# Pension fund units



## dfordog (26 Jan 2020)

I have been paying monthly into a pension fund since 2012. The fund has not performed well so i have been buying units at a relatively low price.

In the last two months the fund has finally started making some gains.

I am trying to understand if it has been beneficial to buy units at a low price and maximise the overall number of units. 

Does having more units have a multiplying effect on the overall fund value when the fund starts to perform? 

Would it be a bad idea to now transfer into a fund that has been performing well and at an all time high in terms of unit price?

Apologies for all the questions but it is difficult to get my head around it.


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## Boyd (26 Jan 2020)

Buying low is good, buying high is not. Buying lots of cheap units of a decent fund in very good. That's why it was crucial to keep paying into your pension during the 2008-2012 when units of good funds were "on sale".
This is often confusing as you have seen, it is well explained by the following article


			Redirect Notice


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## dfordog (27 Jan 2020)

Thanks Boyd
The fund i am paying into is GARS. Although i have been paying in since 2012, for some reason my online pension account says that the fund was launched in June 2019. I asked my fund manager what units were in at the start of June vs the end. It was something live 5,000 Vs 60,000. So some kind of correction factor was applied. Why would they do this?


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## RedOnion (27 Jan 2020)

Forget about units. You're invested in something called an 'absolute return fund'. There's a thread worth reading, with links to other articles: https://www.askaboutmoney.com/threads/understanding-absolute-return-funds.206148/

Specifically, there's lots written about the Standard Life one you're in.

You need to review what's the right investment for your pension, which might involve switching funds or provider.


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## Steven Barrett (27 Jan 2020)

Boyd said:


> *Buying low is good, buying high is not. *



Unless it is something that is going to stay low. When Buffett is talking about buying low, he's talking about buying the S&P 500. 

GARS isn't a good fund and it's an expensive one at that. I don't have any clients in it as there are lots of other, better funds available on the Standard Life platform. 


Steven
www.bluewaterfp.ie


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## Allpartied (27 Jan 2020)

Of course, buying low is a good idea.  The problem is knowing when the price is low, and will it go lower or higher than the price you paid.
The Tokyo Stock market was higher than it is now, in 1989.  Yep 31 years ago. So don't believe those who tell you that markets will always go up and always recover over time.

It's a good idea to invest in a diversified fund, rather than buying individual shares or investing in a fund which is targeted at a specific market.  These funds can protect you by allocating chunks of your savings to secure bonds or cash funds.

Maybe take Steven's advice and look to rebalance your investment into a cheaper and more suitable fund.

Most of us have a few quid to put away, we like to see it grow a little, we don't have the expertise to make decisions on individual industries or investment types, so investing in a diversified fund is the best option.

Don't be afraid to ring up the investment company who are taking your money.  You have, probably, paid them a considerable sum of money over the last few years and the least they can do is advise you properly.


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## PMU (27 Jan 2020)

RedOnion said:


> Forget about units. You're invested in something called an 'absolute return fund'. There's a thread worth reading, with links to other articles: https://www.askaboutmoney.com/threads/understanding-absolute-return-funds.206148/


  Post #8 in the thread to which you refer contains a link to an article on absolute return funds by Rory Gillen.  I'm rather surprised this article has not received more attention.  In it Mr Gillen  explains why he is no longer recommending hedge or absolute return funds as part of balanced or multi-asset portfolios.  This should be mandatory reading for anyone thinking of investing in absolute return strategies.


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## Steven Barrett (27 Jan 2020)

Allpartied said:


> Don't be afraid to ring up the investment company who are taking your money.  You have, probably, paid them a considerable sum of money over the last few years and the least they can do is advise you properly.



Standard Life won't give any advice, it's not their job. They do the administration and investment of the pension. Standard Life don't have a direct sales team either so the OP must have used a financial advisor to set up their pension. If they phoned Standard Life they will be told to get in touch with their advisor. 


