Investment funds rating site

KrytenIceCubeHead

There are lots of sites out there that will give you a rating on individual shares you hold, but if like me your investments are in funds of various sorts (ETFs, OEICs and the like) it seems there is nowhere that will say 'that one is not as good as these'. Unless anyone knows of one...

For the record, my portfolio is 70% shares 30% bonds (15% government, 15% corporate). It's intended to help fund my retirement in 10 to 15 years depending on circumstances.

The world allocation of shares is heavily UK/US based, with the remainder in the EU. All funds are accumulation types. They vary by charge from lower cost (ishares GBP Corporate, ishares Global Inflation Linked Govt Bond, HSBC American Index, Vanguard Lifestrategy 100% Equity) to more expensive ones (Baring German Growth, First State Global, CF Woodford Equity, Royal London UK Govt Bond). Any of those funds make you think 'what is he investing in THAT for?'

bowlhead99

KrytenIceCubeHead wrote: »

There are lots of sites out there that will give you a rating on individual shares you hold, but if like me your investments are in funds of various sorts (ETFs, OEICs and the like) it seems there is nowhere that will say 'that one is not as good as these'. Unless anyone knows of one...

For funds, which can have 40-4000 underlying holdings, there is no equivalent of the broker 'rating' system of strong buy, buy, accumulate, hold, neutral, reduce, etc etc.

Brokers which are paid by their clients to publish their opinion on stocks may change their mind when the price moves a day after publishing their recommendation and may privately advise some clients to do the exact opposite within a matter of days. The fact that - according to one website I looked at - a company like Sky plc has about 30 current recommendations being tracked (most of them being neutral and some being published last November rather than last Monday) is not going to make it very feasible to rate an entire fund as a buy or sell.

And it is all in the eye of the beholder anyway as the fund manager can change his holdings every hour, will only publish a top ten every month-end and will take several weeks to publish it, and we know the suitability of his strategy for your needs largely depends on what else you already hold, which is different for all of us.

Of interest may be Morningstar's star rating system http://www.morningstar.co.uk/uk/news/63205/understanding-the-morningstar-star-rating.aspx which gives better weighting to 10-yr performance than more recent activity but notes:

A fund may very well have a 5-star rating because of its impressive historical record, but, as performance-chasers often find out the hard way, the past doesn't reliably predict future returns.

Another one is the FE Trustnet crown system, which looks at a range of factors albeit only over the most recent 3 year period: see http://www.trustnet.com/learn/learnaboutinvesting/FE-Crown-Fund-Ratings.html?utm_source=Ratings2014&utm_medium=Ratings2014-Splash&utm_term=Crown%20Rating%20Guide&utm_campaign=Find%20Out%20More , but again note:

FE Crown Fund Ratings are not individual fund recommendations, and should not be seen as specific advice, but a quantitative rating to provide a basis for refining and monitoring a list of funds that would be suitable for consideration.

Due to the focus on alpha, FE Crown Fund Ratings are by definition aimed at the active investor. Tracker-type funds are rated, but, unless they are poor at tracking the index, their ratings will be of little value.

So there is no one-size-fits-all solution to making choices on funds. If you're looking at ETFs, cost is key though there are other factors like the method of index replication (physical vs derivatives etc). With actively managed OEICs, your review can be more qualitative and judgmental with different strategies suitable for different time periods and economic circumstances, and managers moving on every so often.

For the record, my portfolio is 70% shares 30% bonds (15% government, 15% corporate). It's intended to help fund my retirement in 10 to 15 years depending on circumstances.

The world allocation of shares is heavily UK/US based, with the remainder in the EU.

Overall the US makes up a huge part of the investible market, and presumably you live in the UK making a bit of 'home bias' sensible. So not surprising there is something of a concentration in those areas.

It's not immediately obvious to me why the remainder is just in the EU though, because Japan - and the rest of developed Asia like Taiwan, South Korea, Singapore, Hong Kong, Australia etc - plus emerging markets like China, India, Russia, Latin America and frontier markets like Aftrica, Eastern Europe etc, would be just as important.

