Professional IFA HELP needed for £80,000

benood

I think that Chrismaths was saying that 10 year performance includes the last year as does 1,3 and 5 year performance - ie bias towards recent time. Presumably it's better to look at year on year performance to get a true indication of consistency. However, I'm not sure if such info is readily available, any suggestions?

The banter on this forum is part of the reason I read it!

Chrismaths

Cheers benood, that's what I was saying. Discrete periods taken over differing market conditions should give you a clue. Trustnet has information for the funds that subscribe to it, but it's not easily searchable.

si1503

wongseefu wrote:

Sorry guys, didn't know it was against the rules l apologise again.

Yea, time after time l think my lack of knowledge is getting the better of me. I only started becoming interested in funds about 2 months ago so alot to learn.

What l'm doing is comparing funds against each other and as you have rightly said it's the top performers for each quarter that l'm looking at. Consistency is def. a more important factor.

Well, I'd say both factors are equally very important, consistency without performance won't get you very far. Consistant outperformance is what you want when investing in funds (certainly its what I look for), hence year on year performance data (mentioned above) can be a useful thing to look at. Though there are many other factors to consider as you are probably already aware of, such as the fund manager, sector of the fund, type of assets the fund invests in, and to a lesser extent things like the fund size and its charges.

Ok if l rephrase the question. I want to have more exposure to the asian market and further east. Any recommendations in how to tinker with my portfolio. Something like another £100 monthly to a asian fund (include Japan). That way l won't be commiting a big lump sum of my portfolio in there and if it's not doing well l can review it in my next meeting.

Sounds fine here. I'd also review the initial 50k you are investing. Currently you have it split amongst 7 funds, I'd perhaps look to expand on that split slightly to cover a slightly broader range of funds to better suit your risk profile. You say you are high risk but that initial 50k seems to be mostly held in more moderate risk funds, portfolio funds, UK equity and UK property. Obviously your monthly choices are more high risk, but they will take some time to build up in terms of weighting.

Another question l have is regarding the Morning Star ratings. What is the best way to interpret these star ratings and are they that reliable?

They have some use to a new investor perhaps as part of a wider scope of research, however I tend to think there are much more important things to consider when making a fund investment decision, such as the factors I mentioned in my first paragraph.

jem16

Jake'sGran wrote:

I was thinking exactly the same thing and have been a fan of EdInvestor since I started reading this forum. Compared to the professionals on this board I am a real novice but have used performance tables for some time now. What is the point of them if they not meant to be a guide for seasoned and novice investors? Whichever forum I do read, on MSE, BBC (gardening :-)) etc there is always someone who seems to enjoy having a go at another contributor! Don't know about others but it puts me off posting.

A lot of Ed's posts, especially on the pension forum, contain a lot of useful information and I quite enjoy reading them too. As with benood I also enjoy the banter.

However, even to a novice such as myself, it is quite clear that on the investment front she posts a lot of information which is quite clearly wrong and not just an alternative point of view. Despite these inaccuracies being repeatedly pointed out often by Chrismaths, Dunstonh and a few others who have given up posting, she continues to post them.

I can see where CM has finally run out of patience

EdInvestor

Jake'sGran wrote:

ctdctd wrote:

Whichever forum I do read, on MSE, BBC (gardening :-)) etc there is always someone who seems to enjoy having a go at another contributor! Don't know about others but it puts me off posting.

Don't be put off JG. These attacks are fairly rare and as other posters have said, they like to hear both sides of the argument.IMHO posters are quite able to decide for themselves which information is correct - and/or if they might need to do some more research.

It's important that people learn what kind of questions to ask their advisors, because often there can be a conflict of interest between advisor and client: he may make more money if you make less.

Sites like MSE can contribute a lot to helping people understand important investment issues such as how to manage risk and the impact of charges, and I'm pleased to hear that people think the "banter" is helpful and worth reading.In general I think we manage to maintain a reasonably civil approach.

carnet

benood wrote:

I think that Chrismaths was saying that 10 year performance includes the last year as does 1,3 and 5 year performance - ie bias towards recent time. Presumably it's better to look at year on year performance to get a true indication of consistency. However, I'm not sure if such info is readily available, any suggestions?

Money Management Statistics

dunstonh

Do you mean that there are IFAs cheaper than discount brokers like Hargreaves Lansdown?

Yes they can. HL are IFAs themselves. They have set their charging structure as they want it but it can be beaten. I'm not sure it can on ISAs but on Unit Trust it probably can and fund supermarket pension it certainly can.

A lot of Ed's posts, especially on the pension forum, contain a lot of useful information and I quite enjoy reading them too. As with benood I also enjoy the banter.

I agree.