Steven 
www.bluewaterfp.ie


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## RedOnion (27 Jan 2020)

SBarrett said:


> If they phoned Standard Life they will be told to get in touch with their advisor.



And @dfordog if your advisor says you should stick with this fund, get yourself a new advisor!


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## ashambles (27 Jan 2020)

The OP should not be discouraged, in reality for the first 5-10 years of a pension what's most important is the money you contribute not the fund performance. 

Further in it's the opposite way around, your fund should be big enough that fund fluctuations dominate over your contributions.


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## Boyd (27 Jan 2020)

SBarrett said:


> Unless it is something that is going to stay low. When Buffett is talking about buying low, he's talking about buying the S&P 500.
> 
> GARS isn't a good fund and it's an expensive one at that. I don't have any clients in it as there are lots of other, better funds available on the Standard Life platform.
> 
> ...


Agreed, but it was only after I said that that the OP said it was GARs.


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## dfordog (27 Jan 2020)

RedOnion, you say above "Forget about the units". This brings me back to my original question. I am struggling to understand why the number of units in a fund dosen't matter. Consider these two scenarios,

1) After investing in a fund while it is performing i have 100 units. Unit price today is 10eur. The fund rises by 25% i will have 1250eur. 
2) After investing in a fund while it is not performing i have 200 units. Unit price today is 10eur. The fund rises by 25% i will have 2500eur.


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## RedOnion (27 Jan 2020)

dfordog said:


> 1) After investing in a fund while it is performing i have 100 units. Unit price today is 10eur. The fund rises by 25% i will have 1250eur.
> 2) After investing in a fund while it is not performing i have 200 units. Unit price today is 10eur. The fund rises by 25% i will have 2500eur.


In 1 you've invested 1,000 (100*10)
In 2 you've invested 2,000 (200*10).

You're invested in a poor performing fund. Have you heard the expression that you shouldn't throw good money after bad?

You seem to be under the illusion that this fund is somehow going to suddenly catch up with rest of the market?


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## EmmDee (28 Jan 2020)

dfordog said:


> RedOnion, you say above "Forget about the units". This brings me back to my original question. I am struggling to understand why the number of units in a fund dosen't matter. Consider these two scenarios,
> 
> 1) After investing in a fund while it is performing i have 100 units. Unit price today is 10eur. The fund rises by 25% i will have 1250eur.
> 2) After investing in a fund while it is not performing i have 200 units. Unit price today is 10eur. The fund rises by 25% i will have 2500eur.



Units are a mechanism in a collective investment vehicle (i.e. a fund) to equitably treat new investments or exiting money. It is purely a statement of value per share.

If a fund performs by 25%, the value of your holding goes up 25% irrespective of unit price you originally bought at. But as you don't invest everything in one go, the unit price allows for the fact you invest over time and you therefore get the relative performance. For example, if your first month you invest at 100. Then next month you invest at 110. If the following month the price is 120, your overall value of pool will have increased 15% (20% on first amount and 10% on second)

Focus on the total value.


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## Steven Barrett (28 Jan 2020)

RedOnion said:


> In 1 you've invested 1,000 (100*10)
> In 2 you've invested 2,000 (200*10).
> 
> You're invested in a poor performing fund. Have you heard the expression that you shouldn't throw good money after bad?
> ...



Exactly. If this wasn't true, I'd only invest in penny stocks because eventually they'd catch up to the value of Apple stock. And I'd be the one laughing at all the people who bought Apple at $308 while I bought Grape stock at $0.01 

Steven
www.bluewaterfp.ie


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## Allpartied (28 Jan 2020)

SBarrett said:


> Standard Life won't give any advice, it's not their job. They do the administration and investment of the pension. Standard Life don't have a direct sales team either so the OP must have used a financial advisor to set up their pension. If they phoned Standard Life they will be told to get in touch with their advisor.
> 
> 
> Steven
> www.bluewaterfp.ie



I didn't realise that, apologies.  But the same principal applies, if that broker was paid a fee.  Setting up a pension should include occasional reviews and realignment of investment, instead of banking the fee and disappearing.


