Quinn Life Fund

T

taytoman

Registered User
Messages
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I have put in 20K into a quinn life freeway fund, now worth 13.7K.
Can anyone suggest a "middle of the road" / medium risk allocation across particular funds/ indices that would give me some chance of (eventually) recovering the money, without going 100% into emerging markets etc!
I am well aware of the risk versus return issue
 
taytoman said:
I have put in 20K into a quinn life freeway fund, now worth 13.7K.
Click to expand...
"Freeway" is the generic name for a family of QL funds. No one can give you advice unless you say in which fund(s) and for how long you have been invested.
 
Allocation To Freeway Funds

Currently, allocation is as follows
Euro Freeway25%
Bond Freeway 20%
US Freeway 30%
UK Freeway 10%
Japan Freeway 5%
Emerging Markets Freeway 10%

Put in 20K in 2007, now worth 13.7K
 
taytoman said:
Currently, allocation is as follows
Euro Freeway25%
Bond Freeway 20%
US Freeway 30%
UK Freeway 10%
Japan Freeway 5%
Emerging Markets Freeway 10%

Put in 20K in 2007, now worth 13.7K
Click to expand...

personally , i have almost zero faith in those funds which banks sell , the guys who manage them get paid the same fees regardless

better to buy direct shares if you ask me
 
taytoman said:
Currently, allocation is as follows
Euro Freeway25%
Bond Freeway 20%
US Freeway 30%
UK Freeway 10%
Japan Freeway 5%
Emerging Markets Freeway 10%
Put in 20K in 2007, now worth 13.7K
Click to expand...
You got 25% Euro equities; 20 % Euro government debt; 45% Foreign developed markets and 10% Emerging markets (which, except for the bond fund, is not significantly different from my allocation of QL funds). You’ve suffered a 31% loss over 4 years. Between 31 December 2007 and the end of last month the QL EU fund is down 35%; the UK fund is down 18%; the US fund down 7%; and the JP fund down 12% (approximate calculations). You’ve probably got a profit on the bonds. In the foreign funds you’ve also been hammered by the current high value in the EUR, e.g. for a GBP investor the FTSE100 has declined in the same period by about 10% and not by 18%, but in 2007 the EUR/GBP was about 0.68 and now it’s about 0.84, i.e. a 20% increase. But as the EUR is starting to fall relative to foreign currencies the value of your foreign denominated funds should increase in EUR terms.
Assuming your asset allocation still meets your risk profile and so there’s no need to change it, according to Prof Burton Malkiel, who wrote ‘A Random Walk Down Wall Street’, all you have to do, every year, is rebalance your funds back to their initial allocation. As most of the funds have unfortunately lost value this means you putting additional cash into the underperforming asset classes and, assuming you believe that stock market returns are random and that asset values mean revert over time as Prof Malkiel does, you just sit back and wait for Mr Market to work his magic. In short, as it’s the asset class that has declined the most and as it has no exchange rate risk, it might be prudent to consider making an additional investment into EUR-denominated developed market equities, either via the QL fund or via an ETF, to restore its allocation and you're also buying (relatively) cheap. [Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund or stock.]

 
Thank you very much for your detailed and thoughtful analysis and the time you took. I should say that right at the very start, I was 100% equities and then went 20% bonds when it dropped

What do you think of this then ?

35% Euro
10% Euro Bonds
30% US
10% UK
10% Emerging
5% Japan
 
taytoman said:
What do you think of this then ?

35% Euro
10% Euro Bonds
30% US
10% UK
10% Emerging
5% Japan
Click to expand...
Your prudent investment in the bond fund has paid off in two ways. First, it has gained about 13% since Dec 2007 to last October. Also it is has gained while the equity funds have fallen, thus showing the benefits of allocating to un-correlated asset classes.
I don’t know if there is anything to be gained by changing your asset allocation as opposed to rebalancing. An asset allocation should reflect your risk profile and how long you intend to stay invested. So unless something in your risk profile changes (e.g. you are suddenly less risk adverse), changing your asset allocation is a form of market timing (so-called ‘tactical’ asset allocation) (i.e. you are lowering your exposure to bonds presumably because you expect equities to improve). David Dremand, in his book, Contrarian Investment Strategies, says this doesn’t work (and gives evidence to that effect); and Mebane Faber says it does work http://www.mebanefaber.com/timing-model/ (and also gives evidence to that effect). Both Mr Dremand and Mr Faber are respected investment professionals, so take your pick, it’s your money. (Also, don't forget that bond prices fall when interest rates rise.)
 
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