All That Glistens - Gold Funds

Gold has been a phenomenal investment story over the last 2 years, and it continues to attract plenty of interest and investment across both instutional and retail investors.

So what are the prospects for gold in 2011? In today's FT, (http://www.ft.com/cms/s/0/ace3ea64-09ee-11e0-8b29-00144feabdc0.html#ixzz18TVuqVbX) Fredrik Nerbrand, global head of asset allocation at HSBC. “Only a marginal increase in the propensity to hold gold as an investment could have a dramatic effect on the gold price.”

One of my favourite fund managers - William Littlewood, manager of the Artemis Strategic Assets funds, prefers to gain exposure through an ETF by ETF Securities - (GBS.L) ETFS Gold Bullion Securities which has an annual management fee of 0.40%. When considered how to invest in gold, understand how the fund your are investing in looks to profit from an increase in the price of gold.

The following chart looks at 2 popular means of investing in gold:- Blackrock Gold & General and the ETFS Gold Bullion Securities Fund.

HSBC built a senario analysis for gold prices by 2020. Its model took into account the impact of expected declines in jewellery and industrial demand as a result of rising prices and the offsetting increases in scrap supply and investment interest.


The model suggests gold prices could rise to $3,305 an ounce by 2020 if fund managers increase their relative gold weightings to 0.5 per cent, even if there were no price gains for equity and bond markets over the next 10 years.

 But gold prices could reach $6,424 an ounce by 2020 under the bullish senario - a gold weighting of 0.5 per cent and 10 per cent gains for asset prices.

 Mr Nerbrand emphasised the analysis was not intended as a price forecast but as a framework for mapping out possible senarios.

Anthony Bolton - Fidelity China Special Situations A Shares

Anthony Bolton’s China Special Situations trust has received the go-ahead to invest in mainland China's A shares this week.

I am a big fan of Bolton's - his record more than speaks for itself, and his timing more often than not right. Investors have rushed to snap up shares in the investment trust, which has been reflected in the trust's NAV. This has recently forced the issue in the declaration that 'C' shares will be released to meet the current demand.

China still seems a difficult call for most. Do you go with the growth story and hope that it translates into capital growth for it's companies, or do you view it as a bubble waiting to happen.

Either way, Bolton will apply the same carefully selected processes to stockpicking and looking for those recovery plays and undervalued stock.

In his book, 'Investing Against the Tide', Bolton outlines the key principles of his investment process:
• If you're investing for the long term don't be concerned about short-term volatility.
• Keep a 'watchlist' of stocks or funds you are interested in and review your position on them every three months.
• Don't be afraid to go for something or somewhere out of favour.
• Use any insider knowledge of a sector you might have gained from your day job.
• Trust your instinct, but avoid emotional attachment to your holdings.

Time will tell whether he was right to come out of retirement for one last hurrah.

Japan - A Trade of The Decade?

Japan has been making some headlines as one of the contrarian trades of choice for some time. This weekend was nothing new therefore, when James Ferguson in The Times decided to tip Japan to outperform based upon. The argument is simple, the Nikkei averages a price-to-book of half that of the FTSE shares and therefore below the actual book value.

Japan has made a mug out of plenty of people, and if you keep trying to put forward a case for Japan then you may eventually get it right. From my own perspective, I like the fact that it is not overly expensive and has some great companies. Whilst I am not saying that Japan can't and will not become cheaper, it has led me to add a significant proportion of my asset allocation into the Invesco Perpetual Japan fund. Time will tell if it was a trade of the decade, or just another false dawn in the land of the rising sun. 

Predicting the Markets

Predicting the markets is impossible, everyone knows this. However, when you come across people that have the ability to make the right calls more often that not, it makes the management of your portfolio an easier task.

Once such person that met this criteria was Teun Draaisma. Draaisma was working at Morgan Stanley until June 2010 as their European strategist. Sadly, his move to TT International to manage a hedge fund has meant that he no longer offers public commentary.

Before the credit crunch, Draaisma was consistent in his message of sell, sell, sell. During the darkest hours, Draaisma made the right calls by telling investors to get back into the market.

I would be interested to hear from you which sources and commentators you listen to in order to make the correct calls in allocating your portfolio and protecting your wealth at the key times.

Schroder UK Alpha - Buxton: 25% Rise in 2011

An article that caught my eye over the weekend was from experienced fund manager Richard Buxton on the prospects for equities over 2011.

Buxton states that UK equities could rise by as much as 20-25% during 2011, fuelled by leaner companies with strong profits being reported and cash on the sidelines.

Seeing the FTSE at it's current level (5770) makes me wonder how much positive upside their is going into 2011. Will company profits warrant a return to a FTSE all time high... I'm not so sure.

Source Link - Citywire 

Opening Post

Hello everyone,

Welcome to my new blog - The Fund Investor.

I have held a keen interest in fund investing for the past few years and have finally got round to creating a blog to reflect this interest.

My intention is to write a series of informative posts that look at the world of unit trusts, OEICS, ETF's and trackers. This will range from looking at the latest 'best ideas' that are suggested by respected commentators to trends and key themes.

As always, happy investing and please do your own research!

Thanks,
Mark