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## PMU (28 Jan 2020)

EmmDee said:


> Units are a mechanism in a collective investment vehicle (i.e. a fund) to equitably treat new investments or exiting money. It is purely a statement of value per share.



Correct. But only for a typical long-only fund.  If, as the OP says, he is invested in a hedge fund he is buying into whatever assets the fund holds at that point in time for the purposes of its then  investment strategies.  If the strategy is now longer being followed the asset is ditched.  For example, GARS says: “. The fund uses a combination of traditional assets (such as equities and bonds) and investment strategies based on advanced derivative techniques, resulting in a highly diversified portfolio. The fund can take long and short positions in markets, securities and groups of securities through derivative contracts.”.

So Red Onion's point in post #4 of forgetting units is somewhat valid.  You're not investing in market risk, i.e. investing in equities to hold for the long term.  It's more in the ability of the investment team to use the assets they hold to implement successfully investment strategies using 'advanced derivative techniques' and 'long / short' positions, etc.



RedOnion said:


> You need to review what's the right investment for your pension, which might involve switching funds or provider.



I think it would be prudent for the OP to follow this advice.


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## EmmDee (28 Jan 2020)

PMU said:


> Correct. But only for a typical long-only fund.  If, as the OP says, he is invested in a hedge fund he is buying into whatever assets the fund holds at that point in time for the purposes of its then  investment strategies.  If the strategy is now longer being followed the asset is ditched.  For example, GARS says: “. The fund uses a combination of traditional assets (such as equities and bonds) and investment strategies based on advanced derivative techniques, resulting in a highly diversified portfolio. The fund can take long and short positions in markets, securities and groups of securities through derivative contracts.”.



It's true irrespective of the fund's assets. The Net Asset Value (NAV i.e. the unit price) is calculated at each dealing point including all assets types. If the fund divests of an asset between dealing points, the NAV at the next point will reflect the new total of net assets.

As a unit holder, you have no direct stake in any specific asset - it is a colective scheme. The fund itself is the legal owner. You buy or sell shares at a price drivn by the net asset values. Whether the fund changes strategy, invests in different asset classes or is "long vs short" doesn't impact that


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## noproblem (28 Jan 2020)

My other half had invested in Gars, was done through Cornmarket as part of a wider portfolio/ After just 3 years and with some advice from the good people on here + Cornmarket she changed from Gars into something else and 18 months on it has been showing an improvement. Saying that, it's nothing special but at least it stopped the haemorrhaging of Capital and am thankful for that. I know some will say that C/market are expensive to deal with, etc, etc, but they're good at their job and peace of mind is difficult to put a value/price on.


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## RedOnion (28 Jan 2020)

PMU said:


> So Red Onion's point in post #4 of forgetting units is somewhat valid


My point has been somewhat misunderstood (entirely my fault for explaining badly), but @EmmDee has corrected the fund unit piece.

My pension is invested 100% in global equities. If the market goes up, the value of my pension goes up, and if it goes down, so does my pension. Simple.

The GARS fund is invested in a series of bets. For example the CAD/JPY FX rate, INR/KRW FX rate. And relative value bets, like small cap Vs large cap. As an example, if anyone heard about the inverted yield curve in US last year, they might have thought 'so what?'. If they were invested in GARS they lost 0.4% of their investment as the fund had bet against it. How can an advisor explain to an investor why their fund hasn't done well?

The movement of the entire stock market, either up or down, doesn't have a direct impact on the value of the fund. Technically if the entire stock market lost 20% in the morning, it might be the safest thing to be invested in.

These make great sales brochures - 'we can even make money in a falling market'. The reality is they're expensive, and have a poor performance history even in one of the longest bull markets in history. Fund managers love them - they charge big fees for doing what traders do best; making the ballsiest bets in the room with other people's money.


