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Investment Opinions - Mutual Funds (Energy)

  • 09-05-2009 10:08pm
    #1
    friendface
    Registered Users, Registered Users 2 Posts: 812 ✭✭✭


    Hi all, I'm fairly new to investments and have a quick question in relation to a fund I am looking to invest in. The fund I am looking at is the 'BGF World Energy Fund' (http://www.rabodirect.ie/investments/fotm/default.aspx), currently RaboBanks fund of the month. They are offering free entry this month (usually 0.75% commission) so I reckoned now would be a good time to invest seeing as I have been interested in investing for a while.

    I suppose I'm just looking for advice on whether these type of funds are usually a good place for your money. I'm assuming they are going to be safer than single stocks since they invest in a number of different companies (Shell, Chevron, BP and Exxon being among the top 5)

    Also, I would probably be looking to invest for a period of 7-10 years or more and that is why I thought fund in energy (especially oil) will be set to rise. These shares peaked at a price of around $32/per share in May of 2008 when oil was around $140 per barrel. Currently shares stand at $14.62 each. I know i'm just speculating but I reckon this fund stands to earn a decent return over the next 5-6 years. With the current recession and low demand for oil would I be wrong in assuming that prices will start to rise again fairly prominently once global economies turn.

    Would really appreciate any advice ye can give.


Comments

  • #2
    A Random Walk
    Closed Accounts Posts: 346 ✭✭A Random Walk


    Will this be your only investment? If so it leaves you very exposed to a single sector and is generally not a recommended strategy. Then again, concentrating all your funds in a single area is a good way to make large profits if the area does well, but does expose you to the risks of large losses if it does poorly.


  • #3
    friendface
    Registered Users, Registered Users 2 Posts: 812 ✭✭✭friendface


    Well I already have a relatively small number of shares in the 'BGF New energy fund' which invests primarily in renewable energies, wind energy being the biggest share in the portfolio. Would I be better off investing in a number of sectors then? If so, are there any you might recommend? I would prefer to keep away from the financials and will be looking to invest through RaboDirect investments. I would prefer to invest in the managed funds listed there as I beleive the offer slightly less risk?


  • #4
    A Random Walk
    Closed Accounts Posts: 346 ✭✭A Random Walk


    friendface wrote: »
    Would I be better off investing in a number of sectors then?
    In general diversification is good as it spreads your risk. You're talking about putting everything into energy stocks which is fine if you win but could expose you to big losses if you lose. I suggest you read one of the books which are often recommended on this forum.

    I wouldn't discount financials myself.
    I would prefer to invest in the managed funds listed there as I beleive the offer slightly less risk?
    Risk depends on what the mutual fund invests in - Rabo funds in themselves are not less risky than any others. A fund which invests in Emerging markets is going to be more risky than a fund that invests in European blue chips (however may offer the potential for better returns).

    When it comes to managed funds I would suggest spending a lot of time finding the cheapest fees.


  • #5
    xebec
    Registered Users, Registered Users 2 Posts: 3,311 ✭✭✭xebec


    friendface wrote: »
    Would really appreciate any advice ye can give.

    No advice given on this forum, just opinions of the users. If you want actual advice seek out a Financial Advisor...


  • #6
    DJDC
    Closed Accounts Posts: 365 ✭✭DJDC


    No advice given on this forum, just opinions of the users. If you want actual advice seek out a Financial Advisor...

    Ha and some guy with a useless QFA certificate whose job is to try extract as much money for you as he can is better at giving advice than some of the experienced traders on this forum :rolleyes:

    One question you have to ask yourself before you invest in this fund is what will be the future correlation between oil price preformance and the energy companies you mentioned. The increasing nationalisation of energy supplies through Gazprom, PetroChina etc mean the these companies face an uncertain future. Personally, Id try invest in the base parameters, in this case raw energy prices. However oil ETF's also don't fully capture the forward curve properly but I can see the quality of these products improving due to well-publised limitations.


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