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Hybrid market timing approach via allocation between trusts and funds : UKInvesting


Timing the market isn’t possible without some serious luck, hence DCA being so popular. What if I try to time the market by varying allocation to assets?

My two main holdings are Fundsmith Sustainable and BG Positive Change and I pay into each monthly. Lets assume that Smithson and Scottish Mortgage are the investment trust versions of these (Smithson is the smallcap version, SMT has similar style but not quite the same as positive change). SMT premium/discount varies between -5 and +5% recently, Smithson +2 and +4%. I set the following condition for investment:

If SMT premium >1%, invest 100% in Positive change. If premium <1% invest 50:50 between the two. If Smithson premium >3%, invest 100% in Fundsmith. If premium <3% invest 50:50 between the two.

With this approach I only buy the trusts when they’re ‘cheap’, I put the same amount of money into my investments each month, just vary the allocation. Am I missing anything here other than the issue that SMT and Positive Change aren’t exact trust/fund versions of each other (though they are highly correlated)? My dealing costs are zero as I buy the trusts through T212.



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