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## dfordog (28 Jan 2020)

RedOnion said:


> In 1 you've invested 1,000 (100*10)
> In 2 you've invested 2,000 (200*10).
> 
> You're invested in a poor performing fund. Have you heard the expression that you shouldn't throw good money after bad?
> ...


In 1 and 2 i have invested the same amount. Each month i make the same contribution. In 1 i have been buying units at a high price so i have a low volume. In 2 i have been buying units at a low price so i have a high volume. This makes me think that having more units will maximise the upside if the fund starts performing. 

I totally agree that the fund has been a disaster but YTD it has performed 2% which isn't far behind some other more popular funds. My fund choices are limited. It is a company pension fund which only offers MAPS 2,3,4,5,6, consensus fund, exempt active, global indexed. I think consensus is the best but reluctant to cash out of GARS right now and buy into a new fund with a high unit price (i.e. get a low volume of units).


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## noproblem (28 Jan 2020)

dfordog said:


> In 1 and 2 i have invested the same amount. Each month i make the same contribution. In 1 i have been buying units at a high price so i have a low volume. In 2 i have been buying units at a low price so i have a high volume. This makes me think that having more units will maximise the upside if the fund starts performing.
> 
> I totally agree that the fund has been a disaster but YTD it has performed 2% which isn't far behind some other more popular funds. My fund choices are limited. It is a company pension fund which only offers MAPS 2,3,4,5,6, consensus fund, exempt active, global indexed. I think consensus is the best but reluctant to cash out of GARS right now and buy into a new fund with a high unit price (i.e. get a low volume of units).


Thought you might like to know that it cost my wife nothing to change to another fund instead of GARS.


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## RedOnion (28 Jan 2020)

dfordog said:


> maximise the upside if the fund starts performing


That's the biggest "if" I've ever seen used on AAM.


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## Steven Barrett (29 Jan 2020)

Allpartied said:


> I didn't realise that, apologies.  But the same principal applies, if that broker was paid a fee.  Setting up a pension should include occasional reviews and realignment of investment, instead of banking the fee and disappearing.



If you had your house rewired, would you expect the electrician to call around once a year to make sure everything was alright? Why would it be any different for a financial advisor? 

If the terms of taking out the pension contract is that the advisor receives a renewal fee, they should provide ongoing advice for that fee. If they only receive a fee for setting up the policy, if you want subsequent reviews, you will have to pay for it. You can't expecting people to work for free, giving up time that can be spent on fee paying clients. 

Steven
www.bluewaterfp.ie


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## RedOnion (29 Jan 2020)

dfordog said:


> reluctant to cash out of GARS right now and buy into a new fund with a high unit price (i.e. get a low volume of units).


I think you're over focusing on units. Maybe someone else can explain better. You should look at the value, not the units.

Option a. Let's say you've 20k invested in fund a. It increases 20%, now you've 24k.

Option b. You've got the same 20k. You switch it out of units of fund a, and into units of fund b. Fund b increases 20%. Now you've 24k.

I'll be honest - I've absolutely no idea what the unit price if my pension is, or how many units I have. I know the value has increased 20% in the last year.


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## Steven Barrett (29 Jan 2020)

RedOnion said:


> The GARS fund is invested in a series of bets. For example the CAD/JPY FX rate, INR/KRW FX rate. And relative value bets, like small cap Vs large cap. As an example, if anyone heard about the inverted yield curve in US last year, they might have thought 'so what?'. If they were invested in GARS they lost 0.4% of their investment as the fund had bet against it. How can an advisor explain to an investor why their fund hasn't done well?
> 
> These make great sales brochures - 'we can even make money in a falling market'. The reality is they're expensive, and have a poor performance history even in one of the longest bull markets in history. Fund managers love them - they charge big fees for doing what traders do best; making the ballsiest bets in the room with other people's money.



