Which funds do you invest in?

dunstonh

I'm by no means an expert, but I find it hard to believe you can find 150 funds that consistently beat their respective indexes with relatively low risk!

low risk has nothing to do with it. Relative risk is more important and relevence to the index in question (i.e. no point comparing corporate bond funds against the FTSE100).

Initially I was never impressed. But now find a considerable number of entries on my portfolios have the 'yellow Wealth 150 star'. So I'm suddenly a bit puzzled if I've inadvertently moved in their direction (as I rarely look at the list) ............... or if they're following me and my (fund chooser) hatpin!

No. The list is a marketing list that generally shows the current best sellers. They are best sellers typically because they are more likely to be the ones that are doing well.

If you have opened an account with H-L and you are unsure what funds to invest in, you could do worse than take a look at their own "Multi-Manager Funds". These are managed "funds of funds" and they have at least one of these in each of the popular investment sectors. Look on the H-L web site for "Fund Research and Discounts" and select Hargreaves Lansdown in the "By Company" index.

For someone who doesn't want to be constantly reviewing their portfolio, this is a way of having it done for you. The performance of the H-L Multi-Manager funds is about average, measured against their relative benchmarks. Not outstanding ... but at the moment they are certainly not losing money.

HL MM funds are not exactly great though. Especially if you are looking at the HL SIPP. We have seen people on this forum come out of a an insurance company balanced managed fund with a TER under 1% to go into the HL SIPP using HL MM funds with a higher TER thinking that they were getting better and cheaper (the insurance company fund held had beaten the HL MM fund every year using discrete performance). A sign of how good HL are at marketing when you can get someone to take their money out of a better and cheaper contract into more expensive one with lower performance and make them think it is better and cheaper.

I do agree with the concept that a lazy investor is better with a fund of funds rather than a random selection of sector specific funds which wont get serviced and rebalanced.

talexuser

dunstonh wrote: »

low risk has nothing to do with it. Relative risk is more important and relevence to the index in question (i.e. no point comparing corporate bond funds against the FTSE100).

by low risk I was referring to that part of my investments which I regard as "relatively low risk", ie I now have virtually as much in bond funds as UK equity income funds since they have done so well. The higher risk stuff does not have quite so much money in it because the volatility risk is too much for my taste and profits can be burnt in currency fluctuations.

I still stand by my theory that you would be hard pressed to find 150 funds that stand a good chance of justifying their charges with consistent long term performance based on stock picking skill rather than flash in the pans or odd lucky years etc. Just a personal opinion based on following many "white list" type recommendations from various sources over many years and seeing what happens to them a few years down the line.

MyLastFiver

my funds:

HSBC FTSE All-Share Tracker (very low TER)
Aberdeen Emerging Markets

dunstonh

I still stand by my theory that you would be hard pressed to find 150 funds that stand a good chance of justifying their charges with consistent long term performance based on stock picking skill rather than flash in the pans or odd lucky years etc. Just a personal opinion based on following many "white list" type recommendations from various sources over many years and seeing what happens to them a few years down the line.

Thats because many sector focused funds work best in certain stages of the economic cycal and not others. A large cap fund isnt going to do well (either tracker of managed) if large caps are not the place to be. When you go with sector focused investment funds you need to be prepared to move with the economic cycle. If you are not prepared to put that level of research in then you are better off with portfolio funds/fund of funds. even if you go with trackers, you still need to put some effort in as to how much you hold in each region and if you start using more focused trackers (like mid caps for example) then you are creating almost as much work as you need to do with managed.

sabretoothtigger

Alot of Bonds arent low risk anymore. How is it that governments have increased their debt, lowered their gdp and applicable tax revenue available and yet the bonds they sell are more expensive then ever. The price is up but so is the risk and bonds are poor value.

Yet if HL wants to put a star next to a bond fund let them, I disagree with the idea of 'relatively low risk' for anything.
Its likely peoples perceptions are often the opposite to the reality of a situation - it reflects just what has done well previously

talexuser

I agree about your point about bonds and gov debt. It looks like they will inflate their way out of debt by devaluing with oodles of printed money anyway. However the concept of "relatively low risk" has some meaning for me. One simple example.

I've had Perpetual High Income for around 12 years from an intial 6 grand pep, now 23 grand (it's actually the only one I've never switched so far). If I had bought it say 5 years ago knowing its record then, compared with buying say a standard Lloyds bank offering (pretty much a tracker with sky high charges like most bank rubbish) it was a pretty safe bet that after charges it would be much better off. This is a fund that will never double in a year but is relatively low risk in my way of thinking while Woodford remains in charge because of his record across cycles.

Rollinghome

Totton wrote: »

If with HL then you would get Troy Trojan I Inc but note that this has a higher TER than their 'O' version (available direct but at a 5% initial fee) and it pays no trailback commission (would you miss the usual 0.15% of other funds?)

Is that initial fee still applied? I seem to vaguely remember that being the case for smaller investments but can't see it mentioned now.
See http://www.taml.co.uk/trojan_charges_explained_terms.asp?mode=agree
and http://www.morningstar.co.uk/uk/snapshot/snapshot.aspx?tab=5&id=F0GBR06OFH&lang=en-GB .

Or have I missed it somewhere? There is an explicit dilution levy of 0.5% on purchases and sales which goes to the fund rather than the managers.

sabretoothtigger

talexuser wrote: »

This is a fund that will never double in a year but is relatively low risk in my way of thinking while Woodford remains in charge because of his record across cycles.

That does sound a very good return. I think I had that one for a while in 2009 but if anything it was disappointing because it moves so slow. I expect this year it compared far better because market has been sideways mostly

I think this is beta rather then risk exactly. He doesn't follow the market, he is trying to gain consistently.

http://en.wikipedia.org/wiki/Beta_(finance))

jamesd

WaltD wrote: »

The performance of the H-L Multi-Manager funds is about average, measured against their relative benchmarks. Not outstanding ... but at the moment they are certainly not losing money.

They are best avoided unless you really can't pick alternative funds instead.

Here's how they touted one fund in a recent email "The HL Multi-Manager Income & Growth Trust brings together some of the finest fund managers in the equity income sector and the performance has been superb". That "superb" performance hasn't even managed to match a FTSE All Share Index tracker fund. It's the sort of active fund that you should be trying to avoid buying.


Red is the HL Multi Manager Income and Growth fund, accumlation units. Blue is the FTSE All Share Index. Yellow is the HL fund's largest holding, Artemis Income, retail accumulation. Green is Invesco Perpetual Income. All are total return over five years.

talexuser

Isn't it amazing that Artemis Income comes at the top of many IFAs recommended lists for that sector, and yet looks just like a closet tracker with higher charges and very wide spread (about 6%) before you start making money. Unfortunately it's still part of my portfolio...;)