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    • talexuser
    • By talexuser 9th Jul 18, 2:40 PM
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    talexuser
    Defensive suggestions.
    • #1
    • 9th Jul 18, 2:40 PM
    Defensive suggestions. 9th Jul 18 at 2:40 PM
    I've had to rejig the ISA and share account due to an inheritance, have no tax free wrappers left, and have run out of ideas for relatively defensive picks.

    The high income funds are now in the ISA, mostly Global and UK Income with a chunk of Troy and want one other defensive. At the moment looking at Caledonia for the discount with a 2% yield but the OCF of 1.22 looks very high compared to others.

    Outside the ISA I have a bunch of Vanguard ETFs across the world, with global ITs, and for defensive Personal Assets, RIT Capital and Troy. Since Troy is now in the ISA I want to sell the share account Troy and change to something like Capital Gearing.

    Ruffer has a high OCF of 1.16 and has gone nowhere recently, and Lowland looks half decent but all UK.

    I'm not so bearish as to want bonds, since have enough time to weather whatever comes next, but after a lot of googling and reading articles am getting brain sprain looking at fact sheets.

    Any ideas welcome, thanks.
Page 2
    • bowlhead99
    • By bowlhead99 11th Jul 18, 2:25 PM
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    bowlhead99
    I found exactly that with my foray into this type of fund, PAT and Seneca, both down in a mild up market. Not impressed at all.
    Originally posted by AnotherJoe
    PAT has been mentioned on the board a few times before. It's one of my core defensive holdings. Their objective is to "protect and grow (in that order)" your money, which will cause you to miss out potential gains from equities if they're not in the mood to buy them.

    Feeling that a lot of potential investee companies are expensive, they are considerably ex- equities at the moment compared to what they hold when feeling more bullish, and some of their bonds or non equities have come off a bit, with increases in interest rates or exchange rate changes. As a result, they have bobbled around the 400- a share level for a year or so, give or take a tenner. So if you're down, you're only mildly down.

    It's easy of course to say with hindsight they should have been more bullish or bought into different types of companies, or that you should have bought something different because you wanted more upside. It's probably also clear though, that with the position they've taken and the types of companies they hold, if equities had crashed 60% or some specialist markets 80%, an investment in PAT would have looked like a smarter thing to have bought.

    It's not like they are sneakily changing their strategy to something you don't want while keeping you in the dark about it . On their website, you can go back through the last eighty quarterly newsletters to see their attitudes and commentary of the time. Some are a little off piste but they are generally well written and quite insightful, especially compared to certain OEICs that just give you a list of top 10 holdings and a paragraph of text telling what you already know happened, if you're lucky.
    • AnotherJoe
    • By AnotherJoe 12th Jul 18, 10:54 AM
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    AnotherJoe
    PAT has been mentioned on the board a few times before. It's one of my core defensive holdings. Their objective is to "protect and grow (in that order)" your money, which will cause you to miss out potential gains from equities if they're not in the mood to buy them.

    Feeling that a lot of potential investee companies are expensive, they are considerably ex- equities at the moment compared to what they hold when feeling more bullish, and some of their bonds or non equities have come off a bit, with increases in interest rates or exchange rate changes. As a result, they have bobbled around the 400- a share level for a year or so, give or take a tenner. So if you're down, you're only mildly down.

    It's easy of course to say with hindsight they should have been more bullish or bought into different types of companies, or that you should have bought something different because you wanted more upside. It's probably also clear though, that with the position they've taken and the types of companies they hold, if equities had crashed 60% or some specialist markets 80%, an investment in PAT would have looked like a smarter thing to have bought.
    Originally posted by bowlhead99
    Almost exactly 13 months, its down 4.28% compared to Dow, FTSE100, FTSE 250, Fundsmith all of which are anywhere from 4%-15% up and Lindsell Train 25% up!

    I didnt expect a fund whose job is to "protect my assets", to be down over an up period. Maybe its my expectation. Flat was what i was expecting.

