[Opinion] Allan Gray Funds

[anakin]

I'm just wondering if it could work...

I have RA and perservation funds at Allan Gray and the type of fund is Equity. I keep my eyes on all types of Allan Gray funds every day and some of the funds seem to be on downward curve now.

They also have some stabler funds. Moneymarket or Optimal Fund for example. (I call Optimal fund "Reverse" fund as it tends to go up a little bit as the Equity share goes down dramatically).

Here is my idea as we are free to switch to any type of funds at any time. It is basically a stop-loss strategy while you can have more shares at the end of the day.

Say at one point of time, you have R50 000 worth of shares in Equity Fund and the unit price of share is R150 hence you have around 333 units of shares.

The next day, the market move downward and you have R 48000 worth of shares - R 144 per unit. You decide to switch the fund to more stabler fund. Still R 48000 worth of shares in stabler fund.

Some days/weeks passed until the market movement seems to be going up again. The unit price is worth R135 now. Then you decide again to switch the fund back to Equity fund. You still have R48000 (plus increase if you are lucky) worth of shares thanks to stabler fund.

You still win because you have more units now - 355 units comparing to the original 333 units before you switch the fund. I guess for long-term investment, it is better to push the units up early on.

Do you agree?

[Dave A]

Can you just switch funds like that, though?
And are there any costs involved?

[anakin]

Yes!

I test switched the fund to balanced fund last month - medium risk fund and there are no costs involved!

I asked pretty Allan Gray Consultant and she said there are no costs involved!

The main reason why I asked you is that I don't have any experience in share trading...

[anakin]

Check attachment - a screenshot from my Allan Gray account - I blurred out all values.

[Dave A]

Hmm. Interesting way to be able to switch from equities to money market and bonds just like that.

The real question is what are equities going to do from here? So they dipped, sometimes they bounce, sometimes they keep sliding. It's crystal ball stuff.

[anakin]

It is the only thing that stops me - but if I stick to 10% stop-loss strategy, it may work very well in long term.

To avoid using rearview, I played with excel sheet during the past 2 weeks and the total units increased by almost 5% which is not bad at all! The value is slightly less, but when the unit price is the same at the point of time when I switched to more stabler fund - $$$!