Should I sell an under-performing fund and invest the money in well performing shares?

eskbanker

DRS1 said:

I remember many years ago sitting in a meeting while some investment managers explained how they were "rebalancing the portfolio".  In a nutshell they were top slicing the winners and reinvesting in the losers.  I thought at the time how mad that was.

Those professionals would be telling the OP to sell the US stock and buy more Lindsell Train.  Maybe not all but enough to get the balance back in the portfolio.

Literally blindly reinvesting in the losers would be rash, but 'reinvesting in markets/sectors/companies that were reasonably considered to have been underperforming but still with growth potential' would be a more justifiable approach!

Cus

DRS1 said:

I remember many years ago sitting in a meeting while some investment managers explained how they were "rebalancing the portfolio".  In a nutshell they were top slicing the winners and reinvesting in the losers.  I thought at the time how mad that was.

Those professionals would be telling the OP to sell the US stock and buy more Lindsell Train.  Maybe not all but enough to get the balance back in the portfolio.

How different is that to rebalancing a portfolio by selling equities and buying more bonds if equities have performed better, so that the equity allocation stays at the original target?

DRS1

Cus said:

DRS1 said:

I remember many years ago sitting in a meeting while some investment managers explained how they were "rebalancing the portfolio".  In a nutshell they were top slicing the winners and reinvesting in the losers.  I thought at the time how mad that was.

Those professionals would be telling the OP to sell the US stock and buy more Lindsell Train.  Maybe not all but enough to get the balance back in the portfolio.

How different is that to rebalancing a portfolio by selling equities and buying more bonds if equities have performed better, so that the equity allocation stays at the original target?

It is exactly that. 

Just to put my point across another way the OP is proposing to remove UK Equity from their portfolio and replace it with more of a single US stock and their reasoning for doing so is the precise opposite of the reasoning those professionals were using.  I think that should give them pause for thought (even if the naive me of 40 years ago thought the professionals were nuts)

DRS1

eskbanker said:

DRS1 said:

I remember many years ago sitting in a meeting while some investment managers explained how they were "rebalancing the portfolio".  In a nutshell they were top slicing the winners and reinvesting in the losers.  I thought at the time how mad that was.

Those professionals would be telling the OP to sell the US stock and buy more Lindsell Train.  Maybe not all but enough to get the balance back in the portfolio.

Literally blindly reinvesting in the losers would be rash, but 'reinvesting in markets/sectors/companies that were reasonably considered to have been underperforming but still with growth potential' would be a more justifiable approach!

I am sure they had every faith in the investment case for where they were putting the money.  It is just that to me it looked like selling the ones which were making money and buying the ones which were losing money.  As I said I was naive and they were the professionals so the OP should pay attention to them not me.

As an aside there used to be an investment strategy of picking the dogs of the something or other.  I believe it was said to be quite effective.

Bostonerimus1

DRS1 said:

I remember many years ago sitting in a meeting while some investment managers explained how they were "rebalancing the portfolio".  In a nutshell they were top slicing the winners and reinvesting in the losers.  I thought at the time how mad that was.

Those professionals would be telling the OP to sell the US stock and buy more Lindsell Train.  Maybe not all but enough to get the balance back in the portfolio.

That might be a good strategy with a good portfolio, but we are talking about a single US stock and Lindsell Train. A re-evaluation of the portfolio is where the OP should begin.