterdays winners after a period of outperformance, wait for it to underperform and then dump them (crystallising a loss)? How has your overall portfolio performed using this IFA?

While this investment is down over this 50%, my overall pot is down c20% since last December. Be interesting as well to hear how others on here have fared?
And if they have let things ride, or taken action?

World equities are down 8-10% since December so this suggests you are quite aggressively positioned. When you chose that strategy, did you consider what you would do if it took a hit?

Thrugelmir

NoviceInvestor1 said:

dunstonh said:

BG American has a pretty average track record, aside from one good year in 2020. A lot of people will have bought it after it’s incredible year and are nursing big losses. 

No. It has a history of having periods of outperformance over a number of years (usually followed by a hit when the cycle changes)

How often should you rebalance?

Once a year is fine.  You want them to go out of sync enough to make it viable.  Too often and you can chase losses in a negative period and miss out on gains in a positive period.

Outperformance compared to what? Anyone who wanted to overweight US growth stocks would have been better off just buying a cheap Nasdaq tracker for most of the past decade.

Far better options available in the US markets than the Nasdaq for growth company exposure. Low entry requirements make for a mixed bag of companies. Tesla had a similar influence on returns on the Nasdaq index as it did on BG funds.