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Fund managers
Comments
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In the Far East (exclude Japan) sector the L&G and HSBC trackers only manage to be somewhere in the middle of the 5 year listing by being apparently extraordinarily bad at tracking the index they claim to follow. This is most odd, anyone any idea whats going on there?
Yes, and you would too, if you'd just read the sodding books I keep suggesting you read!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
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Yes and the chances of that are 0.1%, whats your point?
You have said thats it not worthwhile at any point, well, this fund proves that you are either a) lying b) an idiot c) both
I am not going around to find more and more examples. But you are lying if you thinking copying and pasting results from Googling "trackers are better than active manager" will count as evidence. A good example of this was copying and pasting an article from the US, whereby it is entirely irrelevant because of tax difference.
At least gadget brings something to this debate, you just make trackers side look bad.
0.1%? where did you get your figure? I get 4.4% that means if there are 2000 funds you would expect 88 to beat the index 8 years out of 10 solely due to luck.
In the US they don't have stamp duty, in the UK we do...... I'll agree that the tax system in the US is different, however in the US and UK we both pay tax.0 -
Look at post #51 - a tracker (if it existed) would have been pretty much the worst investment in both the UK and US Small Cap sectors. In the Euro Small Cap sector it would have been 8th out of 12.
In the Far East (exclude Japan) sector the L&G and HSBC trackers only manage to be somewhere in the middle of the 5 year listing by being apparently extraordinarily bad at tracking the index they claim to follow. This is most odd, anyone any idea whats going on there? See trustnet for the evidence.
It's worth pointing out that up until relatively recently trackers available in the UK have had high charges, almost to the point of making them worthless - see the Virgin FTSE tracker which charges 1%, and the Halifax one which charges 1.5%.
When Vanguard made themselves available in 2009 HSBC dropped their charges from 0.75% and up to a much more reasonable 0.25%, so figures from before that date are bound to show a much worse tracking error. In general, tracker charges are on a downward trend and there's a possibility that when the RDR is finally released that things will change further. At the moment nobody in the industry has much of a desire to promote and improve trackers because the charges and trail commissions are keeping the industry happy and well fed, at the expense of customers.0 -
0.1%? where did you get your figure? I get 4.4% that means if there are 2000 funds you would expect 88 to beat the index 8 years out of 10 solely due to luck.
In the US they don't have stamp duty, in the UK we do...... I'll agree that the tax system in the US is different, however in the US and UK we both pay tax.
You pointed out that someone could flip a coin and it land on head 8 times out of 10. The chances of that are 0.1%. So if it really is down to luck then the fund manager must hold a 4 leaf clover or be at the end of a rainbow!
And the stamp duty part of it is not the main reason. I shall leave you to ponder over what it could be
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At least gadget brings something to this debate, you just make trackers side look bad.
1) Thank you, 2) There aren't really sides, or at least I hope not. This is *not* an easy area to study, and all we can do is use multi-decade data from many different markets to see which strategies work and which don't.
There is no perfect portfolio. There is no perfect strategy. There is no magic bullet, and there are *very* few "hot hands" managers, and even these lack convincing "stickyness" and can only be identified after the fact.
There is an old adage that investing will either make you lots of money, lose you lots of money, make you a little money, or lose you a little money. Removing one of these options makes for a happy investor.
A balanced portfolio (assets, territories, yadda yadda) uses rigorous statistical analysis to see what would/wouldn't have worked over a wide variety of past periods and works out what's going to be most likely to deliver the best risk/return mix over future decades.
If you only read one book, read "The Intelligent Asset Allocator" by William Bernstein. Yes, it's out of date, yes, it's from the US POV, but TBH this almost makes it stronger. Seeing how people say "this time it's different" when history is screaming in their ear that it really isn't is a fantastic eye opener. Seeing how people say that a sector/territory is a "can't lose" or "can't win" just to see it swing around opens the other eye.
After you've digested Bernstein, move on to "Smarter Investing" by Tim Hale. More up-to-date, with a UK POV, and standing on the work of Bernstein and many others.
Reading both will take about 5-6 hours, and if after that you still have strong arguments for paying fund managers, then let's talk. Until then, let's just wait for the postman to deliver your books.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
It's worth pointing out that up until relatively recently trackers available in the UK have had high charges, almost to the point of making them worthless - see the Virgin FTSE tracker which charges 1%, and the Halifax one which charges 1.5%.
When Vanguard made themselves available in 2009 HSBC dropped their charges from 0.75% and up to a much more reasonable 0.25%, so figures from before that date are bound to show a much worse tracking error. In general, tracker charges are on a downward trend and there's a possibility that when the RDR is finally released that things will change further. At the moment nobody in the industry has much of a desire to promote and improve trackers because the charges and trail commissions are keeping the industry happy and well fed, at the expense of customers.
The L&G/HSBC anomaly isnt a minor tracking error nor due to charges. Both funds are performing much better than the Index. Looking at the HSBC data for example the Tracker 5 year performance is 47% whereas the index has risen by 19.7% in the same period.0 -
The L&G/HSBC anomaly isnt a minor tracking error nor due to charges. Both funds are performing much better than the Index. Looking at the HSBC data for example the Tracker 5 year performance is 47% whereas the index has risen by 19.7% in the same period.
Are you looking at the Accumulation version of the funds? Does the index data in your numbers include reinvested dividends? I reckon that's probably the source of that anomaly.0 -
You pointed out that someone could flip a coin and it land on head 8 times out of 10. The chances of that are 0.1%. So if it really is down to luck then the fund manager must hold a 4 leaf clover or be at the end of a rainbow!
And the stamp duty part of it is not the main reason. I shall leave you to ponder over what it could be
0.1%? why don't you have a look at this website. type in 10 for trials, 8 for successes and 0.5 for probability. see what you get.
http://stattrek.com/tables/binomial.aspx
leave me to ponder it? because you don't know?0 -
Note the words "in the same market".
(Of course, we also need to add "long term", where such a term is barest minimum 5 years and probably 1-2 decades)I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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