If you need all the money back in 10 years the emerging and developing stuff may be too volatile for you, but missing proper developed Asia/Pacific stuff seems an oversight. Also, you mentioned funding your retirement in 10-15 years - funding early retirement is something that might need you to cash-in these assets, but funding retirement generally can require 40-50 years of drawdown in which case emerging and frontier markets should not be overlooked imho.

Any of those funds make you think 'what is he investing in THAT for?'

There is nothing fundamentally wrong with getting lazy cheap exposure to equities generally through Vanguard Lifestrategy as a backstop to make sure you have some exposure to each market and then overlaying a few themes that you really like.

It can make you need a lot of funds though... e.g. you add Woodford which puts you overweight UK so you have to buy your American Index tracker to try to balance it back up, and then you worry about other parts of the world being light so you buy FS Global (Global what? Global Balanced, which includes more US/UK again - or a specialist like Global Listed Infrastructure or Global Emerging Markets Leaders etc?)... and then you start adding the individual European country specialists like Baring German... It ends up that the equities mix selected by Vanguard for their Lifestrategy has been pretty much left by the wayside and you might as well have just built your allocation from scratch yourself.

It's interesting you have a dedicated German fund. If you are building region by region, UK is understandable as you live there; Japan would also be understandable as it's a bigger proportion of the world equities market cap than UK (about 8-9%) and has behaved quite uniquely in the last 3 decades; USA is understandable as it makes up $20 trillion of the $39 trillion market cap covered by the FTSE World equities index. While Germany at circa $1 trillion market cap is only 3% of the world index. It is going to take you a long time to build a global portfolio one country at a time.

You might think Germany has relatively better risk-adjusted and price-adjusted prospects than the rest of Europe and hope to tilt your holdings towards it. In which case, what is wrong with simply buying a European fund where the manager agrees with that view and has a high German weighting? Baring German is not something you need, to get access to companies like Siemens, Allianz, Bayer, Daimler, Deutsche Telekom, BMW etc. Loads of European fund manager have them in spades.

KrytenIceCubeHead

Many thanks bowlhead. I'll be looking around for new opportunities next week when the new financial year ticks in, and another ISA contribution is made.

Some rebalancing may be in order, having taken the investor risk assessment questionnaire over at IFA.com which recommends 57/43 for someone in my situation. However there's talk of a bonds dip should interest rates rise in 2015, which has so far put me off the idea.

The First State Global is their Listed Infrastructure fund.

dunstonh

Some rebalancing may be in order, having taken the investor risk assessment questionnaire over at IFA.com which recommends 57/43 for someone in my situation.

It should be noted that if an IFA was to use a questionnaire like that to give an outcome, it would be considered bad (FCA thematic review into profiling highlighted exactly that). It is not the only consideration.

The site is not giving a recommendation. It is also a US site and you tend to find US investors have a different style to European investors.

However there's talk of a bonds dip should interest rates rise in 2015, which has so far put me off the idea.

There has been talk of a bonds dip for the last 5 years. There is also talk of a market crash/correction. There is always talk. You never know when it will happen. Just know that it will happen

When bonds have a major drop, its usually in single digit levels or very low double digits (excluding the higher risk ones). When the stockmarket drops, its well into double digits (10-50%).

Not going into bonds knowing that they could drop say 10% whilst increasing your equity content whilst knowing they could drop say 40% is not good justification.

KrytenIceCubeHead

Update time. I swapped out of the German equity fund for a pan-European one (Fidelity Index Europe Ex-UK) and found a UK Government Bond tracker at significantly lower OCF than Royal London, and better performance over the recent past. The new ISA allowance has been partly used to gain exposure to the far east, and increase my holding of global Government bonds. There's still a good chunk of ISA to invest with, I'm mulling whether to increase corporate bond/government bonds (to reduce the 68% equity portfolio balance), have a punt at Woodford's new fund, or even just increase the Woodford Equity fund investment I already have. Or something else entirely. Decisions decisions.