Fund managers

Lokolo

Linton wrote: »

You dont chose funds by sticking pins in a list of 2000+ funds - you should start by chosing the sector. If you chose a focussed high growth sector the evidence seems to show that you get better performance with a managed fund than a tracker which by definition has to invest in all shares in the index.

So look at the UK Small companies sector on trustnet. 45 out of 47 funds beat the FTSE UK small cap index over 5 years.

See US Small Companies. The index seems to be the Russell 2000 which showed a 6.1% growth over 5 years. The worst managed fund showed a 31% growth over 5 years.

And then you ignore the fact that many interesting areas dont have trackers and dont have a meaningful index either, Global Technology is an example. Is it wrong to invest in them?

The problem by the blanket statements that x% of managed funds do worse than the index seems to totally ignore what the funds invest in which makes the statistic somewhat meaningless. To take another example - ethical funds. These tend to do rather worse than unrestricted funds. Does the fact that they do worse than trackers prove that trackers are better? No - the people who invest in ethical funds seem happy to forego return in return for avoiding things they consider unsuitable. Similarly Cautious funds - they give worse performance but in return provide far less fluctuation.

It seems that the people who advocate banning investment in managed funds are more interested in reducing payment to city investment managers than in maximising their own return. Fair enough if that's what you want, but......

THANK YOU!

Glad I am not the only one!

Ark_Welder

Linton wrote: »

You dont chose funds by sticking pins in a list of 2000+ funds

Some people will do so. But then, this is the technique that many individuals use to select their individual share holdings - even after they've narrowed it down a bit - however much they kid themselves otherwise.

thelawnet

I don't have a huge amount of interest in investing, but I did some research when I started investing in about 2007 (at/near the top of the market) as to which funds were good performers.

I did very little monitoring of the funds but checked on them earlier today and basically half (or more) of the 'recommended' funds are no longer recommended. Why? Because:

• success is very often random noise - they got lucky in the past and their future success is only 50/50. Take a look at the chart on Blackrock Absolute Alpha - I invested when they were apparently performing miracles in mid-2008 - the graph was straight up with only downs of about 0.5%. http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/blackrock-uk-absolute-alpha-class-p-accumulation/charts Since then they have near the bottom of their sector - and I was foolish enough to stick about £15k with them.
• good sectors go bad - cycles - it's quite possibly better to choose *sectors* based on recent underperformance than overperformance
• 'star' managers move on to other things (often to attract money into new funds earning new commissions)
• success attracts new money, funds get overweight and previously winning strategies are no longer possible due to the amount of money the fund now needs to work with.

I used to read the marketing crap sent to me by Hargreaves Lansdown before I realised it was worthless and that the whole H-L business model is based on pushing UTs/OEICs that pay commission to H-L forever. I think the ETF/Investment Trust model is much more honest, especially ETFs.

I've not made a huge amount on my investments, though the high-yield bond funds I bought at the bottom of market are still yielding about 7% and have given 60% on my capital as well, so I'm happy with those....

I wouldn't trust the figures on UTs/OEICs that much as the bad funds get closed but overall I'm quite sure the performance of the sector is overstated....

darkpool

Lokolo wrote: »

At what point did I say that because of my fund we should all invest in active management? I haven't. I have said that THAT particular fund is worthwhile for ME because of MY investment strategy.

To rule out ALL active management funds because of costs that all active management funds charge is pathetic and thats exactly what you are doing! I have even said in the next paragraph that I would pick a tracker if I wanted to invest in FTSE 100!!!!!!

a couple of years back i bought shares in tate and lyle i've about tripled my money AND not paid any extortionate annual fees

would you accept that as proof that individual stockpicking is better than funds? after all my return is far better than your 26%.

i rule out UTs because there is little or no academic evidence they outperfom trackers. the market might return about 6% a year, that means a UT will need to get 9% a year just to match the market. you really think that type of outperformance is likely over sustained periods of time? i mean decades, not just a few years.

Ark_Welder

thelawnet wrote: »

I've not made a huge amount on my investments, though the high-yield bond funds I bought at the bottom of market are still yielding about 7% and have given 60% on my capital as well, so I'm happy with those....

So you're happy with the investments that have done well, but not happy with the ones that have not done well.

thelawnet wrote: »

I think the ETF/Investment Trust model is much more honest, especially ETFs.

Would these be the ETFs that use derivatives to generate the return, where the counter-party is the issuing company's investment bank, because these provide more profit to the provider than the physical kind?

Lokolo

darkpool wrote: »

a couple of years back i bought shares in tate and lyle i've about tripled my money AND not paid any extortionate annual fees

would you accept that as proof that individual stockpicking is better than funds? after all my return is far better than your 26%.

i rule out UTs because there is little or no academic evidence they outperfom trackers. the market might return about 6% a year, that means a UT will need to get 9% a year just to match the market. you really think that type of outperformance is likely over sustained periods of time? i mean decades, not just a few years.

!!!!!! there we go again. A GENERALISATION!

"I bought Lloyds in 2008, since then I have lost half my money. Choosing funds is better than stockpicking."

Absolutely ridiculous as to what you are saying.

How did you triple your money in Tate and Lyle when the share price at most has gone up 30%?

Ark_Welder

darkpool wrote: »

a couple of years back i bought shares in tate and lyle i've about tripled my money AND not paid any extortionate annual fees .

Anyone can claim to have had success. Not many are able to demonstrate that they will have success: what's your share selection for the next few years?

thelawnet

Lokolo wrote: »

!!!!!! there we go again. A GENERALISATION!

"I bought Lloyds in 2008, since then I have lost half my money. Choosing funds is better than stockpicking."

Absolutely ridiculous as to what you are saying.

The fact you say you tripled your money on Tate and Lyle when the share price hasn't tripled shows you are inexperienced and uneducated.

TATE bottomed at £2.36, they are now 2.82 times that. 'about tripled' indeed. On top of that they have paid 29.7p in dividends, which with the capital growth comes to very close to triple the bottom. Seems a fair statement to me. Why clutch at straws?

Lokolo

thelawnet wrote: »

TATE bottomed at £2.36, they are now 2.82 times that. 'about tripled' indeed. On top of that they have paid 29.7p in dividends, which with the capital growth comes to very close to triple the bottom. Seems a fair statement to me. Why clutch at straws?

I was not clutching at straws at all, I was asking as I couldn't see it on my graph but I hadn't changed it far enough into the past. (and hence the edit as I couldn't see what he was on about and asked )

darkpool

Lokolo wrote: »

!!!!!! there we go again. A GENERALISATION!

"I bought Lloyds in 2008, since then I have lost half my money. Choosing funds is better than stockpicking."

Absolutely ridiculous as to what you are saying.

How did you triple your money in Tate and Lyle when the share price at most has gone up 30%?

you mentioned you had one fund that has done well to further your argument. i'm using one share that i have to further my argument.

another generalisation is that the financial industry charge their customers more than they deliver in extra returns. of course some of the UT fans here have methods of avoiding the dog funds, however i would doubt these methods would withstand any real scrutiny.