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Tim Hale - Smarter Investing
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gadgetmind wrote: »In those areas, active funds of funds don't generally manage it, but the extra layer of fees is at least part of the explanation for that.
In my view that is a somewhat misleading way of looking at things. If the fund average fund performance matched the index performance, which in many sectors it may, then, perhaps paradoxically, you would expect the majority of funds to perform worse than the average.......
No fund can lose more than 100% but the upside is unlimited. On average the outperformance of a successful fund will be larger than an underperformance of a poor one. So there must be more underperforming funds than outperforming ones BUT by choosing a fund at random you will on average achieve the index result.0 -
Glen_Clark wrote: »Tim Hale does acknowledge there are a tiny minority of managers with exceptional talent/luck, like Anthony Bolton. But what was your chances of picking him when he started in 1979? Very very few people picked Bolton at that time and stayed the course. Most bailed out when he went through a bad patch, or joined the bandwagon when the big gains had already been made. A lot more joined him when he went to China and his luck ran out.
Statistically, you seem to have a better chance of picking great shares than great fund managers.
I am actually not advocating the "cult" following of fund managers - why anyone thought that A Bolton had any reason to outperform in China - A very different area to the one where he made his name I don't know.0 -
The track records of the fund managers is very well documented.
Yes, but almost totally irrelevant.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I am actually not advocating the "cult" following of fund managers - why anyone thought that A Bolton had any reason to outperform in China - A very different area to the one where he made his name I don't know.
The Chinese people Bolton did business with turned out to be a bunch of crooks who shafted him. If his luck had held they could have turned out to be honest and the legend might have continued.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
It is a lot easier picking good funds than good companies IMO. A single fund combines many companies. The track records of the fund managers is very well documented. My portfolio is heavily biased to SC - some of the leading funds in this area have put on over 50% the last year - the sc & 250 index only 30% fees and all.
Its even easier picking good sectors especially as sectors do tend to outperform relatively consistently over extended time periods. Take an example from the first paper quoted by Guymo. The authors claim that there is clear evidence from UK data that active fund managers adopting an equity-income style on average show successful stock picking skill outperforming the general market.
It could be that this is a coincidence of successful managers happening by random chance to adopt a particular style or perhaps more likely it is due to that style being more appropriate to market conditions. The managers adopt the style because it happens to be the remit of their fund.
Also relevant to this debate is that there is no meaningful equity-income index. If there was, it could not distinguish between a share having a high % income because the company was successfully returning money to the shareholders, or because the capital value had dropped because of poor business performance and so the calculated % yield was misleadingly high.
So in this case someone identifying the equity income sub-sector as worthy of investment would on average outperform the index with an active fund without any reliance on golden hands.
Also of interest in the paper is the finding that this outperformance of equity-income investing does not appear in the US where "growth" investing works better. An good example perhaps of where claims based on US data are not applicable to the UK because of cultural and tax differences - in the US dividends are a less significant factor to investors than in the UK.0 -
gadgetmind wrote: »Yes, but almost totally irrelevant.
My point is that it only needs to be a small bit relevant to swing the odds. In any case the average SC fund (UT UK Smaller Companies) beats trackers anyway.0 -
Well you wouldn't have picked Anthony Bolton from his track record in 1979 - the period most often quoted from now, because he was practically unheard of then.My point is that it only needs to be a small bit relevant to swing the odds. In any case the average SC fund (UT UK Smaller Companies) beats trackers anyway.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Its even easier picking good sectors especially as sectors do tend to outperform relatively consistently over extended time periods.
Agree with this - it is the main tenant of my investment strategy. As an example SC funds are running high because we are coming out of recession - If the UK looked as though it was going the other way things wouldn't be so good for the sector.Also of interest in the paper is the finding that this outperformance of equity-income investing does not appear in the US where "growth" investing works better. An good example perhaps of where claims based on US data are not applicable to the UK because of cultural and tax differences - in the US dividends are a less significant factor to investors than in the UK
This is a very good point - so many of these books are US based and not fully relevant to the UK investor.0 -
Glen_Clark wrote: »Well you wouldn't have picked Anthony Bolton from his track record in 1979 - the period most often quoted from now, because he was practically unheard of then.
Agreed - but you might well have spotted him in say 1996 - If I had been in Fidelity SSits since then I wouldn't be complaining!:rotfl:
actually I never look back more than 3 years - too much changes in the market.0 -
Glen_Clark wrote: »Well I did say that was a portfolio 'at its simplest'
But it wouldn't do for financial advisers to simplify matters would it
Where would that leave them
Where would it leave them?
It would leave them suffering mis-sale complaints for doing things wrong. There are other ways of keeping it simple without resorting to bad advice.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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