chiangmai
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Post by chiangmai on Oct 3, 2017 20:08:03 GMT 7
When you write, "global funds", that's just a name like "emerging markets" is just a name, a detailed understanding of the underlying assets and regions is surely the point of the whole exercise? I have four global funds that account for over 40% of my equity assets but each is configured very differently in respect of regions and companies they cover. Surely the point of such broad sectors as "global markets" and "emerging markets" is that one is putting faith in the fund manager to make appropriate asset allocations. For example, in the case of emerging markets, I have no opinion about which of Brazil, South Africa or Indonesia is going to perform best in the next few years. And more specifically, whether individual companies selected from within these markets will perform best. And to be honest, I really don't know how I'd even reach any such conclusions with any sense of certainty. It's a job best left to the professionals. Just look at past track records and work out who appears to have had the better crystal ball. The same sort of logic applies to the flexible allocation sector. I'd rather someone else make the call on how to allocate between equities, bonds, money market/cash and gold at any given point in the market cycle. Faith in a fund manager is one dimension of all of this but ultimately portfolio responsibility for asset allocation rests with the investor, unless of course the investor has chosen to delegate responsibility for asset allocation which probably can't be done effectively unless the entire portfolio is delegated. If for example an investor has say four global funds, purposely chosen for their regional spread and company coverage, reliance on a fund manager to do the right thing can work against the asset allocation required by the investor. It's for those reasons that I think the investor must have an understanding of the detail. Emerging markets however is a much smaller and specialised bucket which I suggest can be delegated, unlike the decision to invest specific percentages in the US, UK or EU for example. To add, flexible allocation is fine because that's an acknowledgement up front that asset allocation has been delegated, in the case of that specific fund.
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Post by Fletchsmile on Oct 3, 2017 20:33:15 GMT 7
For me I spend time assessing the right fund and the right fund manager so I can leave it up to them. I allocate what I'm comfortable to their funds/sectors/focus and let them get on with it. My EM funds are delegated to managers I believe will outperform in EM. Same with the global funds, UK equity income funds and Asian funds. Neil Woodford is a good example. While I occasionally look at his holdings I basically leave a large part of my UK equity income space to him. He has far more expertise and resources available to him. My role was simply to identify and invest with him a couple of decades ago. I'm responsible for the overarching asset allocation and choices at a high level, but I rely on the fund and fund manager to put it to best use in those sectors/ allocations where they see fit. They pick the individual stocks and I wouldn't try to generally second guess The main time I'd take responsibility for the individual shares/stock allocations are where I buy individual shares/ stocks. Otherwise that's a key reason I use a fund. To do the actual stock picking within my chosen sector
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Post by rgs2001uk on Oct 3, 2017 21:25:41 GMT 7
If I aggregate everything I probably have around 40% to 50% in Emerging Markets. I've around 6% in EM funds + over 31% in Thailand (as an EM) I've also around 12.5% in Asian funds and 17.5% in Global funds. Not sure exactly how much of these would be in EM, but it would take me above 40% total. Without Thailand it would be around 15% ball park. The high weighting in Thailand (mainly equities) is simply with living here, and wanting THB assets. In addition to day to day stuff, to pay school fees over the next decade or so, I want something that will reduce THB currency risk and will outperform inflation. School fees tend to rise around 4% a year so THB cash really doesn't cut it for the most part. Although I do make sure there's enough in cash for the next couple of years school fees - as all equities could be asking for trouble A wise man, having Thai assets, those smokie/blether sessions can amount to serious baht, .
