Fund of Funds II

cloud_dog

darkpool wrote: »

so if pro management is so good why do the fund manager fans here not allow a fund manager to invest in UTs for them?

Ok darkpoo I will answer your question........

I personally would not invest in FoF as they do not offer the focus I require. They offer a broad range of investing, sometimes 'themed' but very generic in nature.

dunstonh

cloud_dog wrote: »

Ok darkpoo I will answer your question........

I personally would not invest in FoF as they do not offer the focus I require. They offer a broad range of investing, sometimes 'themed' but very generic in nature.

I wouldnt normally personally invest in a portfolio fund either (although Trojan O does form part of my portfolio). I would and have quite happily recommended portfolio funds to certain clients though where it is better advice for them to have them rather than single sector funds. I have made my response more about portfolio funds as I generally prefer those to fund of funds in general. However, I did use one just yesterday in the form of Friends Balanced index fund of funds.

The problem is that some people on this thread cant see that the investments should be personal to the individuals needs and circumstances. Not one-size-fits-all.

TH1878

darkpool wrote: »

ok, what abilities do you have that the millions of other UT investors don't have? how can you decide which UTs will outperform when you only have the exact same information as every other UT investor?

How many people pick mutual funds by looking at their discrete metrics including:

• Alpha
• Beta
• R2
• Information Ratio
• Sortino Ratio
• Sharpe Ratio
• Volatility
• Historic VAR

They're the factors that I look at when I'm picking funds. Why would I outsource it to a Fund manager whose skillset is assessing companies (which isn't mine) and not assessing other fund managers (which is a different skillset).

darkpool

TH1878 wrote: »

How many people pick mutual funds by looking at their discrete metrics including:

• Alpha
• Beta
• R2
• Information Ratio
• Sortino Ratio
• Sharpe Ratio
• Volatility
• Historic VAR

They're the factors that I look at when I'm picking funds. Why would I outsource it to a FoF manager whose skillset is assessing companies (which isn't mine) and not assessing fund managers (which is a different skillset).

at a guess, out of everyone in the UK, just you.

TH1878

darkpool wrote: »

at a guess, out of everyone in the UK, just you.

And that's why we've beaten the weighted indices benchmark since running model portfolios in October 2008 after factoring in charges.

Your question was:

how can you decide which UTs will outperform when you only have the exact same information as every other UT investor?

You use the above metrics to aid you in your decision and weed out the average fund

psychic_teabag

I assume (hope) the FoF manager is also looking at the states of the global economies to choose the important sectors and asset classes. And should also be looking for funds that work well together.

TH1878

psychic_teabag wrote: »

I assume (hope) the FoF manager is also looking at the states of the global economies to choose the important sectors and asset classes. And should also be looking for funds that work well together.

Absolutely, but I think the macro asset allocation is usually dictated to them by the fund group / fund remit.

JamesU

Linton wrote: »

The main advantage of chosing specific funds is because you can choose what sort of things to invest in. Go for a tracker and you are guaranteed to have most of your money invested in the largest companies in a broad market. Not necessarily the most efficient, nor the ones with the most convincing growth strategy, nor the ones that provide the portfolio balance you want, simply the largest.

What you say above might hold true for UT-based trackers such as the HSBC range, but worth bearing in mind this is not the case for all trackers. Etfs are quite versatile, can be used to track a multitude of indices and specialised areas, and are not so limiting.

JamesU

TH1878

JamesU wrote: »

What you say above might hold true for UT-based trackers such as the HSBC range, but worth bearing in mind this is not the case for all trackers. Etfs are quite versatile, can be used to track a multitude of indices and specialised areas, and are not so limiting.

JamesU

And can also be extremely opaque and complex. The FSA has raised the use of ETFs as a future risk over the next few years - you need to be absolutely sure you know what you're buying.

For example, the combined value of all the gold ETFs (ETCs) in the world exceeds the actual amount of physical gold.

Totton

TH1878 wrote: »

Why would I outsource it to a FoF manager whose skillset is assessing companies (which isn't mine) and not assessing fund managers (which is a different skillset).

I wouldn't agree with that claim, you only need to read a few FoF fact sheets to see that they often follow managers, easy example would be the use of Findlay Park for US coverage. An excerpt from the Jupiter FoF brochure states -

"Investment is an art
The team believes that the most important factor in how a fund is likely to perform is the individual who runs it and so they interview managers face-to-face to gain first-hand information. They are interested in how long the manager has been managing the fund, how performance has been achieved, and the risks that were incurred in achieving it. They also want to know about the style of management and, crucially, how likely it is that the fund will continue to succeed in the future."

Regards,
Mickey