Which funds do you invest in?

Rollinghome

jamesd wrote: »

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.

I tend to agree with you on the conclusion that the H-L fund is pretty pedestrian and the hyperbole typical of H-L advertising.

At the same time I suggest caution on what that graph demonstrates, if anything.

The instant impression would be that it shows how superb the IP Income fund is. But the chart is for the frequently used but entirely arbitary period of 5 years. Over any other period, 1, 2, 3 or 4 years the impression would be very different. Over any of those periods the IP Income has also underperformed the return from the FTSE All Share. It could of course be pointed out that over other periods the IP Income would look better but then that's really the point, the impression will depend on the period you choose.

Another point is that comparisons must be like with like. A fan of the H-L fund, which I'm not, would claim the benefit it offers is that it moves both between funds and sectors and so should give a more stable and, over the long term, better return. The other funds mentioned are all stuck in their sectors with their mandates.

They might also point to the Jupiter funds. Their flagship and one-time big favourite of advisers, Tony Nutt's Jupiter Income, has gone horribly wrong in recent years: up just 11% over 5 years against the FTSE's 27%. From hero to zero it's now firmly stuck in the Best Invest dog list. But their managed Jupiter Merlin Balanced is up by 35%, treble the Income fund, again over the arbitary 5 year period. So comparing income funds with growth funds, with balanced funds, with non-UK funds, etc. should be done with caution.

Past performance may not be indicative of future returns as they are obliged to point out. Looking back, the row-boat syndrome, can be very misleading. As can graphs and performance figures.

talexuser

Rollinghome wrote: »

Over any other period, 1, 2, 3 or 4 years the impression would be very different. Over any of those periods the IP Income has also underperformed the return from the FTSE All Share.

nope, I've just selected 1 year and 3 years on the HL graphs and in both of those IP Income beats the All Share. Only the 18 months and less than 6 months underperforms, and let's face it 6 months is not the timescale to judge anyway.

Rollinghome

talexuser wrote: »

nope, I've just selected 1 year and 3 years on the HL graphs and in both of those IP Income beats the All Share. Only the 18 months and less than 6 months underperforms, and let's face it 6 months is not the timescale to judge anyway.

I confess I didn't bother to look at the specific returns on those specific dates, just glancing at the charts which doesn't give exact days. The blue of the FTSE against the green of the IP fund.

From the chart, the biggest underperformance is from early 2009 to date. You could also look from Jan 08 onward if you want a longer period, appears to be a fall of close to 10% relative to the blue FTSE trace.

But that's the problem, any period is arbitary, epecially when there's so many spikes from month to month, day to day. Is it necessarily right to assume that recent returns are less indicative than more distant figures? Presumably there were those saying after the Nikkei tumble in the 90s that we shouldn't look at figures for the last year but for the five impressive years before that. They would have been wrong of course. There is no "correct period" when you're looking backwards. The period is arbitary and unless you are comparing like with very like, so is the comparison.

jamesd

Rollinghome, I checked all available periods up to five years. The main deficit other than those mentioned already was the well known decision to keep Invesco Perpetual Income with a defensive stance in 2009, causing it to under-perform for that period compared to the FTSE All Share Index. Performance differences do vary over the various time periods but nothing of great significance to the message that using the adjective "superb" about this particular HL fund is not an example of high quality advertising or financial guidance.

Rollinghome

jamesd wrote: »

Performance differences do vary over the various time periods but nothing of great significance to the message that using the adjective "superb" about this particular HL fund is not an example of high quality advertising or financial guidance.

Unfortunately if you want "high quality advertising or financial guidance" then H-L is unlikely to be the place to get it.

Rollinghome

talexuser wrote: »

nope, I've just selected 1 year and 3 years on the HL graphs and in both of those IP Income beats the All Share.

Just had a look. Are we looking at the same thing or are you not looking at the total cumulative returns for both, i.e, including the income from one but not the other?

What I'm seeing is:
Cumulative performance
Investment period
3 months 6 months 1 year 3 years 5 years
Invesco Perp Income Inc
5.14% 10.14% 11.82% -0.05% 35.77%
FTSE All Share
10.68% 12.82% 13.36% 5.91% 27.9%

Doesn't format well but seems to say:
over 1 year IP Income is up 11.82% but FTSE up 13.36%,
over 3 years IP Income down -0.05% but FTSE up 5.91%.

Which seems to confirm the earlier point. Can you paste the figures you're referring to?

talexuser

I looked at the graphs but with ACC which is income automatically reinvested, which clearly showed the reverse.

Rollinghome

talexuser wrote: »

I looked at the graphs but with ACC which is income automatically reinvested, which clearly showed the reverse.

Those are the figures copied and pasted directly from H-L, i.e. the figures at the bottom of the performance page. The total cumulative return should be the same for both Inc and Acc funds (within a fraction of a percent).

If you paste the figures you saw it might throw some light on it.

talexuser

as I said before look at the graphs for 1 and 3 years (on HL).

Here are the graphs from iii

1 year

http://www.iii.co.uk/investment/detail?type=chart&display=chart&code=mex%3APPINCA&it=ukut&timeframe=1y&index=li%3Acotn%3AASX.L&versus=&linetype=line&Go=Plot+&overlay=&overlay2=&overlay3=&overlay4=&indicator=&indicator2=&indicator3=&indicator4=&chartwidth=500&buylines=on&triggers=on

3 year

http://www.iii.co.uk/investment/detail?type=chart&display=chart&code=mex%3APPINCA&it=ukut&timeframe=3y&index=li%3Acotn%3AASX.L&versus=&linetype=line&Go=Plot+&overlay=&overlay2=&overlay3=&overlay4=&indicator=&indicator2=&indicator3=&indicator4=&chartwidth=500&buylines=on&triggers=on

Rollinghome

talexuser wrote: »

as I said before look at the graphs for 1 and 3 years.

If you can't post the figures you saw it doesn't help much in knowing what you were looking at. Perhaps a completely different fund altogether, we can only guess.

FYI, pasted directly again from H-L both the Inc and Acc figures.

Cumulative performance
Investment period 3 months 6 months 1 year 3 years 5 years
Invesco Perp Income Inc 5.14% 10.14% 11.82% -0.05% 35.77%
Invesco Perp Income Acc 5.16% 10.16% 12.01% 0.08% 36.03%
FTSE All Share 10.68% 12.82% 13.36% 5.91% 27.9%
(Both Inc and Acc about the same as expected.)

If you ever find the figures for the graph you say you saw perhaps you could post them. Otherwise just put it down to a computer glitch or trick of the light.