IFA Advice - Commission based?

darkpool

Aegis wrote: »

Invesco perpetual income is regularly mentioned on here by a number of finance professionals and private investors alike as a fund they hold in high esteem and have held for many years. I can't recall a single person on here saying something similar about a Schroder emerging markets fund, so picking that one seems rather pointless except that it's clearly one of the highest PTRs you can find.

As to how you can have a negative rate, that's down to how the calculation works. If you have no inflows or outflows from the fund, it's impossible to have a negative value, but if the inflows and outflows are such that internal transactions are largely unnecessary, the PTR can be negative. In other words, the fund manager likes the look of a new stock, so purchases it with inflows. He starts to dislike a current holding, so he sells it to pay for outflows. The core holdings are left unchanged, so the calculated PTR is negative.

You might consider it somewhat artificial, but given the costs involved can be offset by swinging the mid price of the fund, it makes sense to allow it to become negative.

The property and commodity exposure you've posted are equities which invest into those. That's not the same as diversifying into those assets directly, as you get much greater correlation with equity markets than you'd get if you went into those assets more directly. Arguably it's a lot riskier going in this way because you're leveraging the price movements in the commodity due to the magnified effect on profit margins, plus you have a doubled sentiment effect (the commodities and the equities).

As for the "why" regarding bonds, does that really need an answer?

yeah, i chose the high ptr because it proved my point. just as "per high income" is used by the other side of the argument. you think only one side of the argument should be able to cherry pick UTs?

for the average individual it will be impossible to get diversified direct property exposure, most people in the uk just don't have that type of money.

direct commodity exposure? like buying a few tonnes of copper? ehhhmmmm, i wouldn't do that.....

yeah, why bonds/ gilts? redemption rates on 10 year gilts are 2%, when inflation is 5% i think that a bad investment.

Ark_Welder

darkpool wrote: »

yeah, i chose the high ptr because it proved my point.

You 'point' is shown to be false by the facts held in the fund's annual report

darkpool wrote: »

yeah, why bonds/ gilts? redemption rates on 10 year gilts are 2%, when inflation is 5% i think that a bad investment.

Still shows a lack of understanding on the subject

darkpool

"When we totted up all the costs, our conservative estimate was that someone who invests directly in actively managed funds pays at least 3 per cent a year. This rises to 5 per cent or more for an investor who pays for financial advice, largely through the deduction of initial and ongoing commission payments. "

http://www.moneyobserver.com/issue/features/shocking-truth-behind-fund-charges

Aegis

darkpool wrote: »

yeah, i chose the high ptr because it proved my point. just as "per high income" is used by the other side of the argument. you think only one side of the argument should be able to cherry pick UTs?

Yes, I think that if there's one side which regularly uses a specific investment because they like the management style, then it makes sense to use that as a specific example. If you're on the other side of the debate (which you are) then it makes little sense to pick one out of the several thousand that you don't use. The specific fund has no relevance to you other than the fact that you think this one fund illustrates your point.

I don't generally mention funds for consideration unless I actually have them in my portfolio, so I've made the conscious decision at some point in the last 5 years to put my money into that investment. In short, it's an actual real example of my own investment strategy, not a fund picked purely to make a point.

for the average individual it will be impossible to get diversified direct property exposure, most people in the uk just don't have that type of money.

But you can get more direct exposure by going through a specific property OEIC or a REIT, as these investments are directly linked to the performance of the underlying assets. Pooled investments are extremely useful for getting into expensive assets like property.

Schroders even have such a property fund in the brochure you provided earlier, which I happen to have in my portfolio.

direct commodity exposure? like buying a few tonnes of copper? ehhhmmmm, i wouldn't do that.....

Physical ETFs or funds dealing in Commodities. I used to hold the MFM Commodity fund of ETFs in my portfolio, but chose to move away from it when I reduced my non-equity exposure a couple of years ago. I've no idea how it's done since then, but during the downturn it was quite nice to have.

yeah, why bonds/ gilts? redemption rates on 10 year gilts are 2%, when inflation is 5% i think that a bad investment.

You use bonds to diversify away from equity-only investments. 10 year gilts are probably not a great investment at the moment, but there's always emerging market debt, corporate bonds, index-linked bonds, etc, all of which have their place in many portfolios. Now might not be a good time to get into a lot of them, but we're talking long term strategies here, not just putting money aside right now and ignoring it until it comes to sell, I assume.

Ark_Welder

darkpool wrote: »

"When we totted up all the costs,...

"Not necessarily. Not all managed funds have these charges - not even the dealing costs, and some of these charges can be rebated."


"Reasons why prospective investors should read the relevant prospectus and long-form of the annual reports so that they can determine the true level of charges for themselves. And that goes for investment trusts too, which will also have transaction charges within the fund."

Linton

darkpool wrote: »

.....

yeah, why bonds/ gilts? redemption rates on 10 year gilts are 2%, when inflation is 5% i think that a bad investment.

Do you understand bonds????

There are many sorts....corporate bonds can give you much higher returns, index linked gilts provide the only guaranteed way of getting full index linking. Normal gilts provide safety in troubled times.

I believe bonds should appear in most serious portfolios.

UTs bought and sold online are by far the most convenient way a private investor can access bonds and allow the collation of a well diversified set of bonds very cheaply.

darkpool

Aegis wrote: »

But you can get more direct exposure by going through a specific property OEIC or a REIT, as these investments are directly linked to the performance of the underlying assets. Pooled investments are extremely useful for getting into expensive assets like property.

Physical ETFs or funds dealing in Commodities. I used to hold the MFM Commodity fund of ETFs in my portfolio, but chose to move away from it when I reduced my non-equity exposure a couple of years ago. I've no idea how it's done since then, but during the downturn it was quite nice to have.

You use bonds to diversify away from equity-only investments. 10 year gilts are probably not a great investment at the moment, but there's always emerging market debt, corporate bonds, index-linked bonds, etc, all of which have their place in many portfolios. Now might not be a good time to get into a lot of them, but we're talking long term strategies here, not just putting money aside right now and ignoring it until it comes to sell, I assume.

british land and land sec are REITs.....

70 years ago my grandad bought 3k of war loan gilts, today they are worth enough for a couple of weeks holiday somewhere. if he had bought shares/ property they would have been worth a six figure sum. imho bonds/ gilts are a poor investment.

Ark_Welder

darkpool wrote: »

70 years ago my grandad bought 3k of war loan gilts, today they are worth enough for a couple of weeks holiday somewhere. if he had bought shares/ property they would have been worth a six figure sum. imho bonds/ gilts are a poor investment.

Shows your lack of understanding of the gilts and bonds markets

darkpool

Linton wrote: »

Do you understand bonds????

There are many sorts....corporate bonds can give you much higher returns, index linked gilts provide the only guaranteed way of getting full index linking. Normal gilts provide safety in troubled times.

I believe bonds should appear in most serious portfolios.

UTs bought and sold online are by far the most convenient way a private investor can access bonds and allow the collation of a well diversified set of bonds very cheaply.

so i should buy a product that loses me 3% purchasing power each year? you not think QE will lead to inflation?

Ark_Welder

darkpool wrote: »

so i should buy a product that loses me 3% purchasing power each year? you not think QE will lead to inflation?

Shows a lack of understanding of gilts and bonds markets, QE and inflation.