Professional Finance people no better than amateurs

dunstonh

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

Just as ridiculous to look at 3 years as a timescale. Especially when the fund took a position that was more defensive than was required as it turned out. However, the manager was employed to make those decisions. It didnt pay off in that period but it has in all the others.

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.

No. As no-one should be investing on the basis of a 3 year timescale. You are not looking for perfection all the time. You are looking at better than average. It would be totally unrealistic to expect perfection. It isnt going to happen.

darkpool

brasso wrote: »

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?"

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?

did you open the link i provided? i never got the story from a newspaper. but it does provide a real life example of the advice someone going to an IFA gets.

never the less, what do you think of a 15 year investment that has 3% annual charges? You seem to make clear it is bad advice anyway? it certainly didn't look that good an investment to me.

this thread is about IFAs not being better than amateurs, i would suggest that a lot of the amateurs here could provide better advice than an investment where the money is tied up for 15 years with 3% annual charges.

I usually find it helps my judgement to read things before I jump into a forum discussion.

darkpool

[STRIKE][/STRIKE]

dunstonh wrote: »

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.

I just find it interesting why you questioned why supporters of trackers had no evidence to support their case. Yet you seem incapable of presenting anything apart from anecdotal evidence to support UTs.

Be honest, if there is no academic evidence to show that UTs etc deliver alpha returns there must be another reason why IFAs etc recommend them. The most likely reason is commission.

Of course if there is another reason you will let me know?

jem16

darkpool wrote: »

I just find it interesting why you questioned why supporters of trackers had no evidence to support their case. Yet you seem incapable of presenting anything apart from anecdotal evidence to support UTs.

Yet you seem incapable of understanding that a tracker is a UT and that all UTs/OEICs pay no commission to a fee based adviser.

dunstonh

I just find it interesting why you questioned why supporters of trackers had no evidence to support their case.

I didnt say that. You are being selective in your reading in twisting what was said.

Be honest, if there is no academic evidence to show that UTs etc deliver alpha returns there must be another reason why IFAs etc recommend them. The most likely reason is commission.

How do you explain the funds that do then?

BJV

jimjames wrote: »

This was exactly the situation when I got my first mortgage in 1994. The bank adviser couldn't believe/understand why I didnt want to take out such a great product like their endowment and wanted repayment instead.

They did eventually allow me to take out a repayment as I wanted. I think there is also an element of personal responsibility here, too many things are blamed on the person selling not the person buying.

If something is too complicated to understand then ask questions until it is understandable or don't buy at all.

I would love to blame everything that has gone wrong in my life on someone else. Hey the bankers this week, government next, IFA why not.

But I think this post above summed it up. When someone gives you advice it is just that, their opinion. Sometimes subjective and sometimes based on historical data but an opinion. There is no such thing as a cast iron guarantee when it comes to certain related investments as values can rise and fall. The choice always has to be yours.

Think you summed it up perfectly! Take ideas and opinions and then make your own mind up.

gadgetmind

Here is an interesting message on MF from someone who used to work as a fund manager.

http://boards.fool.co.uk/quotwho-does-consistently-beat-the-marketquot-12489141.aspx

"The figures regularly seen that fund managers often don't beat the market, are after their chunky fees. Fees for active retail funds are often really 2-3% - the TER calculation is massaged down as much as possible and often doesn't contain all deductions from total performance.

I worked as a fund manager for many years, and I beat the market almost every year. I'm confident that, before fees, most fund managers do beat the market most of the time, though I wouldn't dispute that there are a few laggards as in all careers. Of course the fees are large to pay those bonuses, and so, after retail fees, most visible fund manager performance is below the market. It is only the high retail fees that cause most fund managers to fail to beat the market."

darkpool

dunstonh wrote: »

I didnt say that. You are being selective in your reading in twisting what was said.

How do you explain the funds that do then?

but you said -

"Why is it that there is never any evidence from those that say trackers are best and why are they so biased towards it even if it means that they will miss opportunities?"

tbh it seems clear that you were saying that fans of trackers had no evidence to support their case. i don't know how you could accuse me of twisting what you said.

most professionals can give good reasons why they made any particular decision. for instance lawyers look at statute law and past court cases before they give advice. doctors look at clinical research before they prescribe drugs. engineers have design codes and have calculations

it seems IFAs base their advice on recommending UTs as "some have done well in the past". I certainly wouldn't pay 160 pounds an hour for that.

darkpool

jem16 wrote: »

Yet you seem incapable of understanding that a tracker is a UT and that all UTs/OEICs pay no commission to a fee based adviser.

well you enlightened me there, i did not know that technically a tracker was considered a UT.

but in everyday conversation most people realise that UTs are shorthand for actively managed funds and trackers are a passive investment tracking an index.

so how about answering my question, do you think an investment over 15 years with 3% annual fees is likely to be that good?

dunstonh

but you said -

"Why is it that there is never any evidence from those that say trackers are best and why are they so biased towards it even if it means that they will miss opportunities?"

tbh it seems clear that you were saying that fans of trackers had no evidence to support their case. i don't know how you could accuse me of twisting what you said.

It does not say what you are interpreting it to say. Trackers in single sector areas are typically mid table. They provide mid table consistency year in, year out. more niche areas (focused index for example) will fluctuate more and could come out top (just as FTSE250 did quite often in the past). The thread from 3 years ago was collection of threads in quick succession (just as now) about how some were saying they were best (usually quoting MF's 9 out of 10 funds do not beat trackers). Trackers are rarely going to be best. They are going to be at or just below benchmark which means mid-table when looking at discrete performance.

You tell me the last time the FTSE all share tracker was best fund in the UK all companies sector over 12 months

I certainly wouldn't pay 160 pounds an hour for that.

No-one would want you anyway.

but in everyday conversation most people realise that UTs are shorthand for actively managed funds and trackers are a passive investment tracking an index.

Never had that one before.

so how about answering my question, do you think an investment over 15 years with 3% annual fees is likely to be that good?

Yes it can be.