Emerging Markets pension fund advice..

[Gio G]

The swings on my pension over the last 3 months have made me think whether I should be changing out for different funds in the short term. Do people think that Emerging Markets is still a good place to invest my pension fund? Got quite a way to go before I retire circ 25 years.

Clearly they have performed well over the last 5 years, however past 1 year performance is dreadful. I am not an expert, however my current thinking is that I am buying these at a relatively low price and should viewed as a much longer term plan. Maybe because of the past performance, I am now looking for something better in the short term.

Any advice would be great.

Thanks G

[GT03ROB]

Gio G said:

The swings on my pension over the last 3 months have made me think whether I should be changing out for different funds in the short term. Do people think that Emerging Markets is still a good place to invest my pension fund? Got quite a way to go before I retire circ 25 years.

Clearly they have performed well over the last 5 years, however past 1 year performance is dreadful. I am not an expert, however my current thinking is that I am buying these at a relatively low price and should viewed as a much longer term plan. Maybe because of the past performance, I am now looking for something better in the short term.

Any advice would be great.

Thanks G

It would have a place in a portfolio but not the whole fund.

[Ginge R]

Gio,

3 months volatility and dubious performance taken into the context of a 25 year window is not much to base a strategy revision on. If you have a long time to go, forget the little picture. Factor in your churning, dealing and fund switch costs, the time and cost of your time.. and will it still be worthwhile? Why not consider a thrifty basket of managed funds with a higher capacity for risk if that's where your investment bias lies?

[Gio G]

GT03ROB said:

It would have a place in a portfolio but not the whole fund.

Good point, I need to spread the risk more..

[Gio G]

Ginge R said:

Gio,

3 months volatility and dubious performance taken into the context of a 25 year window is not much to base a strategy revision on. If you have a long time to go, forget the little picture. Factor in your churning, dealing and fund switch costs, the time and cost of your time.. and will it still be worthwhile? Why not consider a thrifty basket of managed funds with a higher capacity for risk if that's where your investment bias lies?

Good advice - yes, I am after higher risk and why not at 39... I am also thinking about consolidation other older pensions I have into one pot, so at least I can control it into the funds I want.

[sideways sid]

Emerging markets funds were an excellent place to put cash ...in 2005!

I suspect that outperformance will be much harder to achieve in the next couple of years.

[Ginge R]

That makes sense - for simpler administration, a more cohesive strategy and of course, being able to drive down costs by obtaining discounts. Bear in mind that you might creep over the Financial Services Compensation Scheme limit for investments though - something which might have an impact in the event of your sole manager going into default. This thread has already mentioned diversification - so what is the *default* risk of your sole chosen manager?

Gio G said:

Good advice - yes, I am after higher risk and why not at 39... I am also thinking about consolidation other older pensions I have into one pot, so at least I can control it into the funds I want.

[jeff m2]

There was an article in Morningstar this morning (Friday) re E.M.
It focused on fund flows, where people are putting their money.
While performance has been not so good, it appears there is still money flowing in that direction.

It could of course be people re-balancing their portfolios due to gains in developed markets.
E.M. is quite a mix of countries, not all E.M. funds follow the index. A fund overweight in South Korea would have outperformed a fund heavy in Brazil.

There is nothing wrong with taking a contrarian view, esp if it is with gains from other funds.

With your life expectancy being in the low 90s, I'm sure China will get it together for you to reap some benefit.

http://www.morningstar.com/cover/videocenter.aspx?...