When the fund came out, there was a day long presentation on how it works. A day for a fund!! If it takes that long to explain, there's no chance most clients will understand. I remember one of the bets being German luxury goods v Swiss Pharma. In a bull market, people will buy BMW's but in a bear market the Swiss Pharma will win because people still need their meds. 

It was a fund that was launched to great fanfare after the recession. I never really got into it as I wanted to see how it did in a bear market, which will still haven't had. It looks like it's strong initial performance is more down to "a rising tide lifts all boats". 

Steven
www.bluewaterfp.ie


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## RedOnion (29 Jan 2020)

SBarrett said:


> it's strong initial performance


Strong?
It's increased by about 45% in 10 years? Or am looking at it wrong?


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## Steven Barrett (29 Jan 2020)

RedOnion said:


> Strong?
> It's increased by about 45% in 10 years? Or am looking at it wrong?



You discounted the word *initial *


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## Allpartied (29 Jan 2020)

SBarrett said:


> If you had your house rewired, would you expect the electrician to call around once a year to make sure everything was alright? Why would it be any different for a financial advisor?
> 
> If the terms of taking out the pension contract is that the advisor receives a renewal fee, they should provide ongoing advice for that fee. If they only receive a fee for setting up the policy, if you want subsequent reviews, you will have to pay for it. You can't expecting people to work for free, giving up time that can be spent on fee paying clients.
> 
> ...



Interesting analogy.  An electrician would certainly stand over his work and would return for a period of time to ensure that such work was of high quality. If you had any problems they would repair it, as part of the service. 

The Financial Advisor can skedaddle with the fee, and if his advice turns out to be costly, he will charge you another fee, with no guarantee that his advice would be any more useful.


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## PMU (29 Jan 2020)

EmmDee said:


> It's true irrespective of the fund's assets. The Net Asset Value (NAV i.e. the unit price) is calculated at each dealing point including all assets types. If the fund divests of an asset between dealing points, the NAV at the next point will reflect the new total of net assets.  As a unit holder, you have no direct stake in any specific asset - it is a colective scheme. The fund itself is the legal owner. You buy or sell shares at a price drivn by the net asset values. Whether the fund changes strategy, invests in different asset classes or is "long vs short" doesn't impact that


It's nothing to do with legal ownership.  When you make regular investments into a long-only fund you are buying claims on the future earnings (and thereby performance) of the invested asset class.   Hedge funds are not an asset class.  They are a set of  diverse investment strategies that are applied to different asset classes.  So if you make regular investments in a hedge fund you are not 'buying high / buying low'.  You are in effect making a series of bets at different prices.  This is not the same as cost averaging in a long-only fund. If the bets pay off you may make a lot of money, but if they don't your expected outcome for each regular investment is the fund's objective, (e.g. “cash plus X%” etc.), which it may or may not deliver.


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## Steven Barrett (30 Jan 2020)

Allpartied said:


> Interesting analogy.  An electrician would certainly stand over his work and would return for a period of time to ensure that such work was of high quality. If you had any problems they would repair it, as part of the service.
> 
> The Financial Advisor can skedaddle with the fee, and if his advice turns out to be costly, he will charge you another fee, with no guarantee that his advice would be any more useful.



Ha! You think an electrician would come back a few years later and fix something as part of the service? Do you think they are Dyson?


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## Allpartied (30 Jan 2020)

SBarrett said:


> Ha! You think an electrician would come back a few years later and fix something as part of the service? Do you think they are Dyson?



Not sure, they may do, if they want to keep further business.

