Is it just me, or do you feel aggrieved too?

dunstonh

Paying high fees/commissions in the hope that this will magically make the underlying assets perform better doesn't work, never has, never will. I'm going for a carefully constructed portfolio of low-TER trackers with a good mix of gilts, which isn't exactly rocket science.

Going DIY and going with Daily Mail hot tips or fashion investing doesnt work either. Also going with the absolute cheapest every time doesnt work either.

How many minutes a year does it take to rebalance a portfolio? Anyway, go for a Vanguard LifeStrategy fund and it's done for you as part of that heady 0.31% TER.

About 6 hours.

I just ran it through Financial Express and my comparable risk portfolio is beating it. (-0.02% since June 11 compared to -0.36% with Vanguard - after charges).

What are the platform charges you get with the Vanguard funds? (you need to compare like for like and include all parts of the package)

Linton

gadgetmind wrote: »

Paying high fees/commissions in the hope that this will magically make the underlying assets perform better doesn't work, never has, never will. I'm going for a carefully constructed portfolio of low-TER trackers with a good mix of gilts, which isn't exactly rocket science.

By that appproach you are making the decision not to invest in particular areas - those areas where trackers dont exist or perform particularly badly.

It may give you a portfolio that is appropriate for your apparently straightforward objectives and possibly relatively high acceptance of risk, but wont be for other people's circumstances. I am sure you have the investment sophistication to realise that, but it is clear from the queries on this forum (and the people who get as far as asking for advice on this forum are the more aware minority) that this sophistication isnt shared by many other people who wish to invest possibly large sums of money.

gadgetmind

Meeper wrote: »

Is it your assertion therefore that the only thing that matters in arranging contracts, investments and the like are the numbers?

No, but when it comes to investments, you need the right asset mix and you need to avoid high fees.

gadgetmind

dunstonh wrote: »

Going DIY and going with Daily Mail hot tips or fashion investing doesnt work either.

Agreed.

I just ran it through Financial Express and my comparable risk portfolio is beating it. (-0.02% since June 11 compared to -0.36% with Vanguard - after charges).

Choosing two points in time to try and prove a certain investment is "better" is a rather old financial industry trick. I think someone first tried it on me in the mid 80s, but I'm sure it goes back much further than that.

I'm also not sure this is the place for the active versus passive argument.

What are the platform charges you get with the Vanguard funds? (you need to compare like for like and include all parts of the package)

It depends on the platform, but with many it's just dealing fees and a small up-front dilution levy on some of the funds to cover stamp duty.

gadgetmind

Linton wrote: »

By that appproach you are making the decision not to invest in particular areas - those areas where trackers dont exist or perform particularly badly.

You can run around looking for other uncorrelated asset classes until you're blue in the face, but how many of them really add anything of value to your portfolio?

It may give you a portfolio that is appropriate for your apparently straightforward objectives and possibly relatively high acceptance of risk

Add more fixed interest and both volatility and risk go down, but so does long term gain, add more equities, and the opposite happens. Stare at some tables, muse on what you need versus what you'd like, look at your time frame, and make your choice.

No-one can offer you higher returns with lower risk particularly if they also throw higher fees into the mix.

it is clear from the queries on this forum (and the people who get as far as asking for advice on this forum are the more aware minority) that this sophistication isnt shared by many other people who wish to invest possibly large sums of money.

Agreed, and that's why we need a better financial services industry than we currently have.

I've become so disillusioned that I'm starting to do it all myself (and wish I'd done so decades earlier) while others go all "rabbit in the headlights" and do nothing.

Susievintage

Oh dear - I can see that I have unwittingly stirred up an old enmity here. I think I will bow out before e-blood is shed.

gadgetmind

Susievintage wrote: »

Oh dear - I can see that I have unwittingly stirred up an old enmity here. I think I will bow out before e-blood is shed.

There are a number of areas where I think it's fair to say we don't all see eye to eye (active versus passive, high fees and commissions versus low fees, middlemen versus investing directly) and I'm sure the lively debate will rage on endlessly, but I like to think we all remain civil even if not always polite.

dunstonh

Choosing two points in time to try and prove a certain investment is "better" is a rather old financial industry trick. I think someone first tried it on me in the mid 80s, but I'm sure it goes back much further than that.

I chose fund launch date to compare. The vanguard funds have little history but thats the best that can be done.

I'm also not sure this is the place for the active versus passive argument.

I wasnt comparing an active portfolio. I was comparing core sectors using only tracker funds (with sectors not covered by trackers eliminated - not a good option in my opinion but when you get investors that tell you they want trackers only, then you go with it).

It depends on the platform, but with many it's just dealing fees and a small up-front dilution levy on some of the funds to cover stamp duty.

They need to be considered though because they will add charges that when expressed as an equivalent annual cost could be higher than alternatives that dont have dealing fees but take it as a percentage.

Linton

gadgetmind wrote: »

(1)You can run around looking for other uncorrelated asset classes until you're blue in the face, but how many of them really add anything of value to your portfolio?

(2)Add more fixed interest and both volatility and risk go down, but so does long term gain, add more equities, and the opposite happens. Stare at some tables, muse on what you need versus what you'd like, look at your time frame, and make your choice.

No-one can offer you higher returns with lower risk particularly if they also throw higher fees into the mix..........

(1)
Correlation is basically a short term effect - many markets sort of show a similar up and down motion in the month/year timeframe.

However, if you look long term (10 years+), these short term fluctuations dont matter. IMHO what matters are the fundamental movements in the world economy. Some of these could be:

1) Geographic: which areas of the world will be relatively richer in 10 years time? If you believe the answer is the UK, fine go for a UK index tracker.

2) Raw materials: will these be more of an issue in 10 years time than now? If you believe not, ignore them.

3) Sector/Industry: which industries or economic activities will be more important in 10 years time? How about technology for a starter? Perhaps banking will have been sorted out by then.

4) New currently small businesses: The small business managed funds have done well over the past 10 years, I am betting that will continue. Or do you believe the FTSE100 type global giants will overall outperform?

Interestingly, these types of sectors are the ones where trackers seem inappropriate.

Investing is as much a matter of what you dont invest in as what you do. With your broad index approach you are making the decision to go for the large flabby dogs simply because they are currently large. Is this sensible?

(2) There are more factors than risk/return:
- There are two sorts of risk, short term volatility and long term chance of loss of capital.
- Timescale: I adopt an approach because I am happy to leave a portion of my investments for 10 years. Other people may have a shorter timescale which will increase the dangers from volatility.
- Income: for some people a steady income is more important than long term gains.
- Inflation protection
- Capital protection

and no doubt many others

Things are a lot more complex than your simple return/risk balance. It is here I suggest where an IFA can more than justify their fees in helping those people with a reasonable pot of money and without the experience or knowledge to match the investments to the needs. "stock picking" isnt what is required, its getting the strategy right.

gadgetmind

dunstonh wrote: »

I chose fund launch date to compare. The vanguard funds have little history but thats the best that can be done.

LifeStrategy is new, but the underlying low-TER trackers that make it up have a much longer track record.

They need to be considered though because they will add charges that when expressed as an equivalent annual cost could be higher than alternatives that dont have dealing fees but take it as a percentage.

Yup, and I've done a comparison with the HSBC and BlackRock trackers on a number of platforms. I'm probably going with HSBC as they seem to offer the best compromise right now given that I want to be able to adapt quickly if/when the fall out of RDR drifts my way.