active vs passive?

Rollinghome

bowlhead99 wrote: »

To avoid confusion, you mean "...it's likely to be on a huge premium, and one possible reason to at least consider "deviating" is to contemplate what would happen to that premium should the market conditions that benefited any particular trust change"

Whoops, yes I do indeed. Must try to read what I've typed. Unfortunately "huge discounts" are few and far between.

Ryan_Futuristics wrote: »

It's a fair point ... Murray International (a core holding of mine) is currently on a 5-6% premium

While I don't like buying at a premium, it's one of the few exceptions I make, and as a long-term defensive holding, any realistic change in premium/discount is likely to be absorbed (it would probably be paying a 5-6% dividend, after all, if it lost the kind of capital to make investors flee en masse)

Also I value funds as if they're individual shares - premium/discount is only a small contributor to what I consider to be the underlying value of a fund ... On PEG ratio, I buy funds that I consider are likely at 30-130% discounts (as a high income fund, Murray's obviously not one of them)

Ryan, can I ask how long you have been doing this and what success you have had? You sound as if you have been investing for a very short time and while optimism is fine, I hope you are testing your ideas with only very small sums of money.

AlanP_2

TheTracker wrote: »

Monevator is an excellent resource for passive and active alike. Their weekend newsletter is excellent.

The Tracker - Quick question:

Is this an email newsletter that you can subscribe to or are you referring to the Weekend Reading posts on there?

If it is a newsletter can you tell me how to get it please as I can't see anything on their site?


Thanks

Jaguar_Skills

dunstonh wrote: »

You can. However, without knowing the amounts involved, it may not be suitable. e.g. there is no point running a bespoke portfolio on say £10,000 or regular contributions. It would be massive overkill. A multi-asset fund solution would be more suitable.



Its missing global bonds and corporate bonds. Plus, the property allocation is property share and not physical property. It mentions volatility but doesnt give it a volatility rating. Its an option but again, it depends on the amount you intend to invest.



its a higher risk spread. The high risk property share fund influences that. It is also missing global bonds and UK corp bonds. Its overweighted to UK compared to global but that is not uncommon.



These are also active solutions. The people involved are making management decisions on how and where they invest and areas they do not want to invest in. They are just using passive investments in the areas they want exposure. So, they cant really claim to be passive investors as they are trying to be their own fund managers.

This doesnt mean they are wrong. However, are their resources and knowledge and experience enough for them to make these decisions. Are their allocations going to adapt to the changing economy or are they static?

Some of those spreads appear to have a US flavour to them but have been adapted for UK. US is very inward looking and tends to focus more on its home market. Some people try to replicate that using UK allocations instead of US ones. However, the UK investing market tends to be more global in its outlook.

Why do you think these are better than say the Vanguard Lifestrategy funds, L&G Multi index funds or Blackrock consensus or asset allocations built by actuaries?

What's the rreason a multi asseasset fund is more beneficial? I'm thinking of dripping £600 a month into a SIPP AND £400 into SandS Isa.

Could I just track an index from different nations for simplicity ie FTSE etc?

Jaguar_Skills

Linton wrote: »

There is no reason why you shouldnt just invest in a few trackers if your investments are a fairly small % of your total wealth. Under those circumstances it doesnt matter too much what you do as the results are unlikely to be life-changing as long as you dont do something stupid, and buying a few trackers isnt stupid. But I would suggest that rather than picking a few at random you adopt a strategy and buy specific trackers for specific considered reasons.

Whether a portfolio is too risky or not depends on
1) Your timescale - the shorter the timescale the less risk you can take if yo dont want to endanger meeting your objective. Anything less than 5 years is too short term for investing - you should be in cash. Anything less than say 10 years you should have a significant amount in cash and safer investments.
2) Your attitude to risk. Even if you have a very long timescale you may panic if the market falls say 50% and be unable to stop yourself selling at a loss. If that is the case make sure that no matter what happens your investments are extremely unlikely to drop by 50%. Have significant bond and another non-equity based investments that wont drop with the general share market.

I hold individual shares, active funds, and a few passives. My investment portfolio is over 50% of my total wealth and I also hold significant cash. As I am retired I need my investments to supply my living expenses consistently for the next 30+ years. The portfolio needs to be specifically constructed to provide an acceptable steady income, a degree of medium term safety, and as much growth as possible to satisfy the longer term income requirements. With that size of investment portfolio and complexity of requirements one cant just invest in a few trackers and accept what happens.

