Critique My Fund Portfolio - Don't Be Shy

MrMalkin

Ryan_Futuristics wrote: »

Most investors probably won't be seeking broad market exposure now - instead the challenge is to find value in regions, sectors and companies that haven't grown or have been overlooked ... And trackers are evolving with that - we're getting more value-based trackers - you can create new indexes, using valuation metrics - but then the charges and approaches can blur quite a bit with active management ... I actually struggle to find cheap trackers giving me exposure to markets I'm interested in - otherwise I'd use more

I'd disagree on this. I think for most investors, a broad market strategy forms the basis of any portfolio - look at how pension funds are structured for example. Chasing performance by looking at unusual or overlooked markets is something that more advanced investors might be comfortable with but for the average MSE poster I think that's too much. Most people, I feel, should stick with a long-term buy and hold strategy based around this core.

Incidentally this is something that concerns be about jabbahut40, if he is posting these threads every 6 months or so then that suggests he does not have a good long-term plan in place, or if he feels the need to change things so often that he isn't invested according to his actual (rather than stated) risk profile.

I would be interested in knowing which markets you are failing to find good trackers for. For all that I've disagreed with Linton he does make a good point that trackers don't exist for all markets or strategies - I just feel that for the majority of investors the bulk of their needs can be met using trackers.

Ryan_Futuristics

MrMalkin wrote: »

I'd disagree on this. I think for most investors, a broad market strategy forms the basis of any portfolio - look at how pension funds are structured for example. Chasing performance by looking at unusual or overlooked markets is something that more advanced investors might be comfortable with but for the average MSE poster I think that's too much. Most people, I feel, should stick with a long-term buy and hold strategy based around this core.

Incidentally this is something that concerns be about jabbahut40, if he is posting these threads every 6 months or so then that suggests he does not have a good long-term plan in place, or if he feels the need to change things so often that he isn't invested according to his actual (rather than stated) risk profile.

I would be interested in knowing which markets you are failing to find good trackers for. For all that I've disagreed with Linton he does make a good point that trackers don't exist for all markets or strategies - I just feel that for the majority of investors the bulk of their needs can be met using trackers.

Certainly agree that the thread starter probably does need a more disciplined approach as we move into tougher markets

On broad market exposure - I don't disagree ... For me there are two ways of thinking about market exposure: the sectors you invest in, and the era you invest in ... In a way, each year is its own asset class (investing in the FTSE All Share in 1999 would give you very different returns from investing in 2002)

If you'd invested at the peak in 1999, you'd still be down on your capital (unless you'd reinvested dividends - but you'd have been better off in bonds, and you'd have avoided a big market crash)

Most indexes have experienced downturns lasting 20-30 years - so it may be the case that any money you put in an index today isn't made back until 2044 ... You can trickle money in, but in periods like this, when markets are artificially propped up, you could be trickling money in for a decade of flat markets, and then find we're in a downturn

Stats look a lot at the last 10 years, because we've not got great stats going back much further, but the next 10 will probably be different ... Gold was a safe haven for decades; today it's erratic - the 'no brainer' portfolio all through the 50s, 60s, 70s was 25% gold, stocks, bonds, cash ... Today that would be anything but stable

And the one thing you've got to guide you through constant future uncertainty is valuation ... You can't time markets, but you can estimate whether you're buying cheap - and that's always been the key to investing ... And my big push would be that you shouldn't buy anything without some idea of its underlying value ... Passive investing will probably go on working, but how many economists question whether developed markets can just keep rising? (They may have stopped 10 years ago, and we're just in an almighty bubble)

Here's what investing only in the cheapest markets returns vs the S&P 500 (notice the logarithmic scale)



With an uncertain future, where the developed world might have already peaked (as China and emerging markets rise) I find it safer to know I'm investing with a value approach - value-trackers may be the passive investment of this era (Cambria GVAL and Barclays Shiller/CAPE could do very well long-term)


On cheap trackers I'm looking for - Qatar, Saudi Arabia, Italy, Spain, Ireland, Greece, Brazil, Russia ... I wouldn't buy-and-hold any of those, so it's the spreads and dealing costs that bump a lot of them up, and make it generally cheaper to find active funds run on a similar approach ... Similarly, as I want to invest in Europe now, I don't want to invest in the expensive parts - so a European value tracker would be great (weighted towards Italy and Greece rather than Germany and Denmark) ... I don't think there's a good Asian Income tracker yet (rising dividend culture in Asia that's been a very good payer for me)

TCA

Ryan_Futuristics wrote: »

And I'd love to buy JEO - had an outstanding run recently ... But looking at its regional allocations, it's all firmly in the most expensive parts of Europe now (Denmark, Germany ... That fund's performance tracks how they got expensive) ...

JEO taking a big hit today Ryan. 4% down as I type. Firmly into "correction" territory I'd say, at nearly 20% off its 12 month peak share price. Further to fall though I think.