Fund managers

darkpool

thelawnet wrote: »

The analysis done in the US shows that the fund sector as a whole is essentially parastical and do not add value

thank god there is someone else that uses evidence to form an opinion. a lot of people here use wishfull thinking to make investment decisions.

Lokolo

darkpool wrote: »

thank god there is someone else that uses evidence to form an opinion. a lot of people here use wishfull thinking to make investment decisions.

The US has completely different tax implications for active fund management compared to the UK, so using the US research as an example is flawed.

qpop

Using software such as FE Analytics you can consistently identify OEICs and UTs that outperform their benchmark, whilst taking less risk.

The idea that they only manage this by holding too much cash is ridiculous and inaccurate - this would make sense in a downturn but would result in underperformance when the benchmark was surging.

To name a few funds that consistently meet the above criteria:
Aberdeen Emerging Markets (closed)
First State Global Emerging Markets Leaders (open)
Veritas Global Equity Income (open)
Newton Asian Income (open)
Marlborough Special Situations (open)

There's a whole host of them, investing both domestically and abroad. These are just ones I've been looking at recently, so they're at the front of my mind.

You'll notice that none of these are managed by Woodford (surprised darkpool?)

Linton

darkpool wrote: »

i also object to people saying there is a method of picking the funds that outperform. again the bulk of evidence says this does not happen.

There is a method - getting a detailed knowledge of the companies in a restricted sector and the areas in which they operate, particularly if that knowledge is not generally accessible to the non-specialist general public. One of the posters advocating trackers, gadgetmind, has written about how he has been able to identify very successful investments in a technical area about which he has expert knowledge. Of course you would claim that this is pure coincidence as there is no means of identifying winners.

Where there isnt a method, and where I believe the tracker enthusiasts are right, is where the knowledge is generally available and the companies are large and so tend to follow global economic movements.

A second method of outperforming is where one's requirement is other than simply long term return. For example in the equity income area people would prefer to have a 6% cash return now rather than an average 10% which is only realised in 10 years time. Here trackers, which barely exist, have proven useless.

gadgetmind

Linton wrote: »

One of the posters advocating trackers, gadgetmind, has written about how he has been able to identify very successful investments in a technical area about which he has expert knowledge. Of course you would claim that this is pure coincidence as there is no means of identifying winners.

I also had one total loss to a pre-pack, which still hurts. Yes, I like to think there was a lot of skill. but I also accept a degree of luck.

Where there isnt a method, and where I believe the tracker enthusiasts are right, is where the knowledge is generally available and the companies are large and so tend to follow global economic movements.

Yes, and I'd argue that these should constitute the bulk of your portfolio. You can then add some diversifiers and return enhancers as side dishes, but you need to be clear on what you're adding and why.

A lot of the trendy OEICs are rather opaque when it comes to what they are bringing to the table, and sadly these tend to be the ones that get talking about and (based on fund size) bought the most.

Big turn-offs for me are words such as "absolute", "strategic", "managed", "opportunities", "special" or "general" in the fund name. I reserve the right to add to this list.

Linton

gadgetmind wrote: »

Yes, and I'd argue that these (tracker based general investments) should constitute the bulk of your portfolio. You can then add some diversifiers and return enhancers as side dishes, but you need to be clear on what you're adding and why.

I think that's a matter of investing style. I understand yours and would not have a major problem with it.

My preferred style is rather different. I have 3 notional portfolios. One is pure niche high long term growth with a 10 year or more time frame, potentially high risk. The second is for income with little concern for capital growth, income being important to a retiree. The third is cash or fairly near to cash primarily for safety with some growth - fixed rate bank accounts, some gilt funds, a Pru with profits etc. Each portfolio is of a similar size at the moment, though of course this can be easily adjusted as ones needs change or for balancing.

Operating in this way, when I buy an investment I know precisely why and can sell it if it fails to achieve its purpose. This I fear would be difficult with a portfolio that purely consisted of broad trackers with presumably the purpose being nothing other than matching the index as it goes up and down.

gadgetmind

Linton wrote: »

I
My preferred style is rather different. I have 3 notional portfolios. One is pure niche high long term growth with a 10 year or more time frame, potentially high risk. The second is for income with little concern for capital growth, income being important to a retiree. The third is cash or fairly near to cash primarily for safety with some growth - fixed rate bank accounts, some gilt funds

Ditto! My pensions and SIPPs are (heading towards) as I described above, my income equity portfolio is held by my wife (reinvest now, draw when retired) and we have three years of income in ILSCs and cash.

This I fear would be difficult with a portfolio that purely consisted of broad trackers with presumably the purpose being nothing other than matching the index as it goes up and down.

Well, they track multiple indexes and assets, including gilts, and balance between them, but I guess you know that.

darkpool

Lokolo wrote: »

The US has completely different tax implications for active fund management compared to the UK, so using the US research as an example is flawed.

in the US they don't have stamp duty on shares, in the UK we do. i think it fair to say that if the US fund industry doesn't add value it's unlikely the UK fund industry will add value.

darkpool

Linton wrote: »

There is a method - getting a detailed knowledge of the companies in a restricted sector and the areas in which they operate, particularly if that knowledge is not generally accessible to the non-specialist general public. One of the posters advocating trackers, gadgetmind, has written about how he has been able to identify very successful investments in a technical area about which he has expert knowledge. Of course you would claim that this is pure coincidence as there is no means of identifying winners.

i can accept that a talented fund manager in technology/ small companies might be able to spot star companies. but i doubt he would be able to justify the 3 or 4% annual fees for these types of UT.

Even if a fund manager had genuine stock picking skills i'd think he would get the bulk of the profits from his skill. Fund management groups would be falling over themselves to get him to work for them, he could more or less name his price.

darkpool

Lokolo wrote: »

So, you now think that active management funds are useful in some areas?

active managed funds are well diversified, so generally diversification is good.

but are the annual fees justified - no
would i invest in them - unlikely