Just for fun...

TrustyOven

Ryan_Futuristics wrote: »

Woodford equity Income

Why?

Because with a tracker there's no *chance* of beating the index - you'll probably get a real return around 5% assuming developed markets don't all go into reverse

There must be an adequate rebuke in Tim Hale's Smarter Investing book about this. I'll have a look later.

TheTracker

TrustyOven wrote: »

There must be an adequate rebuke in Tim Hale's Smarter Investing book about this. I'll have a look later.

The rebuke is broadly to laugh in the face of any given investor who thinks they can reliably beat the collective wisdom of the financial industry, or as a proxy follow his favourite football team (Woodford). He would say invest in the durability and long term profitability of the whole world economy, the financial derivative of which is 'the market', not invest in the football manager who has the best retrospective performance, convincing yourself you are actually following his objective player selection methodology.

I'll take inflation plus 5%pa long term return. Other can walk into ladbrokes for their Woodford bets and good luck with that.

Ryan_Futuristics

TrustyOven wrote: »

There must be an adequate rebuke in Tim Hale's Smarter Investing book about this. I'll have a look later.

Well it is a very old debate - and one that only *seems* simple if you break the whole fund universe down in a very crude way (active vs passive), and break the benchmark criteria down in an even cruder way (returns)

e.g. If it was all about returns, we'd all just hold a FTSE 250 index (active vs passive is talking about fractions of percentages; equal-cap vs cap-weighted you're often talking over 100% difference - yet this isn't the popular narrative at the moment)



Without going into all of that though, how I'd simplify the debate is this:

A tracker isn't a universal ... It's a specific investment strategy ... And there is no one strategy that's right for all eras, all people, or all circumstances

The one thing that is almost universal, however, is that in investing (active, passive, or any of the shades in between) you don't usually want to be where the crowd is ... Yesterday's unpopular region, sector or style is the one people are getting rich off today

Active funds have taken a battering in recent years - where they used to charge 5% entry fees and 2-3% annual charges (and many were simply expensive trackers) now charges have bottomed out, boards are kicking out lazy managers, and technology and information are making investing a more sophisticated process by the week

When you look at the evidence against them, it's marginal and dated, while things have swung far more in their favour (not least trackers getting more popular and pushing up their own valuations in a way that's stunted many large hedge funds) - by all accounts, from any investing point of view, OEICs are probably the most attractive way to invest at the moment

Ryan_Futuristics

TheTracker wrote: »

The rebuke is broadly to laugh in the face of any given investor who thinks they can reliably beat the collective wisdom of the financial industry

Absolutely, if:

- Vanguard are the whole financial industry;

- Vanguard are the source and editors of all your wisdom;

- Forget Vanguard are aggressively trying to push a certain type of fund in the UK;

- Vanguard US are ignored because they sell active funds in the US and advertise them differently (not least because they beat all of their own trackers);

- The 500 other academic papers published each year on things like strategic asset allocation and trend forecasting are ignored because they might go against the 5 papers which push passive practices (which Vanguard edit and send you);

- And you don't ever scrutinise figures or statistics and instead just stick to timeless, universal principles (which have such a great track record in investing)

TheTracker

Ryan_Futuristics wrote: »

Woodford equity Income

Ryan_Futuristics wrote: »

The one thing that is almost universal, however, is that in investing (active, passive, or any of the shades in between) you don't usually want to be where the crowd is ... Yesterday's unpopular region, sector or style is the one people are getting rich off today

Most popular fund of 2014: Woodford. Crowd meet Woodford, Woodford meet Crowd.

Ryan_Futuristics

TheTracker wrote: »

Most popular fund of 2014: Woodford. Crowd meet Woodford, Woodford meet Crowd.

Woodford's had a deluge (being the most hyped fund in modern memory), but it's nowhere near the largest

Legal & General's All Share tracker alone controls almost £5 billion in assets

And as all specific trackers hold the same portfolio, you'd have to group them collectively (maths, eh?)

TheTracker

Ryan_Futuristics wrote: »

Absolutely, if:

- Vanguard are the whole financial industry;

- Vanguard are the source and editors of all your wisdom;

- Forget Vanguard are aggressively trying to push a certain type of fund in the UK;

- Vanguard US are ignored because they sell active funds in the US and advertise them differently (not least because they beat all of their own trackers);

- The 500 other academic papers published each year on things like strategic asset allocation and trend forecasting are ignored because they might go against the 5 papers which push passive practices (which Vanguard edit and send you);

- And you don't ever scrutinise figures or statistics and instead just stick to timeless, universal principles (which have such a great track record in investing)

I had never once even looked at any vanguard literature whatsoever until you mentioned it, upon which I read one 8 page pdf. They've never sent me a single document, mail, paper, or brochure. I don't intend to look at any of their literature in the future.

Ryan_Futuristics

TheTracker wrote: »

I had never once even looked at any vanguard literature whatsoever until you mentioned it, upon which I read one 8 page pdf. They've never sent me a single document, mail, paper, or brochure. I don't intend to look at any of their literature in the future.

I think I've seen you link rebuts to me using Vanguard literature twice

But it's filtered into blogs, focus marketing - I think Tim Hale's on the payroll

Basically when Vanguard started offering funds over here, the whole discourse changed - this is a very large, very American firm used to marketing in a much more competitive environment (and as I've said: The moment they start offering their actives over here, you'll see another shift)

masonic

Ryan_Futuristics wrote: »

But it's filtered into blogs, focus marketing - I think Tim Hale's on the payroll

:rotfl: and perhaps you're getting a kickback from Neil Woodford every time you mention his fund

Basically when Vanguard started offering funds over here, the whole discourse changed - this is a very large, very American firm used to marketing in a much more competitive environment (and as I've said: The moment they start offering their actives over here, you'll see another shift)

It started long before Vanguard turned up on the scene over here. In fact, they were very late to the party and when they did turn up their funds weren't available to most investors for another year or two. Perhaps if you'd been investing for a bit longer you'd know that, but the popularisation of index trackers does all stem from John Bogle originally I suppose, so you can at least have that.

What I don't understand is why you brand those who invest in index trackers with labels like 'cult-like' 'devotees' when you seem to be trying harder than anyone else to convert people to your way of thinking. When did investment philosophies become so religious?

System

£500?

Quindell?:p