Halifax FTSE 100 Tracker ISA

ISAmad · 12 January 2009 at 9:07PM

Thanks all. I'm even more confused than when I started!! lol

Thanks anyway for all your contributions :T

cloud_dog · 13 January 2009 at 12:36AM

I have to admit to liking the simplcty of tracjers but not liking them as an investment vehicle. As others have mentioned some of it comes down to whether you can be bothered or want to do some research.

If you can then I think there are better options out there than trackers. For example during the recent turmoil a number of fund managers (or at least a number of the ones I follow) have taken large cash positions prior / during the initial onslaught which is something a tracker cannot do.

Another method of research and investment, and one I've done in the past, is to monitor consistently top performing managers, and to follw them, i.e. if they move to another investment house, follow them. You can research managers performance at Best Invest:

http://ww2.bestinvest.co.uk/fundmanagers/fmpro?-db=webprices.fp5&-format=index.htm&-token=&-token.1=99&-token.2=5&-token.3=3&-view

Another good site is https://www.trustnet.com.

You can always start your investment travel by creating a dummy portfolio and practise making investment decisions without actually investing money. A number of sites provide this service but I like https://www.iii.co.uk.

cloud_dog

purch · 13 January 2009 at 8:36AM

during the recent turmoil a number of fund managers (or at least a number of the ones I follow) have taken large cash positions

WIMPS !!!!!!!!!!!! :eek:

Dooooooooooooooonut · 13 January 2009 at 8:51AM

Aegis wrote: »

Personally I'm more skeptical of claims that a fund manager can fluke his way to outperforming the index over pretty much any time frame you'd like to pick. There are several fund managers that do just that, and calling it luck is effectively ignoring the statistical unlikelihood of someone managing to achieve that result without some sort of advantage over the index.

You need to consider the size of the universe of fund managers. I would be more surprised if a few didn't have a great track record.

So how do you distinguish those who have the track record by chance from those who have it through skill?

cloud_dog · 13 January 2009 at 12:26PM

Dooooooooooooooonut wrote: »

So how do you distinguish those who have the track record by chance from those who have it through skill?

Ahem............... http://ww2.bestinvest.co.uk/fundmana...oken.3=3&-view

Dooooooooooooooonut · 13 January 2009 at 12:48PM

through a broken link on a message board?

oh

cloud_dog · 13 January 2009 at 1:18PM

cloud_dog wrote: »

Ahem............... http://ww2.bestinvest.co.uk/fundmana...oken.3=3&-view

The link doesn't paste correctly, so just go to:

https://www.bestinvest.co.uk
click on Investments (tab at the top)
click on Research
click on Manager Research

This page allows you to research fund managers to the n'th degree.

Enjoy

Dooooooooooooooonut · 13 January 2009 at 1:41PM

well whoopee doopee do

And how do I use this research to tell the difference between good luck and skill?

Aegis · 13 January 2009 at 2:10PM

Dooooooooooooooonut wrote: »

You need to consider the size of the universe of fund managers. I would be more surprised if a few didn't have a great track record.

So how do you distinguish those who have the track record by chance from those who have it through skill?

I'd be extremely surprised, actually. If you define beating the index as a statistically unlikely event of, say, 25% probability in any given year (still less than what you'd have to believe based on some research), then in order to beat the index for 10 years in a row, you'd need to get lucky and beat odds of 0.0000954%. Even at 50% (i.e. the same as a coin toss), the chances of a given fund manager doing this would be 0.0977%. Assume that the fund manager is allowed a year of not beating the index in that time frame and you increase the odds slightly, but still not by enough to make this claim of blind chance stick.

If the fund manager universe consisted of tens of thousands in each sector, then you might expect to see one or two consistently beating the index over a 10 year period, but you certainly shouldn't see what we do, which is tracker performance consistently being mid-table compared with some of the big names out there.

All in all, the maths argument really doesn't stick too well because of all the factors involved, but this simply shows that seeing something occuring on a fairly regular basis and putting it down to blind luck simply doesn't work out in terms of number.

There have been a few efforts in the UK to work out how much value a specific fund manager adds to the funds under his direction, and they generally seem to come out with a few good names each year who manage to stay ahead of the index fairly consistently. I put that down to skill rather than luck.

cloud_dog · 13 January 2009 at 2:14PM

Dooooooooooooooonut wrote: »

well whoopee doopee do

And how do I use this research to tell the difference between good luck and skill?

I started to reply to your post with specific information but then thought....... sod it.

Below is an extract from the actual page:

"MRI allows us to identify those managers that are just lucky and those that show genuine skill. MRIs play an important part in our fund rating system, but we will never rate a fund before thoroughly interviewing the manager."

Now, I'm not suggesting everyone takes BestInvests view / info as gospel but it adds to the wealth of information that is out there and can help people in making investment decisions.

Now, if only I could find a "whoopee doopee" web page that allowed me to identify the ignorant from the idiot.......... more research I think.

Halifax FTSE 100 Tracker ISA

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