To meet that sort of requirement one needs tighter control of what one invests in than simply 60% domestic equity,30% developed world, 10% gilts. The ability to allocate specific amounts of money to particular countries, industry sectors, company sizes is impossible with the standard broad brush trackers. The nature of trackers being allocated mainly on company size makes investing in some very useful sectors difficult.

In my case getting the portfolio balance right is worth far more than the odd fraction of 1% in charges.

One comment on those portfolios - in my view they all include far too high a % UK investment compared with the rest of the world. Many industries important globally and even many important in the UK, being foreign owned, are not included in a UK tracker. Those types of allocation are common in the US which of course has a much larger and more varied domestic market. Judging from their names I guess they are simply an interpretation of US gurus' recommended portfolios simply converted to the UK.

Hi linton:

1) looking to invest from aged 30 to 60 so 30 year period.

It makes investing in the right thing very hard when I thought it was a reliable website. I guess I'm in a unique position that I have more disposable income than most 30 year olds but I just don't really know where to invest it.

As I mentioned it will be a mix of high interest cash accounts, a BTL property or two to start then my £1,000 per month drIP fed between ISA and Sipp. Working to where to put it though is a headache, I really just want simplicity and to not have to think about it.

Jaguar_Skills

Maybe the book smarter investing isa good start followe'd by IFA advice?

I just thought the advice would be too expensive for saving only 1k a month.

Ryan_Futuristics

Rollinghome wrote: »

Whoops, yes I do indeed. Must try to read what I've typed. Unfortunately "huge discounts" are few and far between.

Ryan, can I ask how long you have been doing this and what success you have had? You sound as if you have been investing for a very short time and while optimism is fine, I hope you are testing your ideas with only very small sums of money.

Sure - I've been investing in an index since I was a teenager (something on TV - basically the advice from Rich Dad Poor Dad and The Richest Man in Babylon - stuck with me and has influenced how I deal with money from probably the age of 11)

I realised not long ago I've got a lot of capital I'm not doing much with (I've kept a lot in cash too) so I've been managing my money and building a new portfolio as an almost full-time job recently

Yes, I took 10% of my capital and decided to see what I could do with it

I made mistakes early on and I think the principles I'm using now are the result of those mistakes ... Essentially I'm using the analysis investors like Graham and Slater applied/apply to stocks, and applying it to funds, indexes, ETFs, along with a valuation based geographical spread, and a cost averaging system which effectively times the market (by regularly buying what's cheap in the cycle)

This is partly recreational for me - if my tone doesn't carry the usual fear - but I've always respected the maths - I don't believe you can invest or run a business successfully without a clear vision of the underlying principles ... I think some of the advice I've seen implied by Vanguard (and subsequently many blogs) recently reflects a poor general level of mathematical nous

Gram_Parsons

AlanP wrote: »

The Tracker - Quick question:

Is this an email newsletter that you can subscribe to or are you referring to the Weekend Reading posts on there?

If it is a newsletter can you tell me how to get it please as I can't see anything on their site?


Thanks

Underneath the armchair picture - click on the envelope logo (subscribe via email). It just seems to send you the latest articles from the site though. I just subscribed last week so maybe you do get other stuff on occasion?

TheTracker

Ryan_Futuristics wrote: »

I've always respected the maths - I don't believe you can invest or run a business successfully without a clear vision of the underlying principles ... I think some of the advice I've seen implied by Vanguard (and subsequently many blogs) recently reflects a poor general level of mathematical nous

That's entertaining. Vanguard's whole concept is based on provable mathematics, implementing a strategy almost wholly based on findings by Nobel laureates. It's not worth debating further, we're venturing into troll territory.

TheTracker

AlanP wrote: »

The Tracker - Quick question:

Is this an email newsletter that you can subscribe to or are you referring to the Weekend Reading posts on there?

If it is a newsletter can you tell me how to get it please as I can't see anything on their site?


Thanks

Yes I meant the Weekend Reading post. I subscribe to the RSS feed (Orange square under armchair) and as they usually publish only a couple of posts a week, and because the style of Weekend Reading is like a newsletter I called it by that name. But you're right just a normal post.

Mistermeaner

TheTracker wrote: »

That's entertaining. Vanguard's whole concept is based on provable mathematics, implementing a strategy almost wholly based on findings by Nobel laureates. It's not worth debating further, we're venturing into troll territory.

I dont think its trolling at all and for what it is worth find the debate and discussion on here highly informative and incredibly useful in helping me develop my own views.

Please feel free to continue