Here's my financial advise for anyone thinking of investing in stocks,









						Random darts beat hedge fund stars — again
					

A ‘stock-picker’s market’? Not so much.




					www.marketwatch.com
				




You can buy a dartboard and darts for 15 quid off Amazon


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## EmmDee (30 Jan 2020)

dfordog said:


> In 1 and 2 i have invested the same amount. Each month i make the same contribution. In 1 i have been buying units at a high price so i have a low volume. In 2 i have been buying units at a low price so i have a high volume. This makes me think that having more units will maximise the upside if the fund starts performing.
> 
> I totally agree that the fund has been a disaster but YTD it has performed 2% which isn't far behind some other more popular funds. My fund choices are limited. It is a company pension fund which only offers MAPS 2,3,4,5,6, consensus fund, exempt active, global indexed. I think consensus is the best but reluctant to cash out of GARS right now and buy into a new fund with a high unit price (i.e. get a low volume of units).



It might seem unintuitive but you really need to stop think about absolut number of units (or even absolute unit price). It's the product of the two that matters.

As a simple example - if I invest €1,000 into two funds (A and B). A has a unit price of €1 and B is €100. I get 1,000 units of A and 10 units of B. Let's assume the two funds are actually copying each other and have the exact same portfolio and both have stellar months and posy 100% return. The value of my holding in A is : 1,000 units * €2 = €2,000. My value in B is : 10 units * €200 = €2,000

So it's the % returns the funds have rather than the unit price (or number of units) that drives everything. Having more units doesn't affect your % return.

And the unit price also depends on where the fund launched. The starting unit price is an arbitrary decision by the manager / administrator. Some funds start at a price of €1 per unit, some at €1,000. So comparing the absolute price at some pont in the future doesn't really tell you much.

So - I know you think more units will make you richer quicker. But, unless the fund itself outperforms, it makes no difference at all


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## EmmDee (30 Jan 2020)

PMU said:


> It's nothing to do with legal ownership.  When you make regular investments into a long-only fund you are buying claims on the future earnings (and thereby performance) of the invested asset class.   Hedge funds are not an asset class.  They are a set of  diverse investment strategies that are applied to different asset classes.  So if you make regular investments in a hedge fund you are not 'buying high / buying low'.  You are in effect making a series of bets at different prices.  This is not the same as cost averaging in a long-only fund. If the bets pay off you may make a lot of money, but if they don't your expected outcome for each regular investment is the fund's objective, (e.g. “cash plus X%” etc.), which it may or may not deliver.



If you have shares in a fund (irrespective of stratgey) you have no claim on the underlying assets or earnings. What you have is a share in the economic performance of the fund as a legal entity. It might seem like splitting hairs but it's actually important. Every fund, whether long only or something with a more esoteric strategy, continuously changes its portfolio. Therefore as investors come in and out of the fund, in order to provide a fair valuation of the fund, the fund recalculates its current total value by assessing the current market price of its investments/assets ("mark to market") and dividing by the number of outstanding shares or units. That value is used to issue new shares or repay people leaving the fund.

That process is exactly the same for long only funds as it is for more exotic straetgies; long-short, total return etc. These may be blanketed with the term "hedge funds" but it's such a broad term that it is effectively meaningless. It was originally meant to describe a strategy that was a hedge against regular market volatility. Some hedge funds are extremely low volatility so have a place in a portfolio. But to describe them as "a series of bets" misundertands them.

Your original point that an investor in a long only fund is buying into the claims on the underlying asset is not strictly true. But I understand how a holding of an equity position in a long only fund might seem more tangible than, for exmaple, a foreign exchange position... or a spread position "long Volkswagon / short Tesla" (to use a topical discussion on these boards). But actually they are all the same for a fund investor. When you buy shares in the fund, you share the economic benefit from the current and future investment positions in the fund from that date forward (you don't obviously gain any benefit from the historic performance of those positions).


