Managed Funds US Fund / AUD Related

Try uploading it to the photo gallery and linking to it here to display directly in your post.

 

You could take a screenshot of the doc and upload that as a picture ?

 

So, since the beginning of July, if I read it correctly, it looks like the AUD is up about 6%, while the Dow is up about 7%. I assume this would be enough to cancel it all out ?

Of course, if the AUD dropped from here back down to 55c like it was a few years back, we'd all be ecstatic !!

 

Hey handy ... the fund has only been going for 9 months now ... bit soon to claim it can't do 10% for the year isn't it ?

I'm not saying it will necessarily do so, nor am I saying you should stay in it if you aren't happy with it ... but to me, 9 months does not make an annual return ?

I've only just invested, so I'm happy to give it a while yet. It's currently less than 2% of my managed funds portfolio - so no biggie either way.

Not getting any buy signals for it right now though, so no more money going in for now.

 

But if it goes up, wouldn't you want to think about keeping it ?

I say, if you are going to bail, bail now, and make the money work for you.

Otherwise, just let it be and give it 3-5 years to do its stuff.

Either way, you do need to make a decision and stick to it - otherwise it's going to bug you endlessly

I must say that with a larger, more diverse portfolio, I'm much more relaxed about the individual performance of my funds ... I'm quite happy to sell down some of the worst performing ones to invest further in the funds that are hot right now. However, my approach is to only sell when I need the money to avoid going over my personal LVR limit when gearing-up.

Indeed, unless my fund portfolio grows by around 0.8% tomorrow to give me enough buffer for my next investment, on Monday I'll be redeeming part of my worst performing fund at the moment (Platinum Japan), and reinvesting the proceeds into one of my better performing funds (to be determined tomorrow, but probably Platinum Asia).

I won't sell out of Platinum Japan completely (I'll only be selling enough to fund my next investment), and I'm happy to buy back in to Platinum Japan if it turns good again.

 

Also consider Platinum European - it's been a steady performer of late too.

I would usually expect it to take a week or so to get the money in the bank. I'm hoping that swapping between two Platinum funds might be a bit quicker though (no money need be transferred between accounts).

Well it depends on your attitude towards the ability of fund manager to add value.

My argument for not "trading" as such is that a fund manager should be given the opportunity to take a long term view on their investment strategy and not expected to perform every quarter. This is especially true of fund managers like Platinum, which specialise in what they call "neglected" companies ... which may take a while to come good. As such, I'm generally happy to leave my money where it is for a longer period of time to give them the chance to really shine.

If you look at the historic graphs of most of these high return funds, they often have short periods of low or negative growth followed by longer periods of very fast growth ... it can be worth hanging on through the down period to make sure you get the most of the up period. Since you never know when the up period will start - you miss out on some of the early gains by waiting until the growth has started.

Ironically, that's exactly what I am doing to a degree - waiting until the fund shows an upswing in momentum before I put more money in ... but my explanation is that I'm already holding funds - I'll just add to it when it's obvious things are moving up, using some of the money from a fund that's currently in a down period. I'm not selling out of a fund completely to move to a new fund.

I think the Navra funds do also exhibit a bit of the same behaviour ... when the markets (or some of their larger holdings) are down a bit, they will probably underperform as the fund buys into a falling stock ... and the benefits won't be realised until later once the market has recovered and is moving up strongly again, at which time the fund should strongly outperform due to buying cheaper. However, I think the trading cycle is generally a lot shorter than the timeframes I would expect the Platinum funds (for example) to need to realise their high profits ... so I think there is justification for expecting the funds to perform reasonably consistently (which is the way it has been marketed anyway).

Sure, I agree. The big question is ... are you really better off selling out of fund X to invest in fund Y ? You won't know until Z years down the track, and there are many other variables which start to come into play the longer you leave it to compare. I actually question whether chopping and changing is the best strategy.

There's the standard financial planner's presentation which shows data of having picked the best performing fund over the last 12 months to invest your money in - moving it each year to whatever performed the best. The returns are generally worse than if you had just left it where it was. The reasoning being that a fund that performed well over the last 12 months may well have "done its dash" and the investments it currently holds are now fully valued (or even over valued), and there is less growth to be had going forward. Buying in at the top of a fund's profit cycle will limit your returns. It's also unusual for the best performing fund this year to be the best performing fund next year as well.

It would be interesting to go over some of the funds I'm invested in and play some scenarios on holding versus moving investments to see which option would have performed the best.

Yes, that was always the biggest difference between the US and the AUS funds is the additional variable of currency. This is why I suggested to some people very early on that, despite the promise of greater volatility in the US market leading to more investment opportunities, there was actually a greater risk of volatile returns because of currency pressures.

Just remember though, that currency can work both ways - it can accelerate your gains too. Yes, predictions are that the AUD will continue to strengthen ... but if you knew that for sure, you would be busy making a fortune in the currency markets and not playing with managed funds, right ?