(Pseudo-)Vanguard LS 100 in S&S ISA

bowlhead99

Ryan_Futuristics wrote: »

I believe Investor's Chronicle is the only major site which doesn't receive commissions to recommend funds (I'd have to double check that)

The point of journalism is to create content that people want to read and that they will pay for. They take advertisements like everyone else. They recommend a huge number of stocks that do badly just like they recommend stocks that do well. It is a bit of a scattergun approach and if you bought everything they recommended I don't know where you'd end up - but likely not really a better track record than those claimed by tip sheets. The funds they recommend will likely do OK in the end because funds are diversified and diversified baskets of assets generally do OK in the long term.

In their current Investment Times they're recommending Japan because it's cheap compared to where it's traded in the past,

they're also dissuading people from bond funds because they're expensive and likely to go down at some point

I bought into a Japanese fund immediately after the fukushima disaster when the Nikkei was around 8000ish. That was 3-4 years ago. The dynamics have changed recently with the advent of Abenomics but that market touched 16000 at the end of last year and is now around 15500. So, is it cheap compared to where it has been in the past? Not the recent past, no. On a long long view then maybe as we all remember NI225 values of 20000, 30000 in the 80s and 90s. The market over there is difficult to call but investors have seen the rise of the last few years and are more willing to pile in than they were after the lost decades.

For a UK investor in a fund that isn't sterling hedged, the returns are not so good as implied by the indexes because of the significant devaluation of the yen. However, net exporters could do well going forward with the devalued fx rates, and so some industries will do better than others and probably an index based investment is flawed anyway.

I have a couple of funds in Japan and am avoiding certain types of bond funds. However, the Investment Times is not incisive investment journalism, it is marketing material to encourage you to buy funds and they get more assets under management. Cynically if they believe the markets have legs, they would recommend more equities funds and fewer bond funds because the extra growth will help their NAV under administration and increase their fees. However I have no doubt that some of what they say is true. Unfortunately it can be difficult to sort the wheat from the chaff.

Thanks for some of your other comments. We can probably agree to differ in some areas but generally my point is there are two sides to every story, so taking your views on CAPE or particular funds from IC or Inv Times or popular blogs is not going to necessarily ensure success. You need to do lots of research and form a view. Meanwhile the OP is probably wondering what happened to his thread so I'll give it back now :rotfl:

jimjames

Ryan_Futuristics wrote: »

Re: Hargreaves & Langston's charges
If they're charging an extra 0.2%, but giving you a 0.5% discount on a few core holdings, it might be saving you money

It's actually Hargreaves Lansdown

Which funds are they offering 0.5% saving? The best I thought they had was 0.2% which would make it neutral with a 0.25% platform - except those platforms also have discounts too.

Ryan_Futuristics wrote: »

I'd also factor in how well covered they are (knowing of people in the US whose investment platforms went bankrupt and how little money they've managed to get back)

I can't see any difference between a company such as HL and one like Fidelity. If anything Fidelity is larger so more resistant to any issues. Maybe platforms in the UK are handled differently but platform failure here should not leave any investors out of pocket.

Ryan_Futuristics wrote: »

Right now, almost every metric makes the US overvalued ... If you believe the US market can continue to rise over the next 5-10 years without a major correction or long-term downtrend, then you're a 'bull'

I think that is quite different to what you said originally. I certainly don't believe that there won't be a correction at some point over the next 10 years. I equally don't believe I can time it or that prices will not be higher in the long term than they are now.

So back to the OP.

Check out the prices of the different platforms that offer the funds you want. HL is an option despite being more expensive. I find their site particularly easy to use and the functionality is superior to competitors like Fidelity in my view. It all depends if you are prepared to pay extra for that. Personally I am not so have a small amount with HL but the majority of my ISA funds are with Cavendish (Fidelity/Cofunds)

Ryan_Futuristics

@bowlhead

I rate the advice I've read from you here highly - and I wish I'd had the foresight to invest in Japan at that recent (albeit unfortunate) opportunity

Actually my own preferred valuation methods (I tend to weight higher on absolute CAPE - CAPE relative to other countries, I.e. basically whether it's a high number, as Japan's average CAPE was pushed very high in the 80s - and market/GDP) don't make Japan look particularly cheap ... And as you say there's a low Yen

H&L seem convinced though - they're increasing their exposure to Japan in their multi-manager funds ... To me a factor with Japan and continental Europe is an ageing population - the Asia pacific region seems favourable to me for growth and reasonable valuation, and Newton Asian Income's been a star performer since I've held it


@jimjames

Oops, I'll write to them and suggest they change it

I think Aberdeen Latin America's got a 0.4% saving at the moment, and they waive some hefty initial charges ... I've not compared with other platforms recently, and they are definitely geared towards funds ... But I'd happily pay a premium for the peace of mind of knowing they're a very large, very public company

It was MF Global, in the US, that I heard of people losing a lot of money with recently

