Funds fees query

darkpool

dunstonh wrote: »

Who is saying they can forecast an economic cycle?

pretending that people don't move when fund managers move and holding the funds at the wrong times in the economic cycle instead of just the right ones

kar999

darkpool wrote: »

Any intelligent savvy active fund investor picks and choices their active funds in any given specialist sector given the prevaling circumstances rather than blindly leaving them to chance or the vagracies of the market which is what index trackers do.

Thats not predicting the economic cycle. It's a judgement call. If I knew next weeks lottery numbers I wouldn't be wasting my time on here. I'm investing in NS&I index linked certificates because I beleive the RPI will stay high and interest rates low for some time. That's my view of the prevailing circumstances. I could be wrong.



EDIT: (Good to see the Mods have removed certain previous abusive posts)

darkpool

kar999 wrote: »

Thats not predicting the economic cycle. It's a judgement call. If I knew next weeks lottery numbers I wouldn't be wasting my time on here. I'm investing in NS&I index linked certificates because I beleive the RPI will stay high and interest rates low for some time. That's my view of the prevailing circumstances. I could be wrong.



BTW abusive swearing posts are against the forum rules. Thank you.

ehhhmmmm ok, i'd have thought RPI would have been corellated to the economic cycle. i'll just bin my economics books now.

jamesd

darkpool wrote: »

i'll be honest, i've no idea what point you are making. but you say a skilled manager should not be expected to be in the top quartile? what quartile should a top manager be in?

There are two top quartiles involved in the report that the FT referenced, even though the FT columnist only mentioned one of them.

1. Performance.
2. Volatility.

To be considered a success a fund was required to be in the upper quartile for both measures, not just one.

If you believe in efficient markets theory then it is a prerequisite to accept that higher performance is associated with higher volatility/risk. So a fund manager who is top in performance should also be expected to be less than top on volatility. Change is what volatility measures, so it should be clear that out-performing the average automatically means that volatility can be expected to be higher than average.

And that list of funds illustrated the point of why the study was fundamentally bogus or useless: by showing that the best performing funds that people should have wanted to hold during the period would be rejected and called bad - even though they were the best for performance - for exactly the reason people would have wanted them: their higher upwards volatility.

darkpool

jamesd wrote: »

There are two top quartiles involved in the report that the FT referenced, even though the FT columnist only mentioned one of them.

1. Performance.
2. Volatility.

To be considered a success a fund was required to be in the upper quartile for both measures, not just one.

If you believe in efficient markets theory then it is a prerequisite to accept that higher performance is associated with higher volatility/risk. So a fund manager who is top in performance should also be expected to be less than top on volatility. Change is what volatility measures, so it should be clear that out-performing the average automatically means that volatility can be expected to be higher than average.

And that list of funds illustrated the point of why the study was fundamentally bogus or useless: by showing that the best performing funds that people should have wanted to hold during the period would be rejected and called bad - even though they were the best for performance - for exactly the reason people would have wanted them: their higher upwards volatility.

ehhhhmmmm i'm still not getting it. You suggest that the Thames River and the Financial Times are a bunch of muppets?

jamesd

I'm suggesting that the study was eliminating from consideration funds that didn't meet two mutually contradictory performance requirements, yes. And that the FT columnist didn't mention the volatility test that was very important in understanding the low success rate.

darkpool

jamesd wrote: »

I'm suggesting that the study was eliminating from consideration funds that didn't meet two mutually contradictory performance requirements, yes. And that the FT columnist didn't mention the volatility test that was very important in understanding the low success rate.

have you contacted the Financial Times and Thames River pointing out their report and article is "useless".

at the end of the day i put more weight in the Financial Times than someone on the internet........

The report says

"The TRMC consistency ratio – which measures the proportion of funds that perform consistently above average in each of the last three 12 month periods, in addition to those which are consistently top quartile over the same period – revealed that the percentage of funds delivering above median returns fell from 9.9% in the last quarter to just 8.6%, one of the lowest recordings ever in many years. The number of funds achieving top quartile ranking over the last 3 consecutive years was only 16."

So only 8.6% of funds delivered above average annual performance for three years running.........the report compares funds to their sector group.........

dunstonh

If you look at returns without analysing risk then any "perception" or opinion you derive from your flawed research will be wrong.

kar999

darkpool wrote: »

at the end of the day i put more weight in the Financial Times than someone on the internet........

For once I have to agree with you there!!

So when there is an article suggesting the time is right to get into a particular sector like Equity Income I give it due consideration.

Just one example from last year I recall..

http://www.ft.com/cms/s/2/acb4cd72-1284-11df-a611-00144feab49a.html#axzz1PCEaq94i

“Equity income funds are always more highly rated,” says Elliott. “Compared with some investment trusts, they are more expensive, but the reason is that they offer an attractive yield.”

cloud_dog

Please let me know if you ever find a newspaper that writes an article without a slant in order to deliver the focus they want you to take away with you.

I'm sure you've heard the quote......... "There are three kinds of lies: lies, damned lies and statistics."