Fund of Funds II

JamesU

cloud_dog wrote: »

So if an ETF / equity had a bid / offer spread of 10% you would still invest in it? You either believe in direct investing or you dont?

A bid/offer spread of 10% seems an excessive value for many etfs. More typically when trading etfs from various providers across indices, the spread loss tends to be in a range of around 0.5- 1.0%.

JamesU

cloud_dog

JamesU wrote: »

A bid/offer spread of 10% seems an excessive value for many etfs. More typically when trading etfs from various providers across indices, the spread loss tends to be in a range of around 0.5- 1.0%.

JamesU

Hi JamesU...... Yes a bid / offer spread of 10% is excessive but I know a number of low volume ETF / Stocks which have a large spread which may be significantly large as to question your desire to actually invest in them.

talexuser

darkpool wrote: »

If only more people were like us two!

Ha Ha, nice reverse. But not as far as I'm concerned, my active funds over 17 years are way ahead of the indexes.

psychic_teabag

What's the feeling on fund-of-trackers, where a manager would actively allocate between trackers ? I noticed an advert in the paper today for Fidelity Moneybuilder Asset Allocator, which sounds like such a thing, though with not enough history to gauge performance. TER is 0.92%. Not sure if Cavendish would refund anything (they have AMC as 1.25% with 0.5% refunded).

EDIT: HL lists the TER as 1.17% - Fidelity's 0.92% was an estimate at launch ?

Am I right in thinking the TCF funds are similar sorts of beasts ?

This should differ from things like the Vanguard lifestrategy funds which use fixed allocations (but lower costs).

Porcupine

The Asset Allocator looks interesting. They publish their cyclical strategy (the investment clock which looks funky if slightly obvious) but don't actually mention what the fund invests in at the moment.

There's a couple of reasons for I'm not keen on FoFs. The obvious one is charges - TER north of 2% is a fairly strong thing to swallow. The unit trust/OEIC universe is tiny compared to the shares universe, so a UT/OEIC FoF will end up carrying the 'usual suspects'. Also there's a disadvantage on trying to DIY a fund by buying your own shares which is dealing fees, but you can DIY your own FoF just by buying the constituent funds for no additional costs. In the limited UT/OEIC universe, many of the funds in a sector have roughly equivalent risk, so there's no much risk spreading by buying several. All you're doing is diluting your chance of buying a good fund (if you have to buy 10 funds, you might end up buying 3 good funds and 7 mediocre ones).

Things like LifeStrategy are interesting because they're even cheaper than a regular managed fund, and yet they don't have quite as much risk as a regular single-index tracker. So you get FoF functionality for tracker prices. Or you would, if there wasn't an issue of actually buying them cost-effectively for small-ish portfolios.

cloud_dog

Ahem, darkpool....... Any chance you could just answer the simple question?

cloud_dog wrote: »

So if an ETF / equity had a bid / offer spread of 10% you would still invest in it? You either believe in direct investing or you don't?

sabretoothtigger

Ive bought stuff with 10% spread but it has to be very cheap to buy.
Bad spread just means you expect it to get very popular and accept that it is completely forlorn currently, the transition usually takes years

darkpool

cloud_dog wrote: »

Ahem, darkpool....... Any chance you could just answer the simple question?

ehhhmmmm, if i thought the share was worth it i would still invest. i really don't care what the spread is, i'm a buy and hold investor.

i just don't understand the thought process of the fund management fans here. they think fund managers can make better decisions than "amateurs" regarding share selection. yet the same amateurs believe they have a better ability to choose UTs than a fund manager. it's not logical.

PS thanks for bumping the thread

cloud_dog

darkpool wrote: »

ehhhmmmm, if i thought the share was worth it i would still invest. i really don't care what the spread is, i'm a buy and hold investor.

Interesting......... So you don't care what the costs are associated with investing....... Interesting.

So you've got the cost from your dealing account, the probable cost of Stamp Duty (ex. ETFs) and then the possible large cost from the spread....... and you would still blindly invest.......... Interesting.

Thanks for explaining your obsessive need to invest directly.

darkpool

glad to be of service, i reckon including alllllll costs i pay well under 0.5% a year. what are the typical TERs for UTs again?