Passive Investing

Perelandra

Mr_Curious wrote: »

Hi,

Thanks for the input.

The reason why I have suggested these funds is because of the low cost. Also regarding emerging markets, where would be a good suggestion for a low cost fund and what is the reasoning behind it? Obviously places like India and Brazil are said to be on the up?

If you're wanting cheap, passive emerging markets, the Blackrock tracker:

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=HSFG8&univ=O

Is the cheapest fund that I know of. (It comes in two flavours now, the "D" class is clean, so may attract platform fees. The "A" class is the retail class).

There are a few alternatives to that if you don't have access to the fund- the Vanguard ETF and Index Tracker, or the L&G Index tracker all do the same thing, but costs are higher.

A good compromise between costs and managed investments would be the Templeton Emerging Markets. That does have a higher cost, but it's easier for managed funds to beat the index in less developed markets, so for EM managed funds can have the edge over passive index investing.

brasso

Perelandra wrote: »

IP High Income, Troy Trojan and (probably) the big China/Asia fund are actively managed, though, so not necessarily what the OP is looking for (since he specifically talked about passive investing).

But yes, they've done well.

That's a fair point, Mr P.

Strictly speaking they are not pure 'passive' choices insofar as they are not index trackers. Leaving aside the China/Asia suggestion which could be replaced by an emerging markets tracker, I suppose I consider the IP and Troy Trojan funds to follow the spirit of passive investing in the sense that they are pretty rock solid and personally I could (and have) put money into these funds and just go away for 10 years, reasonably safe in the knowledge that they will keep me afloat.

In fact, thinking about it, I would prefer these picks to pure passive trackers. Being actively managed, they are more likely to protect your capital better during a downturn. If the market drops 10% and plateaus for a couple of years, your tracker will blindly follow of course. Actively managed but conservative funds like Troy Trojan seems to keep its head above water, even during periods of severe
volatility. And Woodford at IP seems rarely to put a foot wrong. Of course, you do pay higher charges for this safety net.

That's why I don't think it's a bad idea to have a couple of funds like this, as well as the purer passive trackers like Vanguard etc. In other words, a little bit of diversification within a fairly conservative container.

Perelandra

brasso wrote: »

In fact, thinking about it, I would prefer these picks to pure passive trackers. Being actively managed, they are more likely to protect your capital better during a downturn.

... but more likely to charge you for performance no-better-than-market-average in an upturn! :rotfl:

Don't worry, I'm not really arguing with you on the relative performance of those funds versus trackers- I know they're both solid funds.

Mr_Curious

Opinions and advice please guys.

Would it be wise to invest my 15k into the low cost HSBC funds with the allocations I gave? What are the opinions of the masses?!

Also I would be looking to add around £100 each month just to try help the pot grow. Again does this seam a wise strategy?

Thanks again

Mr C:)

melbury

After looking on many various sites, I am thinking of investing monthly into the Fidelity Moneybuilder World Index Tracker fund.

Any opinions on this greatly appreciated.

https://www.fidelity.co.uk/investor/research-funds/fund-supermarket/factsheet/summary.page?idtype=ISIN&fundid=GB00B8075673&UserChannel=Direct

It only commenced in December 2012 and seems to cover quite a substantial amount of world markets. The charges appear to be very low at 0.10 annual management charge.

innovate

It's almost 95% equities and has a very heavy US bias - - you are likely to know that already, and if its right for you, it's right for you.

The charges are likely to be more than 0.1% - - according to HL, there are 0.2% "Fund manager's other expenses" (plus a £2/mth platform fee at HL). Not sure what 'hidden' costs there might be if you take it straight from Fidelity.

melbury

innovate wrote: »

It's almost 95% equities and has a very heavy US bias - - you are likely to know that already, and if its right for you, it's right for you.

The charges are likely to be more than 0.1% - - according to HL, there are 0.2% "Fund manager's other expenses" (plus a £2/mth platform fee at HL). Not sure what 'hidden' costs there might be if you take it straight from Fidelity.

I didn't realize the charges were likely to be higher:eek: I was going to invest direct through Fidelity, so no £2 per month charge.

Perhaps I should look again at some of the index trackers that are available, just thought this one sounded quite exciting:) It probably sounds stupid, but I like new funds that don't have any previous results to be compared against.

grey_gym_sock

if it's 0.3% TER, then that's quite competitive for a world equity tracker. especially if you can get it through fidelity without an extra charge on top of that.

e.g. it's a similar TER to vanguard lifestrategy 100% equity. the main difference being that lifestrategy has a UK bias - it's 35% UK, and with no bias you only get about 8% or 9% UK.

another world tracker without UK bias is the vanguard FTSE all world ETF. which has 0.25% TER. but it's as an ETF, you'll be paying dealing charges to buy (and sell) it.

but basically, the fidelity fund is pretty competitive. whether it meets your objectives is another question ...

Robert99

Mr C

Late to the party on this. Agree with your thoughts but I would concentrate hard on the asset allocation rather than the which passive fund selection - you are missing a few asset classes there?

A few thoughts:
BlackRock Gbl Prop Secs Equity Tracker
BlackRock Corporate Bond Tracker
BlackRock Overseas Corporate Bond Tracker
BlackRock Overseas Government Bond Tracker

Just food for thought from a Telegraph article of a few weeks ago. Please ignore the title and bank bits - the table is the interesting bit
Telegraph Article