MOst adsvisers are unfit for purpose

EdInvestor

You have said a number of times you dont believe in sector allocation.

You do talk tosh at times DH.

One minute you're slagging me off for posting asset allocation calculators to help people do that very thing, and the next you're saying I don't believe in asset allocation.

If I didn't practise asset allocation, I wouldn't know that unbalanced allocations can self-correct, would I?

Still, I guess it's a sign of how seriously you take my arguments that you will post such blatant porkies.

Chrismaths

I noticed the Pru sold off a chunk of the equities in its WP fund earlier this year, as it "needed rebalancing" , ie the share prices had run up relative to bonds/property allocations so that the percentages were out of whack. Shortly afterwards IIRC the market corrected.Doh!!

So I suppose the Pru will now have to buy more equities to restore the situation to what it was before they fiddled about with it, as now the equities component is too small ?This sort of thing just wastes investors' money.

That is possibly the most stupid thing I have ever read.

Let's look at the Pru. Let's say they had a target weighting of 50% equity/50% bonds for simplicity, that it started at £1bn, and that that because the equities had had a good run, they became 60% of the fund.


So they had £500m in equities, £500m in bonds. Just before rebalancing, the equities had grown 50% to become £750m, whilst the bonds are still worth £500m.

So the total fund is now worth £1.25bn. They sell £125m in equities and invest them in to bonds.

The market then falls so the equities are now worth what they were at the beginning - so they have fallen 33% to £417m. Overall fund worth £1.042bn

If they had done nothing, and "let the market rebalance them" (ie let the market fall, it would be worth £1bn. The market has just charged you £42,000,000 to rebalance your porfolio!And you are criticising them because they incurred £100 in dealing fees?

You are on a different planet Ed.

Chrismaths

And your subsequent post just proves you don't understand the point of asset allocation and rebalancing. As a client, you have got the financial advisor you deserve...

dunstonh

You do talk tosh at times DH.

One minute you're slagging me off for posting asset allocation calculators to help people do that very thing, and the next you're saying I don't believe in asset allocation.

In your posts you have put off people having overseas exposure. You cant have true asset allocation if you want to keep your investments only UK based. Make your mind up which its going to be.

Still, I guess it's a sign of how seriously you take my arguments that you will post such blatant porkies.

If necessary, I can dig up a number of past posts from you putting down overseas exposure.

I noticed the Pru sold off a chunk of the equities in its WP fund earlier this year, as it "needed rebalancing" , ie the share prices had run up relative to bonds/property allocations so that the percentages were out of whack. Shortly afterwards IIRC the market corrected.Doh!!

Pru did it before the drop in the markets. However, that wouldnt have mattered. Portfolio rebalancing is about maintaining the portfolio within its risk tolerance.

Hereward

ReportInvestor wrote:

It's not a one year investment. Any stock market investment ought to have a five year plus time frame.

I agree that shares are a long term investment: personally I consider all of my investments as lost as I can't realise them easily or accurately know their current value. I do expect, however, that when I do realise them I will make a tidy profit (less any tax payable of course!).

I chose a one year time frame for the theoretical shares, as I believe that trading costs do not vary very much over the short-term, but can vary significantly over the medium to long term.

EdInvestor

You are on a different planet Ed.

I'm definitely not on the "trading with hindsight" planet, Chris. Not on the "timing the market" planet either,looked at the chart lately?

It's well known that incurring high dealing charges through too frequent trading and trying to time the market are the main things that eat into small investors' profits.

regularsaver1

Sorry guys butI feel this post has gone off the track .........

dunstonh

It's well known that incurring high dealing charges through too frequent trading and trying to time the market are the main things that eat into small investors' profits.

Its well known the rebalancing gains you more in the long run. If you feel you are going to switch more often, then pick a fund supermarket/provider that doesnt charge you on switches.

Sorry guys butI feel this post has gone off the track .........

It has. Perhaps it should be retitled, Most IFAs are fit for purpose but tied salesmen are not.

Conrad

ReportInvestor wrote:

Better ask Axa Sun Life policyholders
They're getting back much less then they paid in, even though the stock market has risen .

And what about the Scottish Widows policyholder who got back less than her investment after 10 years :eek: because of charges.

Exactly why Im so critical of the financial services industry.

In the end there are essentially just a few basic asset classes. The indusrty then creates a wrapper, fills it with jargon and costs layers (think of all the staff within an insurer and associated advisers, advertising agencies, Lawyers that all need paying) then presents it in a nice shiny wrapper, hey presto the investor gets a !!!!!! deal.

Take it from me, stick some in low cost Unit Trusts and invest directly with the people who actually do the investing. Put some more directly into blue chip shares. But a bit into some lesser known shares.
Stick the rest in real estate. Im investing in Berlin, Munich, Morocco and now looking at Warsaw.
Finally invest in your own business, or provide capital for someone trusted to establish a business.

regularsaver1

dunstonh wrote:

Its well known the rebalancing gains you more in the long run. If you feel you are going to switch more often, then pick a fund supermarket/provider that doesnt charge you on switches.



It has. Perhaps it should be retitled, Most IFAs are fit for purpose but tied salesmen are not.

No I think it is more an argument between posters, rather that the real issue. (but still an interesting post)