Disinvestment strategy

[Snoopy]

But if no particular interest then yes sell 2/3 now, 1/3 managed funds now. I say this ratio because despite a bad quarter equities still aren't cheap historically and its not a time to be over weighted with risk from equities or low yielding bonds though you still have some. Retain one third cash from the sales to add to the managed fund over time (quite a long time) and in particular if prices fall.

Selling shares to buy into a managed fund is really selling one kind of equities to buy into another (or bonds to buy another if a bond fund). DAF opened this thread to discuss a disinvestment strategy for a share and bond portfolio. But if DAF is taking individual shares and bonds and putting those into managed funds (for some of the capital at least) then this isn't rally disinvestment. It is redistributing assets and externalizing management of those assets.

On rethinking this overnight, perhaps splitting what assets you have into 'three equal boxes' (for example) and doing the disinvestment in stages is not so important? Where a disinvestment strategy is more important is when you are taking assets from one asset class and reinvesting into another. In that case the values of the investment class you are taking assets from and the value of the asset class you are moving assets to are not correlated. So timing is important, and spreading the transactions over a time period, to avoid distortion by a single market peak or trough, makes sense.

Leaving the disinvestment question aside, the net meaning behind your post Peat, is that equities are not cheap historically so you should not be overexposed to them, with either individual shares or funds. But aren't the high share markets really just a product of low interest rates? And while share markets and bonds will undoubtedly suffer losses should interest rates rise, there are powerful government forces out there not wanting economies to be derailed. IMO these overvalued markets and low interest rates could persist for years. And while I agree with you that having some cash on hand to take advantage of market opportunities is a good idea, having 1/3 of all your assets in cash, earning virtually no return, might be taking things too far?

SNOOPY