choosing Funds

meridian

For those of you who do your own fund investments can you advise me the best advice/performance sites as there are several and the terminology is quite confusing in fact the whole area of investing is confusing, most of the press says only 40% of fund managers get it right so no wonder I'm struggling. When looking at a performance chart is it the 10 yr annualised number which one notes, does this mean the % you would have earned in total if you had invested for 10 yrs. Thanks.

calebdylan

If you are selecting actively managed mutual funds of your own volition, or if you are forced to do so because your 401(k) plan does not provide an index fund, you should have the mindset that you are selecting from a universe that underperforms the market and you are primarily attempting to cut your losses. If you think that we can give you a set of directions that are likely to beat the market using mutual funds -- well, we really don't have a system for that and we don't believe anyone else does either. But with the objective of keeping expense ratios and turnover low, you can improve your chances of finding a fund that will not lose badly to the market and improve your chances of finding a fund that holds some promise of outperforming the market.

cloud_dog

calebdylan, you know this is a UK based site, dont you?

martinfollower_2

Meridian,

Calebdylan talking about 401k measn he is talking about US based funds/pensions...

There is an arguement (very strong in the US) that trackers will outperform funs managers picking stocks etc. Search the forums to read more.

By the law of averages, some funds may not beat the markets, but some do. The old line of past perfomance is no guide to future perfomance is true, especially where the fund manager changes...

Good luck1

dunstonh

There is an arguement (very strong in the US) that trackers will outperform funs managers picking stocks etc. Search the forums to read more.

There isnt much of an argument in the US because the system favours trackers. However, we dont have the same handicaps in the UK.

Aegis

martinfollower wrote: »

There is an arguement (very strong in the US) that trackers will outperform funs managers picking stocks etc. Search the forums to read more.

It's true in the states. They're taxation system is much more favourable to the funds which buy and hold rather than making trades to maximise profit. Every single transaction on a mutual fund in the states is taxed as a capital gain, while over here the CGT liability is only on the investor into the fund. The active managers therefore have to fight an uphill battle against both the tax system and the charges that they levy to keep their companies in business (and to pay their salaries of course).

Reaper

calebdylan wrote: »

If you are selecting actively managed mutual funds of your own volition, or if you are forced to do so because your 401(k) plan does not provide an index fund, you should have the mindset that you are selecting from a universe that underperforms the market and you are primarily attempting to cut your losses. If you think that we can give you a set of directions that are likely to beat the market using mutual funds -- well, we really don't have a system for that and we don't believe anyone else does either. But with the objective of keeping expense ratios and turnover low, you can improve your chances of finding a fund that will not lose badly to the market and improve your chances of finding a fund that holds some promise of outperforming the market.

That is an extract from the US Motley Fool site which is why it is not relevant here. I suggest looking at the UK version instead. Either way you really ought to attribute it just in case they get funny about copyright.

sibot74

To answer your specific question:

meridian wrote: »

When looking at a performance chart is it the 10 yr annualised number which one notes, does this mean the % you would have earned in total if you had invested for 10 yrs.

No. Annualised means that the total return over the last 10 years has been converted to an equivalent yearly increase figure. E.g. a 10yr annualised return of 5% would mean that an investment of £100 taken out 10 years ago would have grown by 5% each year, giving a total value at the end of year 10 of £162.89.

Jonbvn

meridian wrote: »

For those of you who do your own fund investments can you advise me the best advice/performance sites as there are several and the terminology is quite confusing in fact the whole area of investing is confusing, most of the press says only 40% of fund managers get it right so no wonder I'm struggling. When looking at a performance chart is it the 10 yr annualised number which one notes, does this mean the % you would have earned in total if you had invested for 10 yrs. Thanks.

A good starting point is Trustnet. - Huge amount of info available.

Check out the alpha-managers.
http://www.trustnet.com/Managers/Home.aspx

humbug12

When viewing a candidate fund at, say, TrustNet, is it possible to see (I haven't found it) or calculate the risk rating of the fund on a scale of 1 (least risk) to 10 (most risk)? Presumably IFAs need/have some way to work that out?

dunstonh

Presumably IFAs need/have some way to work that out?

yes we do.

When viewing a candidate fund at, say, TrustNet, is it possible to see (I haven't found it) or calculate the risk rating of the fund on a scale of 1 (least risk) to 10 (most risk)?

it does on the paid for version but I don't know about the free version. However, even on the paid one it isn't really accurate as its a snapshot based on holdings. Whereas a fund may be defensive in that period and appear lower risk when in reality it can invest more aggressively and higher risk.