    Yes, I agree its hindsight and that with a crash maybe it would have done much better but my possibly flawed thought process is, if its down in a substantial up period, whats it going to be like in a down period?
    Last edited by AnotherJoe; 12-07-2018 at 10:56 AM.
    • bowlhead99
    • By bowlhead99 12th Jul 18, 11:48 AM
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    bowlhead99
    I didnt expect a fund whose job is to "protect my assets", to be down over an up period. Maybe its my expectation. Flat was what i was expecting.
    Originally posted by AnotherJoe
    per Trustnet, starting at Monday 12/6/2017, its total return to today is negative 2%

    Maybe you are not looking at total return, and are ignoring dividends received and reinvested - then you'd get negative 4% on account of taking money out of the product. If so, care should be taken to ensure you are also taking comparable figures from other funds (ie the version of the performance figures which assume you throw the dividends in the bin instead of keeping them or reinvesting them).

    Anyway, if flat is what you say you are expecting you can't really complain about something that bobbled around up or down 2 to 4 percent. In the context of potential find performance, that's basically flat.
    Yes, I agree its hindsight and that with a crash maybe it would have done much better but my possibly flawed thought process is, if its down in a substantial up period, whats it going to be like in a down period?
    The whole point of funds that aim to preserve your capital is that when the highly concentrated equities-only fund falls 60%, they don't.

    It's not like you can say, "ok this fund underperformed an equities index by 10% or more in a market positive for equities, so my expectation is that when the market is negative for equities and an index drops by 50%, this fund will underperform the index again by 10% or more and be down by 60% plus... EEK emoticon help help what is going on this ain't what I bought it for".

    It seems to be doing what it said on the tin albeit a better result would have been preferred. It's not like you didn't know they were bearish when you read the reports and looked at the composition of their holdings before you bought.
    Last edited by bowlhead99; 12-07-2018 at 11:50 AM.
    • AnotherJoe
    • By AnotherJoe 12th Jul 18, 12:01 PM
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    AnotherJoe
    First deal: 15 June 2017

    Overall gain/loss: (4.28%)


    And thats a good point I've ignored dividends so it is actually about 3% however the numbers i posted above for Fundsmith etc etc also ignore dividends.


    I'm probably not cut out to hold defensive funds.
    Last edited by AnotherJoe; 12-07-2018 at 12:04 PM.
    • talexuser
    • By talexuser 12th Jul 18, 12:17 PM
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    talexuser
    I've already got PNL and bought it for the next downturn. If I'd wanted a good return while the bull still runs I'd have bought another fund and accepted the increased overall risk (but not Lindsell Train at a 20% premium!).
    • chockydavid1983
    • By chockydavid1983 12th Jul 18, 12:25 PM
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    chockydavid1983
    Well, three mobile centre-halves with wing-backs pushing on seems to be working out OK at the moment, but if you really don't fancy the traditional flat back four you could always try deploying a sweeper....
    Originally posted by eskbanker
    Not sure this is the best defensive suggestion atm :-).
    • talexuser
    • By talexuser 12th Jul 18, 12:36 PM
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    talexuser
    I think I'll split the difference with Bankers in the ISA for the yield and Capital Gearing outside the ISA for the bonds and property (even though it's largest fund is Vanguard Japan ETF which I already have!).
    • Prism
    • By Prism 12th Jul 18, 12:39 PM
    • 469 Posts
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    Prism
    I don't try and find a single fund that mixes assets to make it defensive but split my total pool into two. Cash (and theoretically bonds though I currently don't have any) for now and downturns. Equity funds for growth.

    I do however try to be defensive in my fund selection. So I have large percentage holdings in Fundsmith and Lindsell Train along with a health tracker. Small cap UK funds are also very low on the volatility scale, although would eventually struggle like most other funds in a full scale crash. I know that some will be scratching their head at my belief that two huge global active funds and UK small caps are in any way defensive but I am hopeful.
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