High dividend

EdInvestor

dunstonh wrote:

You keep referring to high charges despite proof posted a number of times that you are not correct with that assumption.

You need to check the "portfolio turnover" of the foreign fund toi get an idea of the extra charge. 100% turnover =1% on top of the AMC (which is usually 1.5%). This eats up around 30-40% of your money over a long period of investment over 25 years or so - it's not trivial.

You dont get enough global exposure with the UK companies.

Depends which companies you choose, most big FTSE100 companies are pretty global.

If you lived in another country, would you even think about investing in a UK specific fund?

Perhaps you haven't noticed that foreign investors now own more than 30% of the equity in UK-listed companies and that London has eclipsed Wall Street as the market of choice for major global investment banks and fund managers.

Now why might that be?

Apart from the fact that they love living in London, with its fabulous weather, cheap restaurants, moderate house prices and smooth transport arrangements - could it be because major UK listed companies provide a more stable and profitable way to obtain exposure to global growth?

Or is it just because the regulatory environment is so lax?

dunstonh

You need to check the "portfolio turnover" of the foreign fund toi get an idea of the extra charge. 100% turnover =1% on top of the AMC (which is usually 1.5%). This eats up around 30-40% of your money over a long period of investment over 25 years or so - it's not trivial.

Some UK funds suffer equally high turnover. At the end of the day its the end result that matters. If the portfolio has to be altered to increase protential and remain within its risk rules then that is a good thing and not a bad thing.

Depends which companies you choose, most big FTSE100 companies are pretty global.

Which FTSE100 companies would give you true emerging markets exposure or European Property exposure? How is China and Russia covered?

Perhaps you haven't noticed that foreign investors now own more than 30% of the equity in UK-listed companies and that London has eclipsed Wall Street as the market of choice for major global investment banks and fund managers.

Global investers would have the UK as part of the European sector. Not a "UK" sector.

Apart from the fact that they love living in London, with its fabulous weather, cheap restaurants, moderate house prices and smooth transport arrangements

ROFL.

Or is it just because the regulatory environment is so lax?

Was. It isnt as much as it used to be and the increased tax burden is taking its toll.

Jake'sGran

EdInvestor wrote:

The market in the US was up 16% this year, better than here, and Japan was up 7%.But of course the 12% rise in sterling plus the high charges you pay on foreign funds has wiped out the gains.

IMHO the currency risk means it's not worth bothering with foreign markets when you can get such good global exposure via all the multinational UK companies on the FTSE.

I agree with this entirely. There are some very good investment companies in the UK. Recently I decided that my old PEP with M&G which I had split into three of their funds was doing nothing at all and there was a little item in The Times one weekend when the writer mentioned his favourite funds including M&G Global Basics. As I had about made up my mind to move all of it to another company I thought I'd just swop to this one and had a lovely surprise when I saw it had gained £500 in a few weeks(on £12000). It may not continue I know but it's great when this happens. Maybe I've found another winner.

dunstonh

I agree with this entirely.

If I read what you are saying correctly, you are actually disagreeing with Ed. You have invested in M&G Global Basics. The clue is in the name of the fund "global". Ed is saying that you can stick to UK Shares or UK sector Funds (UK All Company, Smaller Company or UK equity Income for example). You have chosen a global fund.

jamesd

Jake'sGran wrote:

M&G Global Basics. As I had about made up my mind to move all of it to another company I thought I'd just swop to this one and had a lovely surprise when I saw it had gained £500 in a few weeks(on £12000). It may not continue I know but it's great when this happens. Maybe I've found another winner.

Take a look at their interesting data and look at the 3 and 5 year performance. In both cases there's a fund of significantly lower volatility and only slightly lower performance. I don't know what those funds are but that suggests that they may offer a better risk-reward balance.

Just 16% of the holdings are in the UK, so dunstonh is right about your comment actually supporting dunstonh's argument.

EdInvestor

dunstonh wrote:

Some UK funds suffer equally high turnover.

Yes, but churning is more common with overseas funds, and likely to be higher cost in emerging markets particularly.

Which FTSE100 companies would give you true emerging markets exposure or European Property exposure? How is China and Russia covered?

Most large banks (HSBC,Barclays in particular)and insurers (Pru,Aviva) plus consumer goods firms like Unilever, retailers like Tesco,telecoms like Vodafone are exposed to the big consumption growth story in emerging markets. Russia is largely an oil and gas play, try Shell or BP. The miners (BHP Billiton, Rio Tinto, Anglo American) give you access to the China commodities boom. Glaxo and Astra Zeneca are major forces in global pharmaceuticals. Just a few examples. It's actually getting quite hard to find locally focussed companies of any size these days.

Global investers would have the UK as part of the European sector. Not a "UK" sector.

Quite so. If you look at the list of global US Fidelity funds with "worldwide" or "international" spread,UK companies are in the the top three places by percentage exposure in most cases. This is because liquid large cap UK companies of the type the big fund managers want exposure to tend to be global, rather than UK (or even Europe) focussed.

carnet

M&G Global Basics is a fund I've dipped in and out of several times in recent years to very profitable effect.

In Graham French, it has an extremely capable manager and it's resources bias has, of course, been the main contributor to its fine performance over the last 5 years.

However, it is now £2 BILLION in size and, even taking into account M&G's lauded proprietary screening process, may struggle to maintain this outperformance - especially if, as many observers anticipate, any global slowdown reduces China's current demand for raw materials.

IMHO there are several smaller, nimbler funds with more favourable prospects going forward - including the very much smaller offshore version of Global Basics !

oldfella

there was an earlier comment that the 2006 HYP return was in excess of 25% - I have a group of UK equity income funds - the return is well over 25%.

Mike

EdInvestor

I am saying that high yielding shares don't generally have much share price growth

This is not my experience.

The UK has for some time been, in general, the worse performing stockmarket in the western world.

It might be worth adding in the market yield before comparing as the UK's is one of the highest.

Long term equity returns are made up of the average dividend yield,plus average GDP growth, plus inflation.So half of real returns (post inflation) consist of the divi.

It's really not a good idea to invest in shares or funds with no divi, or ones where the divi is taken away in charges.

dunstonh

Most large banks (HSBC,Barclays in particular)and insurers (Pru,Aviva) plus consumer goods firms like Unilever, retailers like Tesco,telecoms like Vodafone are exposed to the big consumption growth story in emerging markets. Russia is largely an oil and gas play, try Shell or BP. The miners (BHP Billiton, Rio Tinto, Anglo American) give you access to the China commodities boom. Glaxo and Astra Zeneca are major forces in global pharmaceuticals. Just a few examples. It's actually getting quite hard to find locally focussed companies of any size these days.

You mention Russia as being mostly oil and that is a good reason why the UK doesnt give decent global coverage. Old Russia was mainly oil but they have a number of emerging industries which are not oil and the UK companies just do not have exposure on that front. The same could be said for many other countries. The UK global exposure will be focused and not widespread.

Quote:
I am saying that high yielding shares don't generally have much share price growth

This is not my experience.

But do you focus on high yield, fairly high but not excessive or rising income?

However, that said, in the short term, there has been capital growth at a greater level than historical levels would suggest there would be.

Yes, but churning is more common with overseas funds, and likely to be higher cost in emerging markets particularly.

You seem to make that sound like a bad thing. It can be an indicator that the fund manager doesnt have a good steady grasp on their fund. However, it can also mean that the fund is performing very well and needs regular transactions to bring it back in line with it's risk profile and investment aims.