Page 36 - DIY Investor Magazine | Issue 38

Aug 2023 36
DIY Investor Magazine ·
THE FUND UP 40% OVER THE PAST SIX MONTHS THAT WE’RE ADDING TO
Saltydog Investor explains why it has upped exposure to a fund in fine form, but is avoiding the temptation to take out a bigger position.
In recent months, a couple of themes keep reoccurring – the high level of volatility in global stock markets and their extreme sensitivity to any changes in expected central bank interest rates.
This has been particularly noticeable in the past few weeks. When we did our analysis last week, nearly 95% of the funds we monitor had gone up in the previous week. The week before, more than 95% of them had gone down.
We try to make a considered response to these wild swings in market sentiment when reviewing the two Saltydog demonstration portfolios – Tugboat and Ocean Liner.
When nearly all the funds were going down, we did not panic and sell everything. In addition, when things were looking better last week we did not go ‘all in’, although we did add to some of our holdings.
Although most sectors have been volatile over the past few months, some have definitely been worse than others.
As an example, here is a graph from last week’s reports, showing the performance of the leading funds from the Europe excluding UK and Europe including UK sectors over the previous 26 weeks.
The top one may be showing a gain of over 8%, but it would not have been the previous week, and who knows where it will be in a couple of weeks’ time. This is a fairly extreme example, but there are many sectors where the best-performing funds have followed a similar trend.
In contrast, some of the leading funds from the North American and North American Smaller Companies sectors have been much less volatile.
It would be unfair to suggest that they have not also had their setbacks, but their overall gains are much greater, and it has definitely been a more comfortable ride.
We hold the UBS US Growth fund in our portfolios and last week added to our investment.
There is a close link between the performance of the ‘technology’ stocks and the broader US indices.
I recently read a Bloomberg article that pointed out that “just seven companies now make up 26% of the S&P 500 index’s total value”.
It went on to say, “the companies — Apple Inc, AAPL, 0.62%