And yeah, it's anyone's guess with the US ... But for me, buying as high as it is now, you'd need to be pretty sure it can keep rising ... History doesn't tend to favour buying at such a valuation - and the likes of Meb Faber are skittish about people still buying the US - but of course no one knows the economy we're moving into ... Just I'd expect it to be one shifting more towards the Far East

ChopperST

Ryan_Futuristics wrote: »

it's anyone's guess with the US ... But for me, buying as high as it is now, you'd need to be pretty sure it can keep rising ... History doesn't tend to favour buying at such a valuation

Just curious Ryan what timescale are you investing over?

bowlhead99

Faber is quite respected and he is a fan of relative CAPE to work out where to focus asset allocations, so I guess you are following in his footsteps. For the US I wouldn't think he'd say you shouldn't buy there as there's no value, or that we're in a bubble, just there's relatively more value elsewhere.

The idea that the world economy will shift more towards the far east has been inevitable for decades given the sheer numbers of people in those emerging economies and the buying power that develops as they all become middle class. Still, that long term trend shift doesn't tell you what will happen in any period of a few years here and there and it doesn't tell you how much of it should be, or already is, priced in.

Japan is a funny one and its economics over the last few decades have been somewhat different to the rest of the developed world with lots of deflation. They'll have a real problem with demographics over the coming decades with their fertility rate of about 1.4. Unlike China it's been low by choice rather than by law, but basically means that we'll see the overall population shrink significantly at the same time as working-age population gets smaller as a proportion of total population.

Might help the crazy population density in Tokyo but maybe not so good for GDP output and personal wealth. Another difference compared to Western peers is that they have a monster debt to GDP ratio but this has been sustainable because so much of the debt is internal (i.e. the local population are big savers and are the ones the interest bills get paid to).

They are looking like gradually moving to inflation rather than deflation but whether they can hit the target of 2% inflation looks increasingly in doubt (obviously they're technically over that level at the moment but only because of the consumption levy). GDP contracted in Q2 at a rate that if you annualised it would be getting on for 7%. The changes of recent years have had a big effect on the markets so while CAPE makes an effort to smooth earnings over a long period it is not so great at giving you a realistic snapshot of value here and now knowing what we know now vs what we did 10 years ago... It could easily say Japan is well overvalued based on average 10 years earnings while the earnings you are looking at from here with the push for a long-term change in market conditions, might be significantly better.

I think there is a lot to be said for building out a portfolio based on relative value, much as Buffet has done and Ben Graham before him. Value will prevail as pricing reverts to mean, etc. But it does require a deep understanding of the whys and wherefores, rather than merely the quantitative figures that say one number is less than another. I think someone like Faber would invest on the technicals and be less interested in the day to day news and current affairs. It's one way to go.

In the same way, a 'chartist' will have all kind of names for every shape of the price or a moving average price on a chart for an individual stock, and make buy/sell decisions based on that, using the game theory of what others are doing in the market when they see the same patterns and trends. It can make a lot of money (some of the biggest hedge funds just work on an algorithm based off moving averages) but ultimately I prefer to dig deep into the news or a company's financials when trying to make an assessment rather than just pick a headline ratio to drive my decisions.

So in the same way, CAPE can be a tool to get you thinking about the state of an overall market but it is not the be all and end all. Going back to Japan, a consideration of what's happening to different types of companies based on direction of exchange rates, interest rates, inflation rates, sources of investment capital, tax rates and long term demographics might lead you to favour certain types of companies there, and select a fund accordingly, rather than just buy or sell the index based on what your high-level CAPE desktop review of different markets tells you to do from your desk 6000 miles away.

Rollinghome

Ryan_Futuristics wrote: »

I think Aberdeen Latin America's got a 0.4% saving at the moment, and they waive some hefty initial charges ... I've not compared with other platforms recently,

Certainly can't fault HL for their marketing, including the trumpeting of their "discounts".

To avoid any confusion, HL are offering a 0.40% discount on the Aberdeen Latin American fund. That's a small fairly specialist fund with an unusually high standard AMC that's down 4% since it's launch 2 years ago. As such it isn't likely to have widespread appeal.

HL aren't offering anything like such a discount on any other fund, and not 0.5% on any. For comparison, Fidelity offer discounts of up to 0.375% on 19 Aberdeen funds. List is here... I believe HL offer discounts on just 2.

Ryan_Futuristics wrote: »

I invest directly in funds and trusts as much as possible (although H&L is 0.25% as soon as you're over £250k),

Again to avoid confusion, with HL the 0.25% rate will apply only to the amount above £250k with 0.45% still being charged on the first £250k. (Unless, as for me and many others, they've offered to charge a maximum of 0.25% on everything.) With Fidelity, once you reach £250,000 the 0.20% rate applies to the lot and there are none of the many extra fees charged by HL.

So people will have lots of reasons for choosing a platform other than on cost but make sure you kick the tyres and aren't overwhelmed by the HL marketing machine.