We decided to combine the 33 IM sectors into just five Saltydog ‘groups’, to make it easier for us to do top-level analysis.
As I’m sure you know, different sectors of the market behave in very different ways. Some sectors are very reliable and dependable… and a bit dull. They plod along and nothing much happens. Historically, this means things like cash – the safest, most predictable asset of all - and government bonds from well-established economies. Generally speaking (although not always, especially after the effect of QE on bond markets), your money is safe here, but it’s never going to grow very much.
Then at the other end of the scale are sectors of the market which are very unpredictable. When they go up, they really shoot up. And when they go down, they really drop down. Here we find things like small companies, emerging markets, tech and telecomms, and China. You might make a lot of money in these areas, but you might lose a lot too.
The five Saltydog groups represent different levels of volatility, from the lowest to the highest. And in the spirit of Douglas’s early work in the merchant navy, we gave them nautical names that reflect the degree of risk involved.
Here are the five Saltydog groups - from the least to the most volatile - along with examples of the sectors included within them (note specialist is a bit different and we'll discuss that in a moment):
5. Full Steam Ahead (Emerging Markets) – China, Asia/Pacific, Global emerging markets
4. Full Steam Ahead (Developed Markets) – UK All companies, UK small companies, America, Japan
3. Steady As She Goes – UK equity income, Equity & bond income, flexible investment, Global.
2. Slow Ahead – UK gilts, UK corporate bonds, Absolute Return funds, Global bonds
1. Safe Haven – Money Markets
For more details about our Groups please watch this video
The Specialist Group
The specialist sector is a bit of an odd ball! This is where all the funds which don’t naturally fit into another sector end up and so, not surprisingly, is something of a mixed bag. We consider it ‘high risk’, because most of the funds have the same level of volatility that you would associate with the ‘Full Steam Ahead’ Groups, but this is not always the case. Read more here