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Post by rgs2001uk on Oct 3, 2017 21:39:20 GMT 7
When you write, "global funds", that's just a name like "emerging markets" is just a name, a detailed understanding of the underlying assets and regions is surely the point of the whole exercise? I have four global funds that account for over 40% of my equity assets but each is configured very differently in respect of regions and companies they cover. Surely the point of such broad sectors as "global markets" and "emerging markets" is that one is putting faith in the fund manager to make appropriate asset allocations. For example, in the case of emerging markets, I have no opinion about which of Brazil, South Africa or Indonesia is going to perform best in the next few years. And more specifically, whether individual companies selected from within these markets will perform best. And to be honest, I really don't know how I'd even reach any such conclusions with any sense of certainty. It's a job best left to the professionals. Just look at past track records and work out who appears to have had the better crystal ball. The same sort of logic applies to the flexible allocation sector. I'd rather someone else make the call on how to allocate between equities, bonds, money market/cash and gold at any given point in the market cycle. One of the reasons I stick with the plodders, the dinosaurs of ITs, the usual names with a proven track record, Alliance, Scottish Morgage etc etc.. As for "the professionals" lord help us, have you seen the results and performance figure of some of these so called professionals. Call me a cynic, but I am a firm believer in, there are certain parts of the world, its best just to leave well alone, some of the dross I have been offered over the years, Peruvian Inca Gold Trust, Ozzy Ostrich farms, Bulgarian Winter Games, Brazilian Slums for the World Cup. Greed, its the easiest human emotion to tap into, something for nothing, no thank you, not for me.
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chiangmai
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Post by chiangmai on Oct 5, 2017 6:42:04 GMT 7
The Conservatives seem bound and determined to ditch May, come what, ahem, may!
Replacing May seems like an open invitation for Labour to take power which would be an absolute disaster for the Pound and any associated investments.
The stakes have been raised following the Con. party conference, something to consider perhaps when thinking about diversification.
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AyG
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Post by AyG on Oct 5, 2017 18:22:05 GMT 7
Replacing May seems like an open invitation for Labour to take power which would be an absolute disaster for the Pound and any associated investments. I think one of the mistakes you're making pretty consistently is forgetting that markets respond negatively to uncertainty; valuations are based upon expectations of future income, not what happens today. In the case of May, we have headlines today: "Pound plunges below $1.32 against the dollar following Theresa May's speech" "Theresa May speech disaster continues to weigh on sterling" Electing a stable Labour government would actually boost sterling; markets love stability, that way they can make reasonable estimates of what might happen in the future and so give reasoned valuations. Uncertainty simply depresses value because reasoned valuations simply can't be made.
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chiangmai
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Post by chiangmai on Oct 5, 2017 19:35:31 GMT 7
Replacing May seems like an open invitation for Labour to take power which would be an absolute disaster for the Pound and any associated investments. I think one of the mistakes you're making pretty consistently is forgetting that markets respond negatively to uncertainty; valuations are based upon expectations of future income, not what happens today. In the case of May, we have headlines today: "Pound plunges below $1.32 against the dollar following Theresa May's speech" "Theresa May speech disaster continues to weigh on sterling" Electing a stable Labour government would actually boost sterling; markets love stability, that way they can make reasonable estimates of what might happen in the future and so give reasoned valuations. Uncertainty simply depresses value because reasoned valuations simply can't be made. Thank god your around AyG so you can point out all the mistakes I make pretty consistently!!! A Labour government would boost sterling, really, whatever you're smoking, I'll have some too! That whoosh you hear above your head is the sound of all inward foreign investment departing for more reliable shores, along with all wealth creators earning more than 200k. It's also the sound made by Pounds heading from your pocket into tax receipts as the masses get their nationalised power supply, railroads and health care...good luck with the economic certainty those things bring, invest in the UK you suggest, why take the risk they will reply.
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chiangmai
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Post by chiangmai on Oct 16, 2017 7:10:55 GMT 7
I've been reading everything I can get my hands on and trying to get an education in bonds, the picture that emerges is not a good one so in the back of my mind is a seed that I might look at alternatives.
The problem is that increasingly the behaviour of bonds is now thought to follow equities, which defeat the purpose of holding bonds as a counterbalance to equities in a downturn or crash. As far as I can see this is due (in part at least) as a result of the poor credit quality of newer bonds, their higher risk (in the case of low quality and foreign company/government bonds) plus long durations, this compounded by the shortage of high-quality investment bonds in the market - high credit quality, short duration (under 5 years) bond funds seem to be like hens teeth. I read this morning that the IMF is warning that the global insurance industry could easily be the catalyst for the next crash, the reason being that, in their search for yield to prop up their balance sheets, they are investing heavily in higher risk products that comprise poor quality bonds
So why hold even strategic bond funds when the return is so low and the risk is increasingly high, it must be probable that in the event of a crash, equities will bounce back over time but that same rule doesn't necessarily hold true for bonds and there's no logical reason why they should! It's one thing to accept portfolio drag at low returns, resulting from holding bonds, but it's yet another thing entirely to see the value of the portfolio eroded also.
