How do you consolidate your gains?

135

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  • cogito
    cogito Posts: 4,898 Forumite
    ColdIron wrote: »
    Don't confuse yield (the proportion of the share price paid as dividends) with growth (increase in share price) or total return (the product of both). Many companies, or investment companies, with good share price growth pay little or no dividend

    Quite. You have to look at the total return which, to me, is the only thing that matters. I'd rather invest in companies like Unilever and Diageo than Glaxo which is sustaining dividends by paying them out of borrowed money. It's yielding 6% but the shares are down 15% over 5 years. And still income fund managers are buying it.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    jamei305 wrote: »
    As opposed to reallocating money from well-managed funds into badly managed ones? ;)

    Why would you own a poorly managed fund at all?.......well in fact the majority of people who own managed funds could describe them as poorly managed if they fail to beat their benchmark. If you use tracker funds and reallocate between broad asset classes you are just going with the cyclical nature of say bonds vs equities and really the only "management" decision is your initial ratio of equities to bonds and the trigger point for the rebalancing.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    StellaN wrote: »
    I think the implication was for consistently under performing funds over a period of time not the difference between 2% in one sector/region over a few months. As an example, at the moment I'm considering my holding in Fidelity Asian Values in my ISA account and whether I should switch to Invesco Asia Trust or Schroder Asia Pacific Trust. Its done well long term but I'm just not sure about whether its the right investment for me in that region in the future.

    Why are you considering this change?
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • StellaN
    StellaN Posts: 354 Forumite
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    bostonerimus wrote: »
    Why are you considering this change?

    Well as I said it has done well for me over a period of time, however I am leaning towards a switch because I feel the large Asian technology companies will continue to perform well. FAS is more focused on value smaller companies, which is fine, so its just down to personal preference on the overall holdings sector/regions of each trust
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    StellaN wrote: »
    Well as I said it has done well for me over a period of time, however I am leaning towards a switch because I feel the large Asian technology companies will continue to perform well. FAS is more focused on value smaller companies, which is fine, so its just down to personal preference on the overall holdings sector/regions of each trust

    So this isn't really rebalancing or consolidation.....it's a change in investment strategy going from asian value/small cap towards more asian large cap. That's something I've never even thought about.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • gif1
    gif1 Posts: 42 Forumite
    I thought that by rebalancing you are in a way forced to sell (high) some of your good holdings and to buy more in your underperformers that will automatically turn out to be chaep-ish. In a bull run the underperformers could be cash,gold, fixed interest. I was asking about gain cristallization rather than strategy changes.
    Thank you
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    gif1 wrote: »
    I thought that by rebalancing you are in a way forced to sell (high) some of your good holdings and to buy more in your underperformers that will automatically turn out to be chaep-ish. In a bull run the underperformers could be cash,gold, fixed interest. I was asking about gain cristallization rather than strategy changes.
    Thank you

    That's the usual way rebalancing is thought of. As retirement gets closer people often also move away form equities to less volatile fixed income assets, the extreme being buying an annuity....that's the ultimate in consolidation.

    The momentum approach where you buy more of the good performers sounds to me like "selling low and buying high", but it's advocates will point you to research papers that show that such an "inverse rebalancing" strategy produces excellent results as more often than not previous winners will be future winners. Of course try telling that to Woodford's investors.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • aroominyork
    aroominyork Posts: 2,820 Forumite
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    bostonerimus wrote: »
    So this isn't really rebalancing or consolidation.....it's a change in investment strategy going from asian value/small cap towards more asian large cap. That's something I've never even thought about.
    We know you wouldn't think about it since you kindly tell us your investment strategy on a daily basis. For us active folk growth/value, small cap/large cap are issues we consider. It gives us something to worry about :).
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    edited 16 May 2018 at 4:34PM
    aroominyork wrote: »
    We know you wouldn't think about it since you kindly tell us your investment strategy on a daily basis. For us active folk growth/value, small cap/large cap are issues we consider. It gives us something to worry about :).

    Yes, I can't imagine what that must be like, but more seriously it isn't really rebalancing or consolidation. To me those concepts imply a feed back loop to get back to an initial allocation between asset classes or funds which often have different amounts of risk/volatility and maybe a strategy to eventually de-risk.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • aroominyork
    aroominyork Posts: 2,820 Forumite
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    edited 16 May 2018 at 4:53PM
    gif1 wrote: »
    I thought that by rebalancing you are in a way forced to sell (high) some of your good holdings and to buy more in your underperformers that will automatically turn out to be chaep-ish. In a bull run the underperformers could be cash,gold, fixed interest. I was asking about gain cristallization rather than strategy changes.
    Not necessarily underperformers. You expect some asset classes (and funds within classes) to outperform others so if, eg you want a 60/40 equity/bond split so in a rising market you would expect to periodically sell equities to get your bonds back to 40%. Now if only there was a type of fund that did that for you automatically...
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