Saltydog Investor aims to boost fund investors’ returns via a simple strategy: buy what’s rising, avoid what’s falling. Read more here. Here, Saltydog’s Richard Webb updates us on its cautious portfolio, the Tugboat.
On 24 June, the FTSE 100 closed at 6,029, more than 800 points off its recent peak in May: a fall of nearly 12%. So it’s hardly surprising that all the fund sectors exposed to equities have been suffering too. Sometimes when share prices fall, bonds go up in value. But this month they have been falling too. So the only sector to gain in the last four weeks has been the ‘Absolute Returns’ sector. For the last few weeks we have only been holding the CF Odey UK Absolute Return fund (up 3.3% since we bought it on 16 May) and the Chelverton UK Equity Income fund (up more than 20% since we bought it more than eight months ago). Overall, the Tugboat portfolio has made an annualised gain of 7.9% since launch in November 2010. We haven’t made any changes to the portfolio this week.
By reducing our exposure to falling markets, we have limited our losses during this downturn. But in the last few days, stockmarkets around the world have recovered slightly. So has the correction finished, or is this just a temporary bounce?
On the one hand, the Federal Reserve has tried to reassure markets that it won’t be too hasty to pull back from quantitative easing, so perhaps investors have overreacted. But we shouldn’t be too quick to pile in. As legendary trader Jesse Livermore said: “the desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street, even among the professionals”. If there’s no clear reason to invest then it makes sense to stay safe until conditions improve. We will be watching the numbers closely, ready to invest if the rally continues.
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| Saltydog Group | Fund | % | Last week |
|---|---|---|---|
| Safe Haven | Cash | 71% | 72% |
| Slow Ahead | CF Odey UK Absolute Return | 22% | 21% |
| Steady As She Goes | PFS Chelverton UK Equity Inc | 7% | 7% |