Fund managers

andybenw

Hi folks. I've not really got a huge amount invested at present, however I've more or less paid off my mortgage and will be saving a substantial amount over the next couple of years.

What I want is your opinion of managed funds vs just picking shares yourself. I must admit I do not like the idea of someone syphoning off a nice little earner out of my money for doing the best part of SFA. However I can also see that if they are good at picking shares and can maximise my returns then it would be worth me biting my lip for once. So what's everyones view?

westy22

Meeper, Darkpool et al will be along in a minute:D

brianrhill

It sounds like you probably have less experience than you have money to throw away.

IFA's are neither qualified nor trained to offer investment advice beyond that of asset allocation unless they have a specific investment management certificate and, I'd argue, significant experience.

If you can't afford to lose it all, then speak to an IFA who will help you get a diversified, uncorrelated portfolio based on your attitude to risk and personal circumstances.

Linton

IMHO depends on two things - how much money you want to invest, and where you want to invest it.

It is important to invest in a range of different sectors, but investing in shares becomes relatively expensive for small holdings, say below £500-£1000. So if you want to invest less than say £5000-£1000 a fund of some form would be advisable.

Now where do you want to invest it. If you want to invest in FTSE quoted shares, and have the money to provide diversification I believe you may as well buy the shares. But if you want to invest in say the Far East, funds are the only practical way of doing it.

If you want to invest in technology - to invest directly in a wide range of small company shares scattered around the world would be difficult.

My final example - UK small companies. This is a sector that has performed well over a long time period. It would be difficult for an individual to have the contacts and knowledge to identify the ones more likely to succeed, and to buy enough to ensure that the portfolio isnt badly affected by a few catastrophic failures.

andybenw

I have bought and sold shares since around 2007. Unfortunately for me I did not jump out at the first sign of the credit crunch and spent the whole of 2008 with my share values heading firmly downwards. The value has now more or less recovered but I reckon I am still a little down on my original. Just wondering, would a fund manager have done much better. I have read elsewhere that you've got to be lucky and get the right fund else most of them do worse than a FTSE tracker.

qpop

andybenw wrote: »

I have bought and sold shares since around 2007. Unfortunately for me I did not jump out at the first sign of the credit crunch and spent the whole of 2008 with my share values heading firmly downwards. The value has now more or less recovered but I reckon I am still a little down on my original. Just wondering, would a fund manager have done much better. I have read elsewhere that you've got to be lucky and get the right fund else most of them do worse than a FTSE tracker.

That's not strictly true.

https://www.trustnet.com - interrogate the site and draw your own conclusions.

Linton

andybenw wrote: »

I have bought and sold shares since around 2007. Unfortunately for me I did not jump out at the first sign of the credit crunch and spent the whole of 2008 with my share values heading firmly downwards. The value has now more or less recovered but I reckon I am still a little down on my original. Just wondering, would a fund manager have done much better. I have read elsewhere that you've got to be lucky and get the right fund else most of them do worse than a FTSE tracker.

If you had invested in a SE Asia fund in mid 2007 you would be sitting on an annual 10% or so return.

If you had invested in a FTSE100 tracker in mid 2007 with dividends reinvested you would be about about breaking even.

IMHO buying and selling shares is not an effective way for the amateur to achieve a good return. Much better is to decide on a strategy and invest for the long term.

dunstonh

Just wondering, would a fund manager have done much better. I have read elsewhere that you've got to be lucky and get the right fund else most of them do worse than a FTSE tracker.

I dont have any 2007 investors in negative.

most of them do worse than a FTSE tracker.

FTSE trackers come out mid table or just below in the UK all companies sector. So, if something is half way, that means half did better, half did worse.

There are merits in trackers and managed funds depending on your investment objectives and strategy being used. You should never rule out one or the other and in most cases, both are best.

Imnoexpert_2

On the point about trackers V index funds.

I read Tim Hale's book Smarter Investing (I may start a thread on it) and it did convince me that index funds are probably best even though each year many fiunds beat their index. I am a sucker for the evidence based appproach.

I worry about costs. A managed fund not only has to outperform the index (which I understand most don't) but it has to beat it by whatever the percentage cost differential is. If you hold the fund (and we are told to think of them as say 5-10 year investments) the fund has to do this over a long period and surely very few do.

I'm an Aston Villa supporter and I would be happier to be guaranteed a mid table spot in the premiership than 'do a Leeds' and take a chance on winning the league but tumbling down the divisions if it didn't come offf!

Despite this I have bought a number of managed funds in areas where there isn't a tracker or where I have fancied a punt, or where I have wanted to diversify.

Remember my name though - I really am no expert!

darkpool

Imnoexpert wrote: »

I worry about costs. A managed fund not only has to outperform the index (which I understand most don't) but it has to beat it by whatever the percentage cost differential is. If you hold the fund (and we are told to think of them as say 5-10 year investments) the fund has to do this over a long period and surely very few do.

one of the most intelligent posts i've ever read on MSE.

Lokolo

darkpool wrote: »

one of the most intelligent posts i've ever read on MSE.

Then you need to read a lot more. Thats hardly intelligent, its common bloody sense.

Of course funds need to earn more by the amount they charge, next youll be saying mcdonalds have to charge more for their burgers than it costs them!