fund choices

westy69

i'm sure its been asked before so apologies but which funds are people investing in and why?

just trying to learn why people pick particular funds

thanks

Graeme7777

Hi,

I guess you can either pay someone to make the fund choice for you (via an IFA or Multimanager fund) or do your own fund selection. If it's the latter so should first decide how much risk you're prepared to take with your investments. If you're young and have money to burn you may be inclined towards funds investing in riskier areas like emerging markets or even single countries; if you're older or less keen to risk your money you'll less to consider more conservative funds.

Once you've established how much risk you're prepared to take, do your homework to try to figure out which countries/regions or industries are likely to prosper in the future, before finding a fund with a manager who has a track record of superior performance.

There's tonnes of data available on the web to help you make these decisions.

Good Luck!

nicko33

Graeme7777 wrote: »

If it's the latter so should first decide how much risk you're prepared to take with your investments.

If you want someone else to make the choices, they will also need to know how much risk you're prepared to take.
If you want them to be able to make appropriate choices.

westy69

i am prepared to do research - as much as i can, i am just wondering what other peoples choices are and why they have chosen that particular fund/s for me medium to high risk

thanks

meester

westy69 wrote: »

i am prepared to do research - as much as i can, i am just wondering what other peoples choices are and why they have chosen that particular fund/s for me medium to high risk

thanks

basically based on:

asset type (bond/equities/property/commodities etc) - which you prefer based on your perceived prospects for it, and the potential returns/volatility
geographical location - again, returns and volatility, your assessment of future prospects
equity area - technologies, small caps, large caps, mid caps, bio tech - based on your view of prspects, volatility, etc.
manager - a few managers add value, and are worth seeking out based on track record. Trouble is random variance (some 'good' managers are merely lucky so far), excess risk-raking (managers generate returns by increased risk relative to peers), and hence the difficulty of identifiying a manager who is truly talented, rather than just typed. You can never be certain.
fund record - good performance relative to sector - but 50% of all funds will outperform and 50% underperform purely based on randomness, so this is a tricky thing to look at too.

cloud_dog

westy69 wrote: »

i am prepared to do research - as much as i can, i am just wondering what other peoples choices are and why they have chosen that particular fund/s for me medium to high risk

thanks

Can't comment on the selections but Hargreves Lansdown has a page listing popular funds:

http://www.h-l.co.uk/fund_research/popular_funds.hl

cloud_dog

jaxxbizkit

excellent post cloud_dog

Quick answer is that there is no perfect fund for everyone. Investing in funds should be looked at long term because when you invest you will immediately lose money due to up front charges (unless you have a deal in place with a broker)

So your fund will have to gain money straight out the door for your investment to rise.

Most of the customers I see investing are looking at two areas mainly:

How much risk is involved
against growth or income

Risky investments are ones that cover equity areas (because if any troubles arise they are the first to fall i.e. 9/11, Northern Rock etc.)
Also funds that invest heavily in Far Eastern companies should be considered high risk at the moment (and have been for some time). This could change though with the olympics being held in the region it could lead to a lot of investment in infrastructure and therefore increase companies values for these countries

Growth against income:

The type of shares or units that you purchase in the fund that you select can also make a difference.

Generally you are faced with two choices. Accumulation or Income.

Income does what it says on the tin. It supplies an income by sharing the profit of the fund with investors. You normally have two choices on what to do with your income (also known as distributions). You can reinvest your payments to purchase additional shares or units. Alternatively you can have this paid to you by cheque or BACS (with most companies)

BEWARE: if you choose income the value of your investment is unlikely to rise by very much as you are having the profit paid to you

Accumulation is where the profit of the fund that you invest in is reinvested back into the overall fund to increase the fund price and hence increase the value of your account

Over time both of these methods just about even out but it depends on whether you wish to receive money whilst saving/investing or not.

Hope that lot helped!

FATHEROFTWO_2

I recently did a lot of research based on picking STAR MANAGERS rather than funds.I found that these managers consitently outperformed and factored in a low to medium risk with a diversified portfolio.These star managers also held the best funds
It attracted a lot of debate and comments
here is the link feel free to add to the thread if you think its relevant.

http://forums.moneysavingexpert.com/showthread.html?t=754729

hope this helps