How to check fund performance over last 15 years?

dunstonh

On moving to France I took financial advice on a capital sum, which was invested in an Offshore Bond in Luxembourg

Have you changed the fund universe to be offshore funds rather than unit trusts/OEICs or mutual funds?

Perdu

dunstonh wrote: »

Have you changed the fund universe to be offshore funds rather than unit trusts/OEICs or mutual funds?

Thank you - yes, but cannot seem to get much further - Trustnet says Russell do not subscribe to them, and the dozen or so listed do not look like mine.

There are four funds in the bond, roughly equal percentage:
- Continental Europe Equity
- UK Equity
- US Equity
- US Small Cap Equity

I guess I should try to look at each sector to compare - but I'm not that confident with this, and judging performance from the valuation reports is tricky - particularly as the book cost keeps reducing as more units are sold to pay the fees..:(

I've just been asked (for the first time in 14 years!) if I have a preference as to which fund to sell further units from to pay fees and charges for the next year.

I think that the initial setup was probably the right one way back in 2001, but I and the world have moved on since then, and I'm rapidly losing confidence and rather tempted to sell up and bung it in a nice cheap tracker.. :undecided

dunstonh

and I'm rapidly losing confidence and rather tempted to sell up and bung it in a nice cheap tracker..

Is that within the offshore bond or do you mean surrender and buy in a new wrapper/unwrapped holding?

Perdu

dunstonh wrote: »

Is that within the offshore bond or do you mean surrender and buy in a new wrapper/unwrapped holding?

Surrender probably - unless I somehow find out that it's a world-beating investment.

It seemed a good idea at the time; despite the initial cost of £10k it was set up as a bond in a trust for French tax advantages. The French have since banned trusts so it cost me another £500 to get it out of that. It remains as a life policy which does have tax advantages if held for over 8 years, but I passed that 6 years ago and can't help thinking that I should have perhaps been "Bed & Breakfasting" since then, but my eye has been off that particular ball and no-one has suggested anything.

Interestingly - having made no recommendations for investment reviews in all this time, this year they are proposing switching to one of three Edmond de Rothschild funds, and I have just noticed what I now know to be ISIN numbers, so I picked the middle risk one and looked it up. Trustnet didn't know it but Google gave me a link to Fundsquare. After the usual floundering around for a bit I found a PDF of the KII (see how I'm learning ) which shows an ongoing annual charge of 2.53% ! Now the FA did say it was only .3% more than the present Russell ones, at 1.7% - so to give them the benefit of the doubt I'll assume they might have negotiated special rates (?). Even so - on top of their 0.7% pa, plus annual £ 500 policy fee.. unless I've cocked up the maths, it looks like getting on for £ 7k pa.

All of which would be fine if they could consistently beat the "market" by at least that amount - which obviously is their aim/sales pitch, but the more I read here this seems very unlikely.

So, I'm trying to get as much information as possible to help me decide to stick or twist..

dunstonh

Surrender probably - unless I somehow find out that it's a world-beating investment.

In that case, you need to be wary of tax. An offshore bond will see you hit with a tax bill on surrender. Although I dont know French taxation.

A unit linked offshore bond will typically have a range of funds to select from.

can't help thinking that I should have perhaps been "Bed & Breakfasting" since then

Doesnt apply to offshore bonds.

rustnet didn't know it but Google gave me a link to Fundsquare.

The paid for version does cover offshore bonds. So, I guess it is one of those limitations.

which shows an ongoing annual charge of 2.53% !

That may or may not be accurate. That may be the base charge but many bonds have fund based discounts. The AMC quoted (which is the equivalent of the OCF on unit trusts) assumes full commission. Many bonds didnt have initial charges and they had higher annual charges giving a breakeven point. Indeed, I have seen some bonds with an effective negative charge if surrendered at a certain point. So, you sometimes have to look at the annual charge in context of the total charges/terms.

The product you have may be out of date by UK standards too. Plus, the names you mention suggest it is not a mainstream provider but a niche one. So, terms are unlikely to be at the better end on non-mainstream.

Porcupine

Perdu wrote: »

Thank you - yes, but cannot seem to get much further - Trustnet says Russell do not subscribe to them, and the dozen or so listed do not look like mine.

There are four funds in the bond, roughly equal percentage:
- Continental Europe Equity
- UK Equity
- US Equity
- US Small Cap Equity

If I go to Russell's website and pretend to be an institutional investor from Benelux, I get this list of funds, which includes some names that match the above. If I click on KIID I get taken to this list of ISINs, which are all in Ireland. If I Google them I end up in pages on Morningstar describing the funds. The Russell prospectus has a somewhat long list of classes for each fund, not all are shown on the KIID/ISIN list, but it does show the fees for each class.

Are you sure the funds you have are domiciled in Luxembourg? It may be that the wrapper is based in Luxembourg but contains Ireland-based funds.

Perdu

Porcupine wrote: »

If I go to Russell's website and pretend to be an institutional investor from Benelux, I get this list of funds, which includes some names that match the above. If I click on KIID I get taken to this list of ISINs, which are all in Ireland. If I Google them I end up in pages on Morningstar describing the funds. The Russell prospectus has a somewhat long list of classes for each fund, not all are shown on the KIID/ISIN list, but it does show the fees for each class.

Are you sure the funds you have are domiciled in Luxembourg? It may be that the wrapper is based in Luxembourg but contains Ireland-based funds.

Thank you very much Porcupine, good bit of sleuthing there. I’ve followed your trail and yes, these look like the things I currently have. I’ve tried to work out the difference classes (A,C,K) within each fund, but the details (holdings etc) seem identical apart from charges and performance (could be a clue there..?!)

The charges seem all over the place, whereas the agent/FA has recently told me it’s 1.4% - could be an average I guess – this came as a bit of a shock as I had naively thought it was just the 0.7% plus policy fee, not realising this was on top.

He’s agreeing that performance hasn’t been spectacular but says I’m in the wrong funds (!), and is proposing a choice between Rothschild Balanced LU1061647118 and Dynamic LU1061646730. I gather these have only