Fund managers

Linton

MrMalkin wrote: »

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.

None of that - if you look on Trustnet most other trackers seem to follow their index within 1-2% each year. The HSBC Far East tracker has frequently performed 5-10 percentage points higher than its index in a year (it always seems to be higher).

MrMalkin

Linton wrote: »

None of that - if you look on Trustnet most other trackers seem to follow their index within 1-2% each year. The HSBC Far East tracker has frequently performed 5-10 percentage points higher than its index in a year (it always seems to be higher).

Can you link to the fund in question, because there isn't one called 'HSBC Far East' that I can find. The nearest I can think of is the HSBC Pacific Index which tracks its index pretty closely.

I think a tracking error that large is either a mistake in the data (or your choice of the data ) or that the index it is being compared with is the wrong one.

gadgetmind

MrMalkin wrote: »

I think a tracking error that large is either a mistake in the data (or your choice of the data

I couldn't find that tracker either, but here is an example of how these point-to-point figures can be deceptive.

Here is the HSBC FTSE100 tracker versus the FTSE 100 for the last year.

https://www.dropbox.com/gallery/433250/1/HSBC-Trackers?h=b39813

The cummulative figures below suggest that the tracker has done -3% in the period versus only -1.29% for the FTSE 100, but the chart show it tracking pretty closely.

The three year figures do show that a tracking error accumulates over time, so +46% for the FTSE versus +40% for the HSBC fund, but no-one is pretending that this fund doesn't have fees that accumulate. The Vanguard trackers are closer to their index, but some lag is to be expected.

To put things into context, the UT Active Manager sector has done +31% over those three years.

Of course, what we *really* want to compare is a balanced portfolio of low-fee trackers (multiple territories) and bonds, plus maybe property, commodities, etc., against the UT active sector. This has been done and the results don't show funds to be a great way to invest for the long term.

Linton

MrMalkin wrote: »

Can you link to the fund in question, because there isn't one called 'HSBC Far East' that I can find. The nearest I can think of is the HSBC Pacific Index which tracks its index pretty closely.

I think a tracking error that large is either a mistake in the data (or your choice of the data ) or that the index it is being compared with is the wrong one.

HSBC Pacific Index.

On Trustnet there is a table showing returns for each of the past 5 years. Its pretty clear. Unfortunately I couldnt find any independent data for the FTSE World Asia Pac (exc Japan) Index.

If you were looking on morningstar to show it follows its index - the comparison index on morningstar is the MSCI one which isnt what the HSBC fund claims to follow.

IronWolf

Is anyone familiar with the Aberdeen Emerging markets funds? How come they have a A, I and Z fund, but only the A fund can be held in an ISA?

Do you pay CGT on funds the same as shares when you sell?

Linton

gadgetmind wrote: »

I couldn't find that tracker either, but here is an example of how these point-to-point figures can be deceptive.

Here is the HSBC FTSE100 tracker versus the FTSE 100 for the last year.

https://www.dropbox.com/gallery/433250/1/HSBC-Trackers?h=b39813

The cummulative figures below suggest that the tracker has done -3% in the period versus only -1.29% for the FTSE 100, but the chart show it tracking pretty closely.

The three year figures do show that a tracking error accumulates over time, so +46% for the FTSE versus +40% for the HSBC fund, but no-one is pretending that this fund doesn't have fees that accumulate. The Vanguard trackers are closer to their index, but some lag is to be expected.

To put things into context, the UT Active Manager sector has done +31% over those three years.

Of course, what we *really* want to compare is a balanced portfolio of low-fee trackers (multiple territories) and bonds, plus maybe property, commodities, etc., against the UT active sector. This has been done and the results don't show funds to be a great way to invest for the long term.

You cant compare the FTSE100 with the "Active Managed" Sector. That sector covers a motley collection of world wide investments with a wide range of purposes. None of the major funds investing in the UK are in the AM sector.

If you want a better comparison try the UK All Share Sector. But even that isnt a true comparison as for example it includes the relatively poor performing ethical funds.

My argument in any case isnt about the broad mature markets, it's focussed on the niche sectors. Here Darkpool appears to be saying that one would be foolish to invest in those areas because in general there aren't any trackers, and trackers are the only funds one should invest in. Whether you are saying that I am not sure.

gadgetmind

Linton wrote: »

My argument in any case isnt about the broad mature markets, it's focussed on the niche sectors. Here Darkpool appears to be saying that one would be foolish to invest in those areas because in general there aren't any trackers, and trackers are the only funds one should invest in. Whether you are saying that I am not sure.

What niche sectors to do think bring uncorrelated returns that have a high enough alpha?

gadgetmind

IronWolf wrote: »

Is anyone familiar with the Aberdeen Emerging markets funds? How come they have a A, I and Z fund, but only the A fund can be held in an ISA?

There are usually income and accumulation versions, and also different types of units with different fee structures and "kick back" models. Big platforms are even now requesting different issues to give them different ways to charge.

Do you pay CGT on funds the same as shares when you sell?

Yes, and this can be *very* difficult to calculate for accumulation funds. You *should* be taking into account the reinvested yield for your income tax, and then need to allow for this when calculating the gain at the end.

It seems odd, but income units are easier to handle when held unwrapped.

darkpool

Linton wrote: »

My argument in any case isnt about the broad mature markets, it's focussed on the niche sectors. Here Darkpool appears to be saying that one would be foolish to invest in those areas because in general there aren't any trackers, and trackers are the only funds one should invest in. Whether you are saying that I am not sure.

no what i'm saying is that it is more sensible to invest in a tracker rather than a UT in the same sector*. of course if there is no tracker in the specific sector you want to invest in it might make sense to use an UT.

I thought you were going to give some evidence that showed niche UTs outperformed trackers in the same niche sector?* It's certainly an interesting theory, however without evidence to back it up it will remain a theory - and a theory that I would suggest is seriously flawed.

*just to make clear i'm talking about trackers and UTs that trade in the same geographical/ business area etc.

By any chance do you work in the fund industry as well?

Linton

gadgetmind wrote: »

What niche sectors to do think bring uncorrelated returns that have a high enough alpha?

I am not bothered about short term correlation as I am only interested in the long term where the effect of general global economic trends would be significant. So the sectors that have worked for me are EM, Small Cap, Tech, Raw Materials (not an IMA sector), Far East.

The other sector where index based investing seems to fail is UK Income.