Stop loss for funds?

[Seti]

I was wandering if people operate a stop loss system for funds as they may do for individual share holdings?

I have a couple of funds which are unfortunately just shy of a loss of 10% each;

Aberdeen Emerging Markets
First State Great China Growth

Now, these were bought with a view to holding for several years however if they were individual shares I would probably sell as I believe the 'trend is your friend'.

Just curious if peoples use of stop loss' differs between shares and funds?

[RemainAllHoof]

Funny you post this. I was reading a book on investment vs trading earlier. The overall advice was that if the investment is likely to return to profit in the long run and is only down temporarily for specific reasons then stay in there but if there are core reasons why the investment is in loss then get out.

So, if you think the funds have invested in things that are what you consider failing entities that have no likelihood of returning to good form (and the fund manager is in it for the long term), then exit.

[limpsfield]

I have a sort of time stop loss on the funds in my pension. Because they are meant to be long-ish term, I don't have too much interest in what they do day to day but if a fund loses money for 2 quarters on the trot then it is out and replaced by something that has performed better.

Like everything it is not ideal but it has meant that I don't end up punting my pension and chopping and changing every couple of weeks - and does get me out of markets/sectors when long term trends look like they are changing.

[davemac250]

Well both those funds a highly volatile and you should expect to vary 20% easily.

China has had a bad spell, but is now the worlds second largest economy.

Look at the underlying trends, not the recent movements.

You also should consider that you are dealing primarily in USD, no matter which class you have bought and the current currency market changes are having big effects.

I'd hold on (and am holding on) to those two.

[jeff m]

Check your funds again today

Better

Selling funds when they drop isn't the way to do it.
That does depend a little on how long you have held them, but generally speaking, you have to stick to the reason you bought them in the first place.

I assume that is because they have better growth potential than UK.
I don't think that has changed

[Seti]

Thanks for the replies. And, yes, today has been slightly better than previous (not that I constantly check to see how they're doing...)

[allgonepetetong]

These are long term bets. I too hold the First State Grtr China Grwth but the Ballie Gifford Emerging Mkts Growth.

China has taken a dip recently, but since June last year is up 15% roughly.

I wouldn't properly worry about short term dips, but if you want to try to maximise your money, a couple of options are available to you.

1 Plough more money in on the dips (buy the lows)
2 And this is what I have done as I have invested money elsewhere to broaden my portfolio, is to liquidate half your holding when you think we are at a peak, then when the market corrects (or dips) use your cash to buy a larger holding in the same fund.

It's a bit late for option 2 now as you have missed the top, but I'd certainly look at 2. China is going places and will for the next 4-5 years certainly.

The emerging markets fund will have a lot in South America and that's not doing too well at the moment as it's very strongly linked to commoditioes, which although we are in a bull market have stalled a little recently. Keep an eye on it an perhaps add to it later on when it starts to turn upwards again.

The key to investing in funds is to buy on the dips as your long term expectation is for the fund to perform.