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## dfordog (31 Jan 2020)

Thanks everyone for your explanations and advice. I'm not sure how long this will last but GARS seems to be bucking the trend. 
Can anyone explain why? When should i bail out?
GARS    YTD   2,64%
MAPS 6 YTD -0.34%
CONSENSUS YTD 1.65%


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## PMU (2 Feb 2020)

EmmDee said:


> If you have shares in a fund (irrespective of stratgey) you have no claim on the underlying assets or earnings. What you have is a share in the economic performance of the fund as a legal entity. It might seem like splitting hairs but it's actually important. Every fund, whether long only or something with a more esoteric strategy, continuously changes its portfolio. Therefore as investors come in and out of the fund, in order to provide a fair valuation of the fund, the fund recalculates its current total value by assessing the current market price of its investments/assets ("mark to market") and dividing by the number of outstanding shares or units. That value is used to issue new shares or repay people leaving the fund.


You are spitting hairs.  Anyone who invests in a fund and reads the prospectus is or should be aware of this. 



EmmDee said:


> That process is exactly the same for long only funds as it is for more exotic straetgies; long-short, total return etc.


The process by which a fund actually establishes a unit price may be equivalent, but you're not investing in the same things.   Investing in a hedge fund is not the same as investing in conventional asset classes.  If the OP was told or given the impression that regular investments in a hedge fund is the equivalent of regular investments in an asset class (i.e. productive assets the share common characteristics) he has been poorly advised.

One  rationale for regular investing in an asset class is (a) the tendency for asset classes to mean-revert; and (b) the propensity of assets to increase in value over time due to e.g. increased earnings power, scarcity, etc.  As hedge funds are not an asset class they do not so express mean-reversion; and as they are a series of trades, e.g., long/short, equity market neutral, global macro, convertible arbitrage, etc., they have no inherent earnings power or scarcity value. 

Furthermore, the return on individual assets  is essentially (a)  compensation for the risk of investing in the asset class and (b) compensation for the risk of holding the individual asset.   The latter is 'alpha ' risk that is diversified away  within the asset class and you are left with non-diversifiable risk or 'beta'.  As you have diversified away alpha risk you have also removed the reward for the risk of holding it.  Hedge funds, by their investment strategies,  aim to maximize the return for holding alpha risk.  That's why you invest in them – to obtain the rewards associated with holding alpha risk.  So by making regular investments in a hedge fund the OP is in essence buying alpha risk.  But as he appears to have only one fund – the hedge fund – he has no beta risk and is missing the rewards associated with holding  it.   I doubt this is a good investment strategy.



EmmDee said:


> These may be blanketed with the term "hedge funds" but it's such a broad term that it is effectively meaningless. It was originally meant to describe a strategy that was a hedge against regular market volatility. Some hedge funds are extremely low volatility so have a place in a portfolio. But to describe them as "a series of bets" misundertands them.


 'Bets' is a colloquial expression for such strategies..  One fund in which I invest says in the first line of its prospectus “This fund invests in trades.”  It can't be clearer that that.  If the Financial Times can use the term 'bets' it in relation to certain hedge fund strategies https://www.ft.com/content/bfab7d66-91d4-11e9-b7ea-60e35ef678d2 are you suggesting the FT misunderstands hedge funds?



EmmDee said:


> Your original point that an investor in a long only fund is buying into the claims on the underlying asset is not strictly true. But I understand how a holding of an equity position in a long only fund might seem more tangible than, for exmaple, a foreign exchange position... or a spread position "long Volkswagon / short Tesla" (to use a topical discussion on these boards). But actually they are all the same for a fund investor. When you buy shares in the fund, you share the economic benefit from the current and future investment positions in the fund from that date forward (you don't obviously gain any benefit from the historic performance of those positions).



Investment companies do not market their products in such terms.  Zurich Life e.g.. says straight out that their funds  “offer investors the opportunity to invest in a concentrated portfolio of stocks, chosen and actively managed by Zurich Life”.  To any average Joe this is an offer to obtain the rewards associated with investing in a selected group of stocks.  And investing in its most basic definition is establishing a claim on the performance of an asset.  Otherwise nobody would do it.


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