Professional Finance people no better than amateurs

darkpool

jem16 wrote: »

It shouldn't be one or the other. It should be what fits best for where you want to invest, tracker or managed.

i agree with that. but it is wrong for anyone to make out that any particular UT can deliver long term alpha return.

with investment nothing is certain, but by reducing costs you are increasing your chance of making a good return.

what did you think of the investment recomended to the woman with 80k? would you be happy investing in a product with 3% annual fees?

jem16

SnowMan wrote: »

.The whole thread is worth a read and illustates as Rollinghome says how IFAs have become more favourable towards trackers with the approach of the RDR.

As usual I say read the thread and decide yourselves how opinion has changed.

Two IFAs (one wasn't at the time of posting in that thread) posting back in March 2009. Both seemed to be saying exaclty what they are saying now, almost 3 years later.

It's where you want to invest that matters and then you choose the best fund for that area, be it managed or passive. To go all out into one is blinkered as it may compromise the investment.

brasso

darkpool wrote: »

but when you look at the advice IFAs give it doesn't seem particularly good. we saw the widow with 80k to invest, she was advised to buy some bond that had 3% annual charges.

That is such a silly remark.

The truth is that neither of us have much idea what advice IFAs give. I don't have access to that information, and I'm pretty sure it's not collected in any case.

I don't know who this widow with 80K is - a newspaper story? And why was it in the news? Would it possibly be that it was so unusual that it merited a news report? If this was commonplace i.e. "the advice IFAs give" to use your phrase, it would surely not merit a news story.

The IFA who behaved so badly presumably has been named and shamed and is probably now out of business or seen his/her business suffer significantly. Which is exactly why I can't believe this sort of incompetence or greed is as endemic as you seem to think on the basis of the odd tabloid news report.

Really, this is Beano standard debating on your part.

darkpool

brasso wrote: »

That is such a silly remark.

The truth is that neither of us have much idea what advice IFAs give. I don't have access to that information, and I'm pretty sure it's not collected in any case.

i obviously have more idea of what advice the IFA gave than you.

"Thanks. All this is making sense. I've had a closer look at the illustration, and to be honest, I'm disappointed. Their assumed value after 15yrs at a growth of 4% is less than I could earn fixing it for just 5 years with the Halifax even after tax is taken off.

I realise 4% might be considered conservative, but really, when I think about the growth that would be required to pay for the fees and offer the same return, my mind boggles. In short, for an investment of £70k at 4% I'd get back £81,500 after 15 years. When, really a clean (without charges) 4% growth yoy would be £126,000. Thats nearly £45k in charges? They'd be making four times as much as I am. Am I missing something here (maybe a few marbles?). And, assuming a higher growth level, they'd be taking a higher charge."

http://forums.moneysavingexpert.com/...8445&highlight=

robmatic

SnowMan wrote: »

Invariably IFAs used to claim that they could pick the outperforming funds by looking at past performance. If you read this thread from 2009 you will see this argument being used.

The FSA investigated the matter of past performance in 2000 when deciding whether to allow advisers to use past performance to sell products. Their evidence showed that there was no correlation between past performance and future performance.

The only evidence that came up that I could see in response on that thread was an anecdote of a compliance visit to a fellow IFA from which it was supposedly deduced the FSA had completely backtracked on their finding, together with the retrospective choice of funds that had done well in the past (as opposed to those that had done badly) to show active investing with high charges was better than passive investing with low charges.

The whole thread is worth a read and illustates as Rollinghome says how IFAs have become more favourable towards trackers with the approach of the RDR.

As usual I say read the thread and decide yourselves how opinion has changed.

I like this tip from Aegis in March 2009 for a good managed fund which beats the indices every year:

Aegis wrote: »

Take a look at Invesco Perpetual's High Income funds for one that has outperformed the index pretty much every year in the last decade or so.

It's the red one. Blue is FTSE All Share, Yellow is FTSE 100.