However, even to a novice such as myself, it is quite clear that on the investment front she posts a lot of information which is quite clearly wrong and not just an alternative point of view. Despite these innacuracies being repeatedly pointed out often by Chrismaths, Dunstonh and a few others who have given up posting, she continues to post them.

I can see where CM has finally run out of patience

It does get fustrating where information that has been posted and highlighted as being inaccurate with proof and everything shown gets repeated with inaccuracies thread after thread and we go through repeats of having to point out the inaccuracies.

Whilst the professionals on the board may agree with much of what has been said, because the inaccuracies have been pointed out, it then often appears we are taking a different view when all we are doing is trying to balance the debate.

With these things, there are often very many ways of doing things. However, too often on here only, only one solution is given to any scenario i.e. have a pension, you must have a SIPP or want to invest, then you must have an HYP and dont see an adviser. Not everyone can handle a SIPP, not everyone wants or is suited to an HYP and many people need advice and if they go DIY could end up costing them more because of errors. Just look how many people have ended up in FTSE100 trackers with all their money?

Back on the issue. Past performance league tables have issues and that is why we are not allowed to recommend investment funds on the basis of past performance.

CM gave an example of a fund that was in the top 10 where the manager had recently changed. So, what is past performance going to have to do with it? Well, if you look at the past performance of his old fund, then you perhaps can get an idea of how the manager works but that involves looking at another fund and not the current one.

Also, funds in a sector dont all invest with the same aims and risk. More adventurous funds in that sector could appear in the top 10 in one period and the top 10 in another. Often it is the more consistent funds outside of the top 10 which are the more desirable. The ones that are top of the second quartile all of the time can be more attractive than one that yo yos around. Of course, a yo yo fund can be attractive in a rebalancing portfolio as you can take advantage of the ups and downs to maximise returns.

because often there can be a conflict of interest between advisor and client: he may make more money if you make less.

I'm not sure how you come by that. Regulars here know where CM and I make our money and its on performance of the investments. The more they go up, the more we get paid. Even old model advisers with upfront charging dont benefit if it goes down as they only get paid at the start.

I cant see where any conflict would exist. Advice is based on knowing the facts (something we often dont know on here when in discussion) and as long as the factfinding has been done to a high standard then there should never be a difference.

If you are getting advice, I would tell you to insist that the remuneration is based on performance and not upfront. How the adviser is paid has to be declared so its not an issue you need to shy away from.

Chrismaths

Agree wholeheartedly, apart from one thing:

CM gave an example of a fund that was in the top 10 where the manager had recently changed.

In fact Legg Mason Japan was an example where the bias towards recent performance of looking at cumulative performance is demonstrated. Hideo Shiozumi has managed the fund for over 10 years (though trustnet has the wrong data on this.

This was one of the top performing funds of 2004 and 2005, and if you looked at cumulative performance at that time, he'd have come at the top of the Japanese sector. However, he had a nightmare in 2006, because his style of management involves picking a small number of small cap stocks, and the Livedoor scandal kicked the hell out of the fund, losing half of its value. That's the nature of a concentrated portfolio of small caps - its a hugely risky strategy that can pay huge dividends, or wipe out a large amount of your capital. Looking further back, he's had other bad times, but those 2 years of stellar outperformance masked the earlier poor performance.

You need to look at how a manager manages a fund, look at the volatility of the fund, look at how it performs during corrections, and many other things to get a good idea of how it will behave, and avoid nasty surprises.

But this fund also shows the value of rebalancing. If you held 5% of your portfolio in this fund 3 years ago, without rebalancing you would probably have ended up with around 10% of your portfolio in it by January 2006, which would then have knocked 5% off the value of your portfolio over the next year, and you'd be back where you started. If you'd taken out profits and rebalanced, you'd have made good profits out the fund, and last years fall would have cost you around 2.5%.

Ed stated before that rebalancing was pointless, as "the market will usually rebalance your portfolio for you". She was right, but it will cost you a hell of a lot!

dunstonh

Agree wholeheartedly, apart from one thing:

I thought you mentioned an AXA Fram fund somewhere.

Legg Mason Japan could actually be worth looking at now as well (not saying it is). When a fund of good reputation has plummeted and the reasons are seen and event driven it could now be undervalued. This could result in better peformance going forward. Although the same risk issues that impacted on that fund in the past could happen again. I invested in Jupiter monthly income after that suffered a big drop that was out of sync with others in its sector and its recovery was better. Sometimes looking at bottom 10 can be just as beneficial.

EdInvestor

It does get fustrating where information that has been posted and highlighted as being inaccurate with proof and everything shown gets repeated with inaccuracies thread after thread and we go through repeats of having to point out the inaccuracies.

I agree, it's very tedious constantly having to correct people's repeated inaccuracies thread after thread. Sometimes one nearly loses the will to live.