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darkpool

jem16 wrote: »

Funnily enough it's you that is trying to prove otherwise rather than them trying to prove anything of the sort. All you have proved though, is your lack of understanding.

A parade of studies has shown why: Index funds, which try to simply match the performance of a broad market sector, have consistently beaten "actively managed" funds, where professional money managers attempt to outperform the market by picking the hottest stocks and bonds.

Over the 23 years ending in 2009, actively managed funds trailed their benchmarks by an average of one percentage point a year. If a benchmark like the Standard & Poor's 500 returned 10%, the average managed fund investing in similar stocks would therefore have returned 9%, while an index fund would have returned 9.8% to 9.9%, giving up only a small amount for fees.


http://knowledge.wharton.upenn.edu/article.cfm?articleid=2702

Just ignore the above Jem, after all what does some PhD in economics know about investment? Your IFA obviously knows more about investment, after all his qualifications are the same as a hairdresser.

StevieJ

darkpool wrote: »

Over the 23 years ending in 2009, actively managed funds trailed their benchmarks by an average of one percentage point a year. If a benchmark like the Standard & Poor's 500 returned 10%, the average managed fund investing in similar stocks would therefore have returned 9%, while an index fund would have returned 9.8% to 9.9%, giving up only a small amount for fees.

I think most people would acknowledge that trackers perform comparitively well in developed markets, but I for one would much prefer hands on management in the not so developed markets. BTW I do hold UK and US tracker funds.

darkpool

StevieJ wrote: »

I think most people would acknowledge that trackers perform comparitively well in developed markets, but I for one would much prefer hands on management in the not so developed markets. BTW I do hold UK and US tracker funds.

fair point, i agree that the tracker advantage will be less in developing markets. i still doubt that the manager fees are justified by alpha return though in developing markets.

you often read how china rips off western technology, do you not think that indicates they will rip off westren investors as well?

no one seems to have made much money in china yet.....

Totton

darkpool wrote: »

... you often read how china rips off western technology, do you not think that indicates they will rip off westren investors as well?

no one seems to have made much money in china yet.....

That seems very wrong to me, I guess it depends on when/how long you have been/were invested but China did very well for me.

As for China 'ripping off' the west, history suggests it hasn't all been one way :-)

Regards,
Mickey

DavidLaGuardia

darkpool wrote: »

A parade of studies has shown why: Index funds, which try to simply match the performance of a broad market sector, have consistently beaten "actively managed" funds,

The academic evidence in on the side of the passives, but do not confuse passive and index funds. Index funds are passive, but not all passive funds are index funds!

StevieJ wrote: »

I think most people would acknowledge that trackers perform comparitively well in developed markets, but I for one would much prefer hands on management in the not so developed markets. BTW I do hold UK and US tracker funds.

This is true to a point, but oft exaggerated. The spreads (broker fees) are that much higher in these other markets meaning active manaaged often doesn't compensate of these costs. What can be flawed is specific indices, but these do not have to be the basis of more passive investment in the first place.

darkpool

Totton wrote: »

That seems very wrong to me, I guess it depends on when/how long you have been/were invested but China did very well for me.

As for China 'ripping off' the west, history suggests it hasn't all been one way :-)

Regards,
Mickey

it just seems to me that western companies have been pumping money into china for decades, but no company seems to be making much profit there

be honest, china is the "bad boy" of countries, they take over tibet, manipulate their currency, insist that foreign companies share their technologies before they can invest, take over citizens land if they want it, and last but not least kill thousands of their own people.

yet people here think china will play fair with western shareholders.....

browniej

darkpool wrote: »

I'm terribly sorry if you feel my explanation of beta was defficient - I was only trying to help you.

As you will see I thanked you for that help.

It type of says something about you that you feel the need to come and criticise me on another post, on the Easter weekend of all weekends

I felt the need to say something after your rather boastful post about putting IFAs right on alpha return. As I have since found out that your knowledge of alpha and beta was not as good as you appear to think it was, I really don't think you have anything to boast about.

Quite what the Easter weekend has to do with it I have no idea. Have you gone all religious?

It seems that you think you are allowed to crtiticise IFAs on an Easter weekend but no-one should criticise you.

How hypocritical .

browniej

DavidLaGuardia wrote: »

Thank you browniej. I agree with this comment and almost all of Jem16's description. The small area I would would disagree with is is the use of the word "expected". Alpha only indicates a past return

Thank you. I think I have the general idea now.

Are you an IFA?

jem16

darkpool wrote: »

Just ignore the above Jem, after all what does some PhD in economics know about investment?

Actually I found it very interesting that, once again, you choose to quote an article based on US mutual funds to try and support your argument. We all know that in developed markets, an Index tracker is best suited to the job.

What was even more interesting was one of the comments on that article.

this article misses the asset class & sector implications of finding alpha. US large cap vs emerging market debt are different animals. Can a portfolio be optimized for a determined level of risk with a combination of passive/active strategies based on asset class/sector ability to find alpha?

Do you have an answer to this?

Your IFA obviously knows more about investment,

Well he certainly knows more than you - but then that isn't difficult.

However what is clear is that he acknowledges the good and bad points about passive vs active and utilises the best options available according to my objectives.

after all his qualifications are the same as a hairdresser.

:rotfl: :rotfl: Your powers amaze me. You know absolutely nothing about him yet you can come up with this wonderful observation.

I shall tell him when I next speak to him. I would imagine his answer would be along the lines of - "What an idiot! Please don't recommend me to him!" He doesn't suffer fools gladly.

Sauveur

RDR will reduce the number of IFAs and as a result the networks will reduce in size. Networks hope the quality of advice improves as a result of a reduced advisor base as one of the biggest expenses on these networks is complaints and the related PI expenses.