Stewart Investors Asia Pacific Leaders B Fund Acc danicheng

#1
Hi All,



I am 23 and earn a salary of £25,000 per year and I have decided to put a monthly contribution for the next 30/40 years of £180 to a fund per year. The fund I have chose is Stewart Investors Asia Pacific Leaders B Fund Acc which shows some good returns over the year with a high element of risk to it which I do not mind since I am only 23 and the plan is to move it to a less risky plan as I get older.



Does anyone have any advice on this fund and I should choose another fund. My monthly contribution will start in 10/03/2017 and the reason I chose this fund is because I already have funds in the UK and want to diverse into the Asian market to compare returns in the future.



Any advice would be appreciated.



#2
Sounds as if you are saving a very high proportion of your monthly income: do not allow this to ruin your life now and your career prospects (eg if work colleagues think of you as a tight-wad that could be damaging in all sorts of ways).



If your life goals include owning property then an HTB ISA would be a good idea. If you are saving for a pension or generally for life after the age of 55 then hold your investments in a SIPP so you get tax relief.



And you need greater diversity...

#3



Sounds as if you are saving a very high proportion of your monthly income: do not allow this to ruin your life now and your career prospects (eg if work colleagues think of you as a tight-wad that could be damaging in all sorts of ways).



If your life goals include owning property then an HTB ISA would be a good idea. If you are saving for a pension or generally for life after the age of 55 then hold your investments in a SIPP so you get tax relief.



And you need greater diversity...
Originally posted by Voyager2002


I already have flat my parents bought for me so my rent and bill is only £250 per month and I already put £145 a month to a pension and also £250 per month in to a savings account but thought I could put away a little more and investing in a fund was great for long term saving.

#4



The fund I have chose is Stewart Investors Asia Pacific Leaders B Fund Acc which shows some good returns over the year with a high element of risk to it which I do not mind since I am only 23 and the plan is to move it to a less risky plan as I get older.


That is a fund type that is really meant to be held in a portfolio of other funds. i.e. that caters for your Asia Pacific allocation. Where is your UK, US, Europe, Japan, Fixed interest, Property etc allocations?






Does anyone have any advice on this fund and I should choose another fund.


If it was advised, it would likely be a mis-sale. However, when you DIY, you are free to make your own mistakes.






the reason I chose this fund is because I already have funds in the UK and want to diverse into the Asian market to compare returns in the future.


Ok, so that gives you 2 of the main sectors. Still missing the rest.

#5



That is a fund type that is really meant to be held in a portfolio of other funds. i.e. that caters for your Asia Pacific allocation. Where is your UK, US, Europe, Japan, Fixed interest, Property etc allocations?







If it was advised, it would likely be a mis-sale. However, when you DIY, you are free to make your own mistakes.







Ok, so that gives you 2 of the main sectors. Still missing the rest.
Originally posted by dunstonh


Thanks for your advice. Can this fund not be bought as a single fund of £180 going in to per month for investing? Seemed ok to me with the added risk an past performance?

#6
Yes it can but as DunstonH said it is likely to be not the best idea.



High risk does not always mean high returns. The essence of modern portfolio theory is that by diversifying you can considerably reduce risk at the cost of a negligible reduction in potential returns. For the purpose of this discussion this means that most investors should diversify across all mainstream sectors (see Dunstonh's list).



As the name suggests, the fund is relatively concentrated, holding "only" 45 companies (for comparison, HSBC Pacific Index holds ten times that). I haven't looked at which companies they hold but there is a material risk that they pick the wrong ones and the fund has a sustained period of underperformance. And you aren't compensated for the risk by higher potential returns. There is no evidence that good past performance is an indicator of good future performance.



It is a common mistake by some inexperienced investors to conclude that as they have a very long time horizon they can afford to take more risk (correct) and they should therefore put all their money in emerging markets or even individual shares or even borrow to invest (wrong). They make two mistakes: 1) is to forget that when you take risks it's supposed to be rewarded by higher potential growth, and there's no reason to think that putting all your eggs in one basket will in itself result in higher growth, and 2) nobody no matter what their age wants to lose money.



Just as individual companies will occasionally go bust, individual investment sectors occasionally experience "lost decades" (see Japan). This is why no matter what your risk profile, putting all your money in a single sector is usually a bad idea. Diversfiying across sectors reduces this risk and the cost to you in potential returns is not significant. The Stewart fund is diversified enough across different Asian economies that I don't necessarily think it faces a big risk of lost decades, however it is concentrated enough in terms of individual companies held that there is undoubtedly a risk of poor stock selection.

#7



Thanks for your advice. Can this fund not be bought as a single fund of £180 going in to per month for investing? Seemed ok to me with the added risk an past performance?
Originally posted by danicheng


It can be. It is just bad quality investing if you do.



Past performance is irrelevant in terms of future performance. You are largely dependent on sector performance. For example, during the Asian crisis, Western stockmarkets were not as affected as the Asian markets. Asia fell around 63% from peak to bottom.

#9



The fund you mention has a 0.89% ongoing charge:



http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR04H80



A Vanguard Asia Pacific ETF has an onging charge of 0.22% :



https://www.institutional.vanguard.co.uk/portal/instl/uk/en/product.html#/fundDetail/etf/portId=9522/assetCode=equity/?overview
Originally posted by EdGasket


Since the current VAPX ETF has data (June 2013 according to Morningstar), it has grown 22%.

Since that date the First State fund has grown 46%.



Counting the pennies and ignoring the pounds?



(I thought the First State Asia Pacific funds were soft-closed, but it seems not that one)

#10



Since the current VAPX ETF has data (June 2013 according to Morningstar), it has grown 22%.

Since that date the First State fund has grown 46%.



Counting the pennies and ignoring the pounds?
Originally posted by Plus


Not disagreeing with the general principle of "don't let the tail wag the dog" but also, obvious comment re "past performance is no guarantee of etc etc..."


(I thought the First State Asia Pacific funds were soft-closed, but it seems not that one)


The regular Asia Pac one is, and so is the global EM and global EM Leaders.



However, the Asia Pac Leaders one has a strategy of investing in leading companies in mostly developed Asian markets.



As such, they are big and liquid companies. So, it is relatively less important to keep your fund "small and nimble" - because even a large fund can deploy a hundred million more here and there without having problems running out of opportunities to invest the money at sensible cost or adversely moving the market while trying to exit a large position.



If you are investing in some mid-size or small companies, or a subset of companies with very specific characteristics, or companies in emerging markets, you might well want to cap or dampen down the fund size to preserve the ability to meet your objectives with the opportunities you have. With bigger "leading" companies in developed Asia, less of an issue.

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