selling at loss and reinvesting in something else?

eastmidsaver

hi,
i have a portfolio of about 7 or 8 funds..... all of them are down.   
some are down more than others,  but i think the average loss in the portfolio is about 25% 
before the crash ii was around 10% up,  so it's been a big drop.
i am thinking of selling them all and just reinvesting into something else.
unsure if this is a wise thing to do...  or just keep holding .

eskbanker

Key factors in your decision should obviously include what you're currently invested in, what your objectives and timescales are, and what your risk tolerance is - if you're hoping for any guidance from anyone on here then you'd need to share that at a minimum in order for posters to have some sort of clue about how appropriate your current portfolio is and if/how it could be improved....

eastmidsaver

that's fair enough.
basically my portfolio consists of a couple BG funds,  JPM emerging markets,  rathbone global,  a couple small cap funds,  a couple others.
all of them performed fairly well over 2021 (except JPM),  now they all are down  (but i imagine most funds will be).
however,  my goal now is just make things more simple for myself.

masonic

Ouch! Sounds like a risky portfolio (a global index tracker would have lost about half what you have), and I'd guess it is above your risk tolerance, but the following questions might help probe that: Would you invest in them today? How would you feel if they lost another 20-30% from here?

Edit: I guess I missed the most important question of all, what will you invest in instead?

InvesterJones

Shares don't generally care about what point in the past you bought them, so the question is almost always: If you were starting afresh at today's prices, where would you invest? If you thought they were suitable investments at the price you bought them, then aren't they an even better investment at today's lower prices? Or has something changed in your circumstances that means you have a different risk profile than when you started?

Albermarle

 but i think the average loss in the portfolio is about 25% 

Virtually all investments have dropped this year, but 25% is towards the top of the range, highlighting that the investments you have chosen are all pretty high risk.

A more typical medium risk diversified portfolio has probably lost about half of that.

So one obvious question is what was the reasoning behind picking these funds ?

JohnWinder

 If you were starting afresh at today's prices, where would you invest? 

Widely said, makes sense, but somehow jars with me for reasons I doubt.
 Here’s one: I think it assumes that the new decision to invest today is to be more rationally made than the original decision that got us to this point. If it’s not, then it would be unwise to sell and buy, I think.

dunstonh

Virtually all investments have dropped this year, but 25% is towards the top of the range, highlighting that the investments you have chosen are all pretty high risk.

Or low risk and heavy in gilts.  Gilts have dropped upto 35% this year.

older_and_no_wiser

I did something similar when I rebalanced my portfolio about 2 years ago. I went from a fairly low risk (safe?) default pension provider plan. This was the point at which I started learning about funds and asset classes. I was starting from very little knowledge and didn't appreciate the volatility that could be expected from more aggressive/risky funds. At that point everything was on the way up and investing was easy. I looked the performance history of BG American and thought that was the golden ticket. I put way too much into it and soon saw the massive ups and downs over the following months. Fortunately, I moved a fair amount out of it into a multi asset fund (HSBC Global Strategy) and a global index tracker (Fidelity World Index P). I did this once it had recovered and I was back out of the red with it.

I still have a proportion of my portfolio in BG American, BG Emerging Markets and a Marlborough UK Micro Cap. However, I see these as satellite funds and although they are all way down currently (I dare not look!), I am not planning on touching them for a very long time. I retire in around 4-5 years but will not need to use those funds for retirement withdrawal for 20+ years if at all.

I learnt (eventually) that a lot of managed funds are more volatile/risky and they shouldn't be part of my main portfolio as I'm too close to retirement and I value my sleep at night!

InvesterJones

JohnWinder said:

 If you were starting afresh at today's prices, where would you invest? 

Widely said, makes sense, but somehow jars with me for reasons I doubt.
 Here’s one: I think it assumes that the new decision to invest today is to be more rationally made than the original decision that got us to this point. If it’s not, then it would be unwise to sell and buy, I think.

The point of asking is that it doesn't make any assumptions - it makes you look at the reason you invested and asks you to question if anything has changed in those reasons - if not, there's no reason to sell because you'll come to the same decision if investing now.

JohnWinder

Mmmm. I looked at the reason I weighted my investments so heavily in UK, which was a belief in a heavy home bias. What has changed is the UK market has been shocking, so now I’m going all into emerging markets because they’ve done so well over the last 10 years. So there’s a reason, but it’s less rational thinking that my first decision was based on. The epithet would have me change investments, but I don’t think it’s a sound decision. What have I missed, or sneaked in?