Artemis Income Retail Inc

jamesd

Party_Animal wrote: »

Thanks I've gone with the Newton one, but I'd still be interested in cheap trackers. Can you please expand as I'm new to this.

Easy enough:

1. All trackers under-perform the index they track. In theory by using a form of active management called share lending they might be able to match or slightly beat it, but I don't think this has happened yet.
2. Lots of studies have found that if you ignore changes of manager and usually also lots of other things like different tax rates for short and long term holdings, on average in well studied markets - like the big companies in the US - the average of tracker performance beats the average of active managed fund performance.
3. At least one study found that in the US, active managed funds on average outperformed trackers before tax, but not after tax. And found that the reason was the higher US capital gains tax on holding durations of less than a year, which in the US is charged to investors each year, not when they sell the fund. The UK doesn't have this tax difference.
4. Fees are a significant factor in performance, for both active and tracker funds.
5. Many high fee funds are sold to captive audiences, like insurance company customers. Few of us are actually forced to buy high fee funds. This applies to both trackers and actively managed funds. Don't pay a higher fee than you need to unless you're getting something for it. For example, I could buy the Vanguard global tracker in my work pension for a total cost of over 0.5%. Or I could buy it outside for a total cost of under 0.3%. The work one has 0.25% adviser trail commission charge added and that's enough to almost double the holding cost. So I hold this, but in a pension outside the work one, for a lower total cost. Or OEICs for example, that used to traditionally charge about 1.5% including 0.75% adviser and platform commission can now be readily obtained for 0.75% or so without those things included, or with the sometimes still bundled commissions discounted. Don't buy a fund inefficiently, you probably don't have to.
6. Smaller markets and smaller companies within larger markets are unlikely to be efficient due to limited analysis.
7. For trackers at least one study has found that market cap based trackers can be beaten by trackers based on things like total sales or equally weighted trackers. The common index trackers are market cap weighted but some alternatives do exist.
8. Within larger company investing, there's reason to believe that value investing can beat non-value investing.
9. At least one study has found that under-performance tends to persist, including an FSA funded one that didn't control for manager changes and had a range of other systematic flaws - which fortunately don't matter so much when it comes to under-performance.

There's a good deal more to know but a few simple things you can do are reject high cost trackers (like paying 1.5% for a FTSE All Share Index tracker) and consider a tracker if you want exposure to the biggest companies in the biggest markets. But not necessarily a cap-weighted tracker.

I use a mixture of active and passive managed investments. Passive particularly for a core global developed market large company holding. Also at times leveraged and unleveraged UK trackers. And quite possibly others in the future.

jamesd

A_Flock_Of_Sheep wrote: »

I have become quite sceptical about funds and fund managers basically since Neil Woodford said he wanted to resign causing people to sell up out of the investment trust he was managing.

You need to think a bit more about why they sold. A manager with a long record of out-performance was leaving, so they dropped the price premium of holding the IT that was gaining from his performance. He might end up still the manager of it, via his new business. Too soon to tell.

A_Flock_Of_Sheep wrote: »

If everyone did the cheap tracker route all the fund managers would be down the dole queue !

But that would be foolish, since the actions of trackers are predictable and can be exploited by active managers. One of them a few years ago even thanked the tracker managers when he received an award for out-performance... he'd been exploiting their somewhat forced market timing.

Party_Animal

JamesD, many thanks for all the useful info. I'm a complete novice so It's well appreciated.
I've gone with the Artemis Income and the Newton Global Higher Income to start with. Looking for another one.
Thanks again

A_Flock_Of_Sheep

Cheap tracker ETFs must be rubbish because Hargreaves Lansdown never seem to recommend them on their front page nor do they feature in their wealth 150 list.

Artemis income, Newton Asian must be the bees knees because Hargreaves Lansdown says so on their front page.

jamesd

"Hargreaves Lansdown launches cheapest UK tracker .. Hargreaves hopes the new tracker will blow rivals out of the water with an annual management charge (AMC) of just 0.07% (or 0.11% measured as the total expense ratio ... Swip is taking a big cut on its normal charge. Its Foundation Growth tracker fund – on which the fund for Hargreaves is based – normally levies a 1.14% TER on direct investors."

If I recall correctly some 40% of all money at HL is in trackers. They are hardly ignoring them.

Party_Animal

Had a look at this. What I don't understand is that it seems to be mostly the same shares as in my Artemis income (UK), but with £2 a month platform fee. Shouldn't I be looking to Asia or somewhere to broaden my portfolio?
Sorry if I'm missing something.

Linton

Party_Animal wrote: »

Had a look at this. What I don't understand is that it seems to be mostly the same shares as in my Artemis income (UK), but with £2 a month platform fee. Shouldn't I be looking to Asia or somewhere to broaden my portfolio?
Sorry if I'm missing something.

You havent missed anything. Most funds focusing on the UK are going to mainly invest in FTSE100 companies as these comprise 80% by value of all UK shares. So if you want to diversify you should look at non FTSE100 UK companies ie smaller companies funds/FTSE250 tracker or non UK funds.

Another option is sector funds. There are funds that focus on technology, biotech, property, raw materials etc often globally. Because of the nature of the companies that quote on the London Stock Exchange some sectors that are very important globally such as technology and manufacturing are under represented in UK based investing.

grizzly1911

Party_Animal wrote: »

Had a look at this. What I don't understand is that it seems to be mostly the same shares as in my Artemis income (UK), but with £2 a month platform fee. Shouldn't I be looking to Asia or somewhere to broaden my portfolio?
Sorry if I'm missing something.

Whilst a lot has been done to demystify fee charging this hasn't always resulted in wins for the consumer. Any reductions in annual management fees being replaced by other fees, to make up the loss to the intermediaries

Linton has explained the make up similarities.

Managed funds will also have internal targets on what they can and cannot invest in to achieve specific goals. They may therefore take a heavier/lesser weighting in certain stocks whereas a tracker is broadly stuck with the good, bad and ugly.

Azza_1

Speaking of Newton Global Higher Income - http://www.trustnet.com/News/465363/why-is-newton-global-higher-income-underperforming

joerugby

Azza_1 wrote: »

Speaking of Newton Global Higher Income - http://www.trustnet.com/News/465363/why-is-newton-global-higher-income-underperforming

That's a very interesting article. I was scratching me head this morning wondering about the fund's relatively low capital growth this year and now all is revealed.

I find the explanation reassuring. I 'm in for the long term and I'm happy to hold on.

Also I've had 3.6% net income from three dividend payments so far this year with another to come nest month - that's fine for me