Past performance, eh?

dunstonh

It is good to see that the opinion being posted in 2009 is still the same as it is now. Despite attempts by a few to use creative copy and paste to make it look otherwise.

It's the red one. Blue is FTSE All Share, Yellow is FTSE 100.

Past performance, eh?

Inv perp high income is a lower risk than the FTSE. Over 3 years it has underperformed the FTSE. Over 1 year it has outperformed it. As it has over 2 years, 4 years, 5 years, 6 yearsm 7 years, 8 years, 9 years and 10 years.

So, one period in the last 10 years the fund underperformed the FTSE. So, the statement is correct. The fund has pretty much every year in the last decade outperformed the index. Unless you feel 9 times out of 10 is not enough?

brasso

darkpool wrote: »

i obviously have more idea of what advice the IFA gave than you.

The quote you provided tells me nothing about "the advice IFAs give" (your previous phrase) in general Maybe the question you meant to ask was "Do you happen to have a quote of some sort from any random IFA?"

If that had been the question, then yes, I could have helped as I spoke to an IFA less than a month ago (non-professionally).

What I fear you are doing is generalising from the particular. You read a news story about an IFA who gave bad advice and extrapolate from this that all IFAs under all circumstances give bad advice.

Exactly what standards of logic and analysis and judgement do you apply to your investment strategy?

Aegis

robmatic wrote: »

I like this tip from Aegis in March 2009 for a good managed fund which beats the indices every year:


It's the red one. Blue is FTSE All Share, Yellow is FTSE 100.

Past performance, eh?

A fair point, it's not done as well as a lot of other funds since early 2009. However, 2009 saw the end of a very severe downturn in the markets and the invesco team had lot a lot less of their value than the main market. You'll note that the fund has considerably lower volatility than the FTSE100 and Allshare figures over the following time frame.

In the interests of total fairness, let's look at 1, 2, 3 and 5 years terms for the fund vs the indices and the sector average.

IP High Income is blue
UK Equity Income is green
FTSE 100 is red
FTSE Allshare is Yellow


1 year



2 years



3 years



5 years



I'm still personally invested in this fund and think it will continue to do well compared to all three benchmarks you listed. I was quite happy with Neil Woodford's decision to play the recovery carefully in case there was a slide straight back into recession, and if you look at the 3 year chart you can see that the rest of the world pulled well ahead right up to the point where the markets took another dive, at which point the team did a lot better than the peers (see the 1 year performance for just how much better).

All in all, it achieved its goals and hasn't suffered too much in terms of performance.

SnowMan

dunstonh wrote: »

Inv perp high income is a lower risk than the FTSE. Over 3 years it has underperformed the FTSE. Over 1 year it has outperformed it. As it has over 2 years, 4 years, 5 years, 6 yearsm 7 years, 8 years, 9 years and 10 years.

So, one period in the last 10 years the fund underperformed the FTSE. So, the statement is correct. The fund has pretty much every year in the last decade outperformed the index. Unless you feel 9 times out of 10 is not enough?

Someone recommends a fund in 2009 where the past performance has been very good over the past 7 years and then after that advice it does fairly badly over the next 3 years to 2012.

I think most people can see that it is ridiculous to look at the 10 year performance to appraise the recommendation.

If you are looking at a recommendation in March 2009 to see if it was a good recommendation the obvious period to look at is the period from March 2009 to now? Surely you must understand that.

Aegis

SnowMan wrote: »

Someone recommends a fund in 2009 where the past performance has been very good over the past 7 years and then after that advice it does fairly badly over the next 3 years to 2012.

I think most people can see that it is ridiculous to look at the 10 year performance to appraise the recommendation.

If you are looking at a recommendation in March 2009 to see if it was a good recommendation the obvious period to look at is the period from March 2009 to now? Surely you must understand that.

Then look at it. How has it done in comparison to the UK Equity Income sector, i.e. its benchmark?