M&G Recovery Fund
Discussion
I am curious to know other people's opinion of this under-performing fund.
I have had a holding for some time assuming it was a low risk option that should be able to perform better than an All-share tracker fund following the 2008 recession. In August 2013, the manager was pushing the under-valuation of its underlying assets and so, being dumb, I added to my holding.
In 2014 it under performed the All-share by around 8%.
Does anyone have a preferred alternative with a similar profile?
I have had a holding for some time assuming it was a low risk option that should be able to perform better than an All-share tracker fund following the 2008 recession. In August 2013, the manager was pushing the under-valuation of its underlying assets and so, being dumb, I added to my holding.
In 2014 it under performed the All-share by around 8%.
Does anyone have a preferred alternative with a similar profile?
If a fund is underperforming, it doesn't mean it's bad, just as if it's over performing, it doesn't mean it's good. I almost got badly burned a couple of years ago when I was mesmorised by returns - a look under the bonnet revealed that the manager had sold his jewels and was parked in cash. Fatally, as it turned out. Similarly, a fund might be superb in concept and management but its particular area of focus might simply be out of favour. The other issue too, is does a fund manager really have a sell-by date - Tom Dobell has been in post for a lot longer than most.
Alas, He has had a protracted run of bad luck.. call it what you will. I think the issue is with poor decisions (he started dabbling in areas he wasn't sure about I think) and it is becoming difficult to rationalise inbound investment. The fund came off my panel a while back - cold comfort, if your timeline permits, do you really want to sell at a loss and realise your fears? Notwithstanding that, I think that fund is in for a torrid time - if I were you, I wouldn't look at the past, look to the fund's future - if you're directly invested, e-mail the team and ask them what their plans are to reverse the malaise.
If it doesn't make sense, you might have to consider long and hard about getting out. The danger that you have, is do you stick and does the fund continue to falter, or do you bang out and does it improve. Fear and greed are the investor's two worse nightmares.
Alas, He has had a protracted run of bad luck.. call it what you will. I think the issue is with poor decisions (he started dabbling in areas he wasn't sure about I think) and it is becoming difficult to rationalise inbound investment. The fund came off my panel a while back - cold comfort, if your timeline permits, do you really want to sell at a loss and realise your fears? Notwithstanding that, I think that fund is in for a torrid time - if I were you, I wouldn't look at the past, look to the fund's future - if you're directly invested, e-mail the team and ask them what their plans are to reverse the malaise.
If it doesn't make sense, you might have to consider long and hard about getting out. The danger that you have, is do you stick and does the fund continue to falter, or do you bang out and does it improve. Fear and greed are the investor's two worse nightmares.
Before buying a fund you must read the prospectus.
What is the object of the fund, what are it's criteria for selecting shares.
Is the Manager tied in someway that he can't take advantage of a drug company or a tech firm even though he knows both will do well.
By virtue of it's name I would guess he doesn't have many paying 3 - 4% divs, unless of course they are long holds that have already recovered. assuming of course he doesn't have to sell them once they "recover"!
If you buy a restictive or sector fund it should be understood that the Manager cannot buy outside his mandate. eg that often rules out shares in the FTSE100 which is heavy in some sectors. So to compare its performance against an index he is not using as a yardstick is a bit unfair.
Sectors are often cyclic, small caps will usually lag large caps on the way up etc etc.
When choosing a fund, first decide if you are trying increase your assets towards a target figure, if so why not choose a growth fund, even a global growth fund,
Why put restrictions on a Fund Manager?
If you are already comfortable and just need to stay in front of inflation, then choose a balanced fund for your core holdings, you can still have a few punts with outlandish bets like Russia with "loose change".
Basically, know what you are buying and why.
You need a plan.
Example when I buy a fund or a share I already know when I'm going to sell it. (how long I'm going to give it) Does that make sense?
That doesn't mean you should sell it, read the prospectus, read the object, read the latest mangers comments (excuses
).
Look at its holdings, esp the ones that have been increased over the past year. How did they perform. Try to get a feel for the direction of the fund by looking at its most recent buys.
Don't sell on impulse.
What is the object of the fund, what are it's criteria for selecting shares.
Is the Manager tied in someway that he can't take advantage of a drug company or a tech firm even though he knows both will do well.
By virtue of it's name I would guess he doesn't have many paying 3 - 4% divs, unless of course they are long holds that have already recovered. assuming of course he doesn't have to sell them once they "recover"!
If you buy a restictive or sector fund it should be understood that the Manager cannot buy outside his mandate. eg that often rules out shares in the FTSE100 which is heavy in some sectors. So to compare its performance against an index he is not using as a yardstick is a bit unfair.
Sectors are often cyclic, small caps will usually lag large caps on the way up etc etc.
When choosing a fund, first decide if you are trying increase your assets towards a target figure, if so why not choose a growth fund, even a global growth fund,
Why put restrictions on a Fund Manager?
If you are already comfortable and just need to stay in front of inflation, then choose a balanced fund for your core holdings, you can still have a few punts with outlandish bets like Russia with "loose change".
Basically, know what you are buying and why.
You need a plan.
Example when I buy a fund or a share I already know when I'm going to sell it. (how long I'm going to give it) Does that make sense?
That doesn't mean you should sell it, read the prospectus, read the object, read the latest mangers comments (excuses
).Look at its holdings, esp the ones that have been increased over the past year. How did they perform. Try to get a feel for the direction of the fund by looking at its most recent buys.
Don't sell on impulse.
I started buying M&G Recovery in 2011 and its been quite poor.
I actually sold in November and bought Schroder Recovery instead. That *seems* to be doing ok... but I guess it will need a couple of years.
The way I saw it is I already 4 years of not really doing anything so I was willing to take a risk and swap.
I actually sold in November and bought Schroder Recovery instead. That *seems* to be doing ok... but I guess it will need a couple of years.
The way I saw it is I already 4 years of not really doing anything so I was willing to take a risk and swap.
BP are talking low oil prices for the next 3 years. QE in Europe may change everything. The manager does seem to have lost his way.
A recovery fund during the prolonged recession we have just been through should have been a reasonable choice to better an all-share tracker, but it is pitifully worse.
Thanks to Ginge R for his professional perspective.
A recovery fund during the prolonged recession we have just been through should have been a reasonable choice to better an all-share tracker, but it is pitifully worse.
Thanks to Ginge R for his professional perspective.
red_slr said:
I started buying M&G Recovery in 2011 and its been quite poor.
I actually sold in November and bought Schroder Recovery instead. That *seems* to be doing ok... but I guess it will need a couple of years.
The way I saw it is I already 4 years of not really doing anything so I was willing to take a risk and swap.
Not a bad fund, but keep your eyes on it.I actually sold in November and bought Schroder Recovery instead. That *seems* to be doing ok... but I guess it will need a couple of years.
The way I saw it is I already 4 years of not really doing anything so I was willing to take a risk and swap.
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