Fees

doubleJackD

Lokolo wrote: »

Erm eh? There are employees running the fund. Employees don't just set up the fund a leave it, they have ongoing changes, analysts looking into new and existing companies. Portfolio rebalancing etc.

Don't get me wrong, I have every respect for people that decide to invest in actively managed funds. However the evidence does show they are effectively throwing their money away in fund management charges.

But yes, maybe I should see it as more a job creation scheme. Of course I'd rather spend my money on things that I get some use/ enjoyment from, but it would be a dull world if we were all the same!

Lokolo

doubleJackD wrote: »

Don't get me wrong, I have every respect for people that decide to invest in actively managed funds. However the evidence does show they are effectively throwing their money away in fund management charges.

Which goes back to me in a salary and bonus anyway, so doesn't bother me, because in the end, it comes back to me.

The evidence says that sometimes its not worth it and some it is. Aberdeen Emerging Markets is evidence that sometimes it is worth it, whether it will be worth it in the future, who knows. We all take risks, and personally I find people who only buy trackers pretty boring.

It also makes me wonder why people with trackers buy individual shares, if you don't think people can out perform the market, why do you think you are the exception?

But yes, maybe I should see it as more a job creation scheme. Of course I'd rather spend my money on things that I get some use/ enjoyment from, but it would be a dull world if we were all the same!

Well yes it would be very dull. Gadget spends his money on books and paying platform charges, I spend my money on internet and active management fees, and Dunston spends all his money on cars and Norwich FC.

grey_gym_sock

Lokolo wrote: »

personally I find people who only buy trackers pretty boring.

perhaps they don't spend much time on their investments, because they have such exciting lives in other respects.

Lokolo

grey_gym_sock wrote: »

perhaps they don't spend much time on their investments, because they have such exciting lives in other respects.

I don't think people who buy trackers spend any less time on investments than those who buy active.

grey_gym_sock

Lokolo wrote: »

I don't think people who buy trackers spend any less time on investments than those who buy active.

well, the ones who post on MSE are by definition spending time posting on a money-related site, so they may not be typical.

gadgetmind

Lokolo wrote: »

The evidence says that sometimes its not worth it and some it is. Aberdeen Emerging Markets is evidence that sometimes it is worth it,

Perhaps you and I have a different definitions of the word "evidence"?

It also makes me wonder why people with trackers buy individual shares, if you don't think people can out perform the market, why do you think you are the exception?

Were I to take 2-3% of the funds in my trading accounts out as cash every year, and then burn it, I think this would give me plenty of long-term under performance.

Comparing my trackers and individual share holdings would be *much* harder, and I'd have to differentiate between my high-risk tech holdings and my income portfolio.

For my tech holdings I like to think that my success is down to the fact that I spend time reading through the patent portfolios of the companies on my watch list, which isn't something you can do unless you understand
that area of technology and the patent system.

However, it's far more likely to be dumb luck!

Gadget spends his money on books and paying platform charges

I spend £228pa on platform charges, and that between two SIPPs and multiple ISAs. Dunno what I spend on books, and it's dwarfed by what I spend on bicycles, cars and Caribbean holidays.

My overall fees, including platform charges, trading costs, and some active funds/ITs, come to just over 0.4%pa. I'm working on getting this down.

I spend my money on internet and active management fees

Each to their own. I just can't stand the smell of burning money.

Lokolo

gadgetmind wrote: »

Perhaps you and I have a different definitions of the word "evidence"?

Not quite sure how you can say it's not evidence? It has outperformed the market after fees, therefore it is evidence that fees can be worth it. I don't understand how you can say "that's not evidence".

gadgetmind wrote: »

For my tech holdings I like to think that my success is down to the fact that I spend time reading through the patent portfolios of the companies on my watch list, which isn't something you can do unless you understand
that area of technology and the patent system.

Right. Have you ever researched as to what fund anaylsts do? This is very similar and makes no sense as to why you are doing it. You don't believe that people can out perform the market longterm, yet you are trying to do exactly that. They don't just sit around all day.

But as you said, I guess you have just been very lucky.

gadgetmind wrote: »

I spend £228pa on platform charges, and that between two SIPPs and multiple ISAs. Dunno what I spend on books

gadgetmind wrote: »

Each to their own. I just can't stand the smell of burning money.

Again, contradiction. You say you can't stand the smell of burning money, yet pay for books (library is free), pay huge platform fees (I'm sure there are places where you could get it cheaper).

A holiday is never burning money

gadgetmind

Lokolo wrote: »

Not quite sure how you can say it's not evidence? It has outperformed the market after fees, therefore it is evidence that fees can be worth it. I don't understand how you can say "that's not evidence".

I'm guessing that you don't have a background in science and/or statistics. You can't just cherry pick one bit of data that happens to back your argument, you need to carefully collect and examine the total of all available data. You need to look at all available funds, all the information available to investors regards past performance and (cough!) manager skill, and analyse whether given this data investors can pick funds that will out-perform.

I think we all know by now what such analysis shows.

You don't believe that people can out perform the market longterm

There is evidence that some can, we just don't know which they will be until after the fact.

yet you are trying to do exactly that. They don't just sit around all day.

I have the advantage of not having to invest. I'm not given some money and told "do your best", so I can bide my time and wait for opportunities. If I don't see anything, then the money goes into trackers and bonds.

But as you said, I guess you have just been very lucky.

I think it would be both wrong and rather vain for me to claim otherwise.

Again, contradiction. You say you can't stand the smell of burning money, yet pay for books (library is free), pay huge platform fees (I'm sure there are places where you could get it cheaper).

I buy a lot of my books second hand and often resell them. As for platform fees, no, there isn't anywhere cheaper that I can hold the trackers/etc. that I'm holding. I could hold other trackers without the platform fees, but the fee in (for example) my SIPP adds 0.06%pa to my overall charges.

For smaller pots, I adopt slightly different approaches (platforms, holdings, etc.) that give me roughly the same geographic, sector, cap and asset spread but which keep the fee percentage down.

A holiday is never burning money

As it happens, my wife and I disagree on that. She also think that I spend too much money on bicycles and that no one man needs six of them. I have an opinion regards her shoes, so we both tend to keep quiet.

Radiantsoul

Lokolo wrote: »

Right. Have you ever researched as to what fund anaylsts do? This is very similar and makes no sense as to why you are doing it. You don't believe that people can out perform the market longterm, yet you are trying to do exactly that. They don't just sit around all day.

The thing for me is that it is probably easier for the layman to analyse the performance and prospects of individual companies than the performance of active funds.

How active funds invest is hidden and the personnel move around so it seems to me it is rather difficult to see what they are doing. Whereas companies disclose quite a bit in their releases, to the media, etc.

gadgetmind

Lokolo wrote: »

Again, contradiction.

BTW, I don't claim to be contradiction free, and play host to a veritable menagerie of demons regards my investing style, particularly my well-researched tech share investing and my knee-jerk plays on subordinated bank debt!

I'm also still holding some active funds in two old ISAs, and there's about £75k between the two, so I'm not entirely active averse. However, these are on the list to move and ... and I'm actually going to find it hard when it comes to sell some of the funds that have done well for me. But all I will need to do is look upon the once-promising dogs that inhabit the same pot and I'll press that sodding button without hesitation!