Managed Investment Question

Hi,

I'm playing around with the % for funds allocation in my Managed Investment Fund, and had a couple of questions.

At the moment, i've got:
1. Property Securities (40%)
2. Global Resources (20%) and
3. High Growth (40%)

The percentages are what goes into them every time I put money in, or I get distributions.

I've worked out, that from what I've invested, the Funds are down by:

1. Property Securities = -74%
2. Global Resources = -38%
3. High Growth = -31%

My question is:

1. Should I changed my allocations, so that more of my Distributions and money I put in myself go to say Property Securities or Global Resourses (as they've done the worst), so that I am technically buying a lot more units, and then when they recover that fund will be very healthy, or, change the percentages into High Growth as that fund hasn't done so bad, and then not worry too much about the other two?

What would you guys do? Advantaged/Dis-advantages?

Thanks.
Paul.

 

Hi Paul

Lets get this straight from the start. Nobody can predict what asset classes will perform in the future. If you could, you'd be a Zillionaire!

In a major crash, every asset class starts to correlate. ei It all goes down.

The idea is to split your assets, according to your risk tolerance. A split between bond and shares. ei 40/60, 50/50, 60/40. Holding bonds does two things. a)bonds don't drop with shares. b) Because of a, you have less inclination to sell.

You should use all asset classes. They are: Cash, Fixed Interest, Bonds, Property, Aus shares(small and large), Foreign Shares(small and large), Foreign property and Bonds, Emerging markets, Global resources, and perhaps precious metals.

First work out your bond allocation. Then choose your asset mix. Rebalance at least once a year to lower risk. There are heaps of asset allocations you can find on the web to meet your personal requirements. I can get you some websites if you are interested.




Cheers, Johny.

 

Hi Johny,

That would be great, thanks

 

Some Portfolios

http://www.bogleheads.org/wiki/Lazy_Portfolios

Risk Capacity Survey

Choose 25 questions option.

Model Portfolios Canadian Couch Potato

replace Canadian with Australia.



Hope these help,
Johny.

 

Just edited sites, should work.



J.

 

Also

http://travismorien.com/invest_FAQ/content/view/40/54/

and

Beginners' Guide to Asset Allocation, Diversification, and Rebalancing




Johny.