Emerging Markets

gadgetmind

Linton wrote: »

I thought the forum generally agreed that the wealth 150 was little more than a marketing exercise - seems a bit weak to use it to bolster your case!

As I regards active funds as mostly being a marketing exercise, I was just being consistent.

Pick another "fallen from grace" fund in any sector and you'll see the same "explanationism" for why they have dropped. The truth is that they have dropped because they hold a different subset of the market, and you will always see such ups and downs versus other subsets.

How can we have 2 apparently very different indexes in the same sector? Only one can be optimal long term. Which is the "True" index?

Optimal? No such animal.

Different trackers use different indexes, and these may use different constituent indexes in their target territories.

http://monevator.com/2012/02/07/facebook-index-trackers/

So, their short/medium term performance may differ, but they'll be closer than active funds.

As it happens, I *do* have EM exposure via some active funds, including a few £k in both First State and Aberdeen, but this is dwarfed by my holding in EM tracker.

Hell, I even hold some Templeton - imagine how I must feel about paying fees so that Mobius can fly around in private jets!

barak

gadgetmind wrote: »

.....As it happens, I *do* have EM exposure via some active funds, including a few £k in both First State and Aberdeen, but this is dwarfed by my holding in EM tracker.

Hell, I even hold some Templeton - imagine how I must feel about paying fees so that Mobius can fly around in private jets!

I've held Templeton Emerging Markets Investment Trust PLC since launch and I'm perfectly happy for Mark Mobius and his team to carry on in just the same way!

In the 10 years to 31st March 2011 TEMIT's share price grew from 113.5p to 660.0p [NAV from 135.7p to 718.0p].

Today's closing price was 618.50p.

gadgetmind

The same team run various other collective investments, not all of which have faired so well. I backed TEMIT along with a few other horses, not all of which have faired so well.

Active investments work very well if you only ever bet on the winning horse.

I like to think I've got it right more often than I got it wrong, but I've had to shoot a few three-legged donkeys along the way.

Linton

gadgetmind wrote: »

The same team run various other collective investments, not all of which have faired so well. I backed TEMIT along with a few other horses, not all of which have faired so well.

Active investments work very well if you only ever bet on the winning horse.

I like to think I've got it right more often than I got it wrong, but I've had to shoot a few three-legged donkeys along the way.

Not all one's investments need to win, those in very well performing sectors dont even need to be better than sector average. What you do need is for the ones that do win to provide a much better return than any losses from the dogs.

Recommended reading - The Black Swan, Nassim Taleb. Much more thought provoking IMHO than Tim Hales.

gadgetmind

Linton wrote: »

Not all one's investments need to win, those in very well performing sectors dont even need to be better than sector average. What you do need is for the ones that do win to provide a much better return than any losses from the dogs.

Buy the index via a "closet tracker" of funds, take away fees, what are you left with?

That Taleb book is on my reading list (I've read a lot of Umberto Eco!), and I'll try and bump it a trifle higher.

As it happens, I've encountered a few "Talebists" over the years, some of which have done well at investing, but many have crashed and burned. That I'm now moving towards trackers isn't coincidental: I'd love to fly high, but I can't risk getting too close to the sun.

Linton

gadgetmind wrote: »

Buy the index via a "closet tracker" of funds, take away fees, what are you left with?

That Taleb book is on my reading list (I've read a lot of Umberto Eco!), and I'll try and bump it a trifle higher.

As it happens, I've encountered a few "Talebists" over the years, some of which have done well at investing, but many have crashed and burned. That I'm now moving towards trackers isn't coincidental: I'd love to fly high, but I can't risk getting too close to the sun.

You dont have a closet tracker of funds because you avoid the funds that primarily invest in the run of the mill FTSE-100 type of companies ie those large companies that have little prospect of major growth beyond what they get from rising and falling with the index.

As to the risk of being burnt - sure its risky in the short term, though perhaps not much riskier than the FTSE-100 has proved to be in recent years. That's why it makes sense to spead ones search for lucrative opportunities widely and have a high % of cash and other safe (in the short to medium term) investments.

gadgetmind

Linton wrote: »

You dont have a closet tracker of funds because you avoid the funds that primarily invest in the run of the mill FTSE-100 type of companies ie those large companies that have little prospect of major growth beyond what they get from rising and falling with the index.

So that'll be defensive income stocks, which have done very well during 2011, thank you very much.

That's why it makes sense to spead ones search for lucrative opportunities widely and have a high % of cash and other safe (in the short to medium term) investments.

So, global trackers, a bit of Pacific/EM, bonds, REITs, a glimmer of gold and some cash? I hope so, as that's more or less what I hold with a TER of 0.4%.

(I'm hoping you've forgotten my 30% holding of tech shares. Let's just gloss right over those and their gains.)