Question
I am currently new to investing and was wanting to know your thoughts on the Jupiter China Fund and the Jupiter emerging market funds?
I am looking at starting small by investing £100 per month into a profitable fund. Are there any funds that you could recommend to me?
Many thanks in advance for your advice.Answer
The answer really depends on how much risk you're comfortable taking. This will determine the investment areas that are potentially appropriate, then it's a case of choosing funds in those areas that are (hopefully) worthwhile.
I've little doubt that China and other emerging markets are a good bet over the next 10-20+ years. Their economies will likely continue to grow at a faster rate than ours and there should be good profits to be made along the way, especially as their local populations start to earn then spend more money. From this point of view you could argue investing in these areas is fairly low risk long term.
However, the shorter term risks of investing in these areas can be high. When there are global setbacks, the investments that have tended to rise fastest often fall back the hardest - as has generally happened with emerging markets over the last year. And there's plenty of factors that could push emerging economies off track as they grow - high inflation, political problems, corruption, banking crisis and natural disasters to name but a few. You might find my article on emerging markets helpful.
While none of these potential problems are ever likely to be terminal, they can contribute to emerging markets investing being a volatile journey, so you'll need to be comfortable facing potential losses at times along the road to probable long term profit.
Of course, you might be lucky and make lots of money within just a year or two, but I'd strongly suggest only investing in emerging markets if you're comfortable with the possibility of high short term volatility and losses. Investing monthly does potentially help, as short term market falls will hurt less than had you invested a large lump sum at the outset.
If the above doesn't put you off then by all means consider a China and/or emerging markets fund. If you think this approach will give you sleepless nights then perhaps consider spreading your money more widely, perhaps including some developed markets and maybe other investment types such as fixed interest and property.
As for the Jupiter funds, I'd be inclined to look elsewhere. Jupiter China has disappointed of late (see my answer to this earlier question) and Jupiter Global Emerging Markets has only been running since November 2010, so little track record as yet. The manager, Kathryn Langridge, has run emerging markets funds for other fund providers in the past, but with less than convincing results.
That's not to say neither will do well in future, but fund investing is all about making educated guesses on how things will pan out. And on balance I think there's a reasonable chance you'll end up better off using funds like Aberdeen Emerging Markets or First State Global Emerging Markets Leaders for emerging markets exposure - both have proven management teams and tend to be relatively cautious (which I think is no bad thing). As for China funds, First State Greater China Growth is worth a look, as is Neptune China (although it's run more aggressively hence volatility is likely to be greater).
The alternative to the above actively managed funds is to buy funds that aim to track an index. These should be cheaper and quite often fare well versus a number of active funds. There's not a great choice when it comes to emerging markets - you'll need to consider exchange traded funds, which might become expensive for a monthly saving due to dealing costs, although some stock brokers (iii and Alliance Trust Savings) do offer monthly dealing for £1.50. But if you decide to invest in developed markets (e.g. UK or US) then they're well worth considering.
Holding funds from different fund managers is easy if you use a fund platform/supermarket and you can cut costs by doing this via a discount brokers. Take a look at the Candid Guides on these topics for more info.
Good luck whatever you decide.
I am currently new to investing and was wanting to know your thoughts on the Jupiter China Fund and the Jupiter emerging market funds?
I am looking at starting small by investing £100 per month into a profitable fund. Are there any funds that you could recommend to me?
Many thanks in advance for your advice.Answer
The answer really depends on how much risk you're comfortable taking. This will determine the investment areas that are potentially appropriate, then it's a case of choosing funds in those areas that are (hopefully) worthwhile.
I've little doubt that China and other emerging markets are a good bet over the next 10-20+ years. Their economies will likely continue to grow at a faster rate than ours and there should be good profits to be made along the way, especially as their local populations start to earn then spend more money. From this point of view you could argue investing in these areas is fairly low risk long term.
However, the shorter term risks of investing in these areas can be high. When there are global setbacks, the investments that have tended to rise fastest often fall back the hardest - as has generally happened with emerging markets over the last year. And there's plenty of factors that could push emerging economies off track as they grow - high inflation, political problems, corruption, banking crisis and natural disasters to name but a few. You might find my article on emerging markets helpful.
While none of these potential problems are ever likely to be terminal, they can contribute to emerging markets investing being a volatile journey, so you'll need to be comfortable facing potential losses at times along the road to probable long term profit.
Of course, you might be lucky and make lots of money within just a year or two, but I'd strongly suggest only investing in emerging markets if you're comfortable with the possibility of high short term volatility and losses. Investing monthly does potentially help, as short term market falls will hurt less than had you invested a large lump sum at the outset.
If the above doesn't put you off then by all means consider a China and/or emerging markets fund. If you think this approach will give you sleepless nights then perhaps consider spreading your money more widely, perhaps including some developed markets and maybe other investment types such as fixed interest and property.
As for the Jupiter funds, I'd be inclined to look elsewhere. Jupiter China has disappointed of late (see my answer to this earlier question) and Jupiter Global Emerging Markets has only been running since November 2010, so little track record as yet. The manager, Kathryn Langridge, has run emerging markets funds for other fund providers in the past, but with less than convincing results.
That's not to say neither will do well in future, but fund investing is all about making educated guesses on how things will pan out. And on balance I think there's a reasonable chance you'll end up better off using funds like Aberdeen Emerging Markets or First State Global Emerging Markets Leaders for emerging markets exposure - both have proven management teams and tend to be relatively cautious (which I think is no bad thing). As for China funds, First State Greater China Growth is worth a look, as is Neptune China (although it's run more aggressively hence volatility is likely to be greater).
The alternative to the above actively managed funds is to buy funds that aim to track an index. These should be cheaper and quite often fare well versus a number of active funds. There's not a great choice when it comes to emerging markets - you'll need to consider exchange traded funds, which might become expensive for a monthly saving due to dealing costs, although some stock brokers (iii and Alliance Trust Savings) do offer monthly dealing for £1.50. But if you decide to invest in developed markets (e.g. UK or US) then they're well worth considering.
Holding funds from different fund managers is easy if you use a fund platform/supermarket and you can cut costs by doing this via a discount brokers. Take a look at the Candid Guides on these topics for more info.
Good luck whatever you decide.
Read this Q and A at http://www.candidmoney.com/questions/question514.aspx
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