Fund managers

Linton

gadgetmind wrote: »

I'd respect your view that they are meaningless much more if I thought that you'd looked at them.



Fine, I'm just not yet convinced that it's a sufficiently informed view.

Its difficult having two discussions going on at once....

My point was that darkpool's view that only a tracker and those funds with the same objective and universe of eligible shares can be taken into consideration in comparisons would imply that the academic conclusions were either invalid or irrelevent as there appear to be very few UK funds that meet the criterion. Perhaps you dont share darkpool's view.

gadgetmind

Linton wrote: »

A pity that you havent included the index or a tracker on your graph. It would have made the comparison clearer. To remind you, it showed a drop of 7% compared with an average rise of 7%.

HL didn't have one that I could spot. And yes, we get the 7%, but do you get how little that actually means when it comes to long term investing?

I would like to see that tracker, and the UT average, and a few funds, all on the same graph if anyone can find that data.

Linton

gadgetmind wrote: »

Here's what. Close Special Situations, best performance at the link you gave over five years and three years. Wow, do I want some of that!

Over the last year, it's ranked 42 out of 58 funds, well down with the dogs.

Return to mean.

(BTW, I just spotted that 8% of that Close fund is held in Tanfield Plc. No wonder it sailed high and then crashed and burnt! I bought into Tanfield near the bottom because I saw value in their powered access business, and I've more than doubled my money, however, at the same time I put a few bob into a company which fell victim to a pre-pack.)

IMHO you are too concerned about short term changes, investing is for the long term.

But it does show the point that IIRC jamesd raised that people wont hold necessarily hold funds for greatly extended periods. If your were a Close fund holder then their recent performance may cause you to review whether they are the right fund for your objectives, or whether the small cap sector was where you wanted to be. In any case you would still be holding onto a lovely profit.

At least buying the tracker you wouldnt have that worry!

gadgetmind

Linton wrote: »

Its difficult having two discussions going on at once....

Agreed!

Perhaps you dont share darkpool's view.

I doubt I do 100%, and I also recognise the difficulty in comparing like for like. I'm also accept that there are niches where trackers can't give you exposure, but to know whether that matters you need to be able to justify having that niche n your portfolio.

With UK Small Cap, the chances of picking a winning fund seem to be mighty slim (hot money effect, who knows?) and remember what I said about what makes a happy investor?

As it happens I *do* hold a self-proclaimed small cap fund (gasps from the gallery!) because I liked their stated investment strategy as it matched my own. I use the past tense as the sods started buying AZN, GSK and ULVR and get permission to change their stated investment remit. I hold those directly, so why pay some fund manager to hold them?

I am now older and wiser (perhaps "better informed" would be more appropriate?) and this one will go as part of my final "bonfire of the funds".

gadgetmind

Linton wrote: »

IMHO you are too concerned about short term changes, investing is for the long term.

Yes, very funny.

But it does show the point that IIRC jamesd raised that people wont hold necessarily hold funds for greatly extended periods.

No, they'll get cold feet and sell as the fund value falls, and pick another manager who's managed too get eight heads out of the last ten tosses. By selling what's just done badly, and buying into what's just done well, they keep on losing money.

Linton

gadgetmind wrote: »

No, they'll get cold feet and sell as the fund value falls, and pick another manager who's managed too get eight heads out of the last ten tosses. By selling what's just done badly, and buying into what's just done well, they keep on losing money.

There is that danger, but the same danger applies to a novice investor with a very small portfolio investing in anything.

gadgetmind

Linton wrote: »

There is that danger, but the same danger applies to a novice investor with a very small portfolio investing in anything.

Quite so, which is why people need to understand how to manage a balanced portfolio, and to realise that human instinct and gut reaction will work against you at every stage if you let them.

BTW, Bernstein's background is in psychology, which I think adds some interesting dimensions to his book.

Ark_Welder

IronWolf wrote: »

Which is the best place to hold funds? Because my iii.co.uk ISA says it will cost me 1% initial charge bu the HL website says theres no initial charge and they reduce the AMC by 0.25%?

Difficult, because of the uncertainty surrounding post-RDR. If platforms introduce annual fees then the smaller number of platforms used should work out cheaper. I use HL for some funds and have considered changing (there's a fund that is of interest but it isn't on their platform), but I've decided to hang on for now to see how things pan out: I don't want to be hit with any charges now just to discover that I'd have been better off by staying.

I'm proceeding on the assumption that annual rebates will be discontinued post-RDR. So sorry - not answering your question! But perhaps something here to think on further.

darkpool

Linton wrote: »

There is no reason why whether a fund is a tracker or not should be the primary factor or even a major one.

apart from the difference of fees of course and the resultant lower performance. i salute you for stimulating the fund management industry, these guys are having it tough. i've heard some of them cant even afford a new porshe for the mistress

three cheers for Linton

HURRAH!! HURRAH!! HURRAH!!

MrMalkin

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.

If you want to invest in niche markets, then yes you are correct, there are no relevant indices or funds that track them. However picking sectors in this manner is frought with the same kind of dangers as picking individual stocks - for example internet stocks was a booming market right before the tech bubble burst.

Now if you think you can succesfully pick sectors then go for it, but an indexing strategy is exceedingly unlikely to recommend doing so for exactly the same reason that it encourages people to avoid picking individual stocks or even individual markets - the chances for success are not high, statistically speaking. A big part of indexing is the desire to diversify across wider markets so I don't see why a failure to be able to focus on specific sectors is a flaw - it's against the point of indexing.