So, alternatives, none of them look even remotely good, cash, property, p2p, 100% equities,......ideas thoughts or comments anyone?
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Post by rgs2001uk on Oct 16, 2017 21:33:34 GMT 7
Cash, yes,as mentioned before 25% of my portfolio is in NS&I. Property, forget it, back home the taxman will have you. Gold, no chance.
Its a bit like the Grand National, take your pick and back your fancy.
Luckily for me I will pick up two gold plated final salary pension payouts, in truth they aint part of my pension plan, they are something the mrs will inherit. Best make sure she doesnt toss me over the balcony tonight.
So we get back to sqaure one, what is it you want from your investments?
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chiangmai
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Post by chiangmai on Oct 17, 2017 3:15:33 GMT 7
Cash, yes,as mentioned before 25% of my portfolio is in NS&I. Property, forget it, back home the taxman will have you. Gold, no chance. Its a bit like the Grand National, take your pick and back your fancy. Luckily for me I will pick up two gold plated final salary pension payouts, in truth they aint part of my pension plan, they are something the mrs will inherit. Best make sure she doesnt toss me over the balcony tonight. So we get back to sqaure one, what is it you want from your investments? Just looking to add in as much security as I can at this stage. The investments are fine and I'm happy, it's just the bond issues that I need to come to terms with, to hold or not hold, if to hold, what and why. BTW when I wrote property I didn't mean physical; property.
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chiangmai
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Post by chiangmai on Oct 17, 2017 17:04:08 GMT 7
Continuing my journey of understanding about investment markets and products:
I've been following the progress of my holdings on a daily basis for two months so I've got the detailed data. At one point recently I was considering a global tracker and indeed an MCSI tracker is still on the cards. But I thought I'd find out if my holdings were beating the FTSE or not because that would make any decisions on this front easier. I was surprised, net index movements over two weeks saw an uptick in the index of 0.79% which provided a 0.94% increase in the value of my holdings, the index won a majority of higher daily increases increases but my holdings outperformed on downturn days, sinking by a much smaller amount than the index, reassuring in many ways that there is a brake there of some sorts.
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AyG
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Post by AyG on Oct 20, 2017 8:32:17 GMT 7
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chiangmai
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Post by chiangmai on Oct 20, 2017 8:53:21 GMT 7
Thank you for the thought but the article wont allow me access, it's labelled for professional investors only.
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chiangmai
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Post by chiangmai on Oct 20, 2017 16:19:10 GMT 7
Thank you for the article, high yield/low duration is attractive of course but my concern at this moment is the degree to which such bonds are truly defensive and whether or not they will behave very much like equities in a downturn, unfortunately, it looks as though we may not get to know the answer to this until the downturn comes!. I currently hold Royal London Extra Yield and Schroders High Yield Z, I'm holding them not primarily for their income or growth potential but more for their ability to resist downturns and with effective durations of 5.4 and 4.5 they must surely stand a reasonable chance - the standard deviations are 2.82 and 3.85 respectively so really very low. I also have a couple of other bond funds as well as index-linked gilts, the former I am considering swapping out for M&G Optimal Income which looks very promising all around. One of my other bond funds is 24 AM Dynamic Bond Fund which is proving to be a very reliable plodder, nothing exciting by way of returns but it's performance has that feel of reliability to it. Finally, I'm very happy with the composition of my two portfolio's and it's interesting to see how two very different portfolios perform against each other. Overall I'm very pleased with performance hence the emphasis currently is on survivability hence the question earlier about bonds or alternatives.
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Post by rgs2001uk on Oct 23, 2017 21:05:36 GMT 7
Thank you for the thought but the article wont allow me access, it's labelled for professional investors only. From the same link above, www.trustnet.com/news/760260/the-investment-trusts-that-advisers-are-flocking-to-in-2017The most popular member of the sector is Scottish Mortgage (which accounted for 21.85 per cent of Global sector research in the first eight months of 2017), followed by Monks, Foreign & Colonial, The Bankers Investment Trust and Witan.I must be doing something right, I hold SM, Monks, Bankers and Witan.
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