AT Saltydog Investor we are passionate believers in active momentum trading.
In simple terms, this consists of buying what’s hot, and ditching what’s not.
Momentum investing can work with individual shares, commodities, exchange traded funds, and no doubt many other types of investment.
The Saltydog system is unique in that it invests in actively managed funds – Unit Trusts and Open Ended Investment Companies (OEICs).
So why funds and not shares? There are many good reasons.
A fund collects the money of many individuals and invests it into many businesses within its sector of operation, thereby giving the advantage of scale to the individual.
In other words, your money is being spread over a number of investments and all your eggs are not in one basket.
It is run by a professional fund manager, usually with a team of researchers, who has the time to carefully select and closely monitor the assets.
They are also highly regulated, ensuring that your investments are protected from any financial misfortune which may happen to the organisation running the fund.
Contrary to popular belief, they are also relatively cheap and easy to trade.
Fund supermarkets now offer a wide selection of funds and you can often switch between them without any transaction fees, initial investment charges, or bid / offer spreads.
To make changes you only need a computer, an internet connection and a few spare minutes.
Funds are also clearly defined by their IA (Investment Association) sectors.
The IA has specified over 30 different sectors and most funds in the UK fall into one of them.
Sector definitions are mainly based on assets, such as equities and fixed income, and some also have a geographic focus.
To qualify, a fund must stick to some fairly rigid rules. As the funds have to work within such tight constraints it’s hardly surprising that when a sector is doing well most funds in that sector will benefit.
It is equally true that when a sector is suffering, even the best fund manager will struggle.
The task is to have your money invested into funds which are performing above the average, in sectors of the equity market that are on the rise.
Say this quickly and it sounds easy. Well, with the correct guidance, and access to up-to date accurate fund performance numbers, it’s not so difficult.
The performance of the sectors can vary significantly, both relative to each other and over different time periods.
The table shows some of the best and worst so far this year, along with how they performed last year.
For a better understanding of our practical approach to momentum investing in funds, visit www.saltydoginvestor.com
|Investment Association Sector Performance|
|Best Sectors so far this year (01/01/2015 – 30/06/2015)||% Return this year||% Return 2014||Worst Sectors so far this year
(01/01/2015 – 30/06/2015)
|% Return this year||% Return 2014|
|Japan||13.26||0.43||Global Emerging Markets Bond||-2.56||3.42|
|China/Greater China||12.16||9.40||Global Bonds||-2.54||4.87|
|Japanese Smaller Companies||11.25||5.18||UK Gilts||-1.72||14.92|
|UK Smaller Companies||10.72||-1.58||UK Index Linked Gilts||-0.64||18.66|
|European Smaller Companies||10.61||-1.21||£ Corporate Bond||-0.63||10.63|
|Asia Pacific Including Japan||7.43||5.33||Short Term Money Market||0.05||0.06|
|Europe Including UK||6.48||0.28||North America||0.12||17.77|
|Europe Excluding UK||6.40||-0.93||Money Market||0.12||0.29|
|UK All Companies||6.10||0.85||Global Emerging Markets||0.43||3.42|
|UK Equity Income||5.53||3.61||£ Strategic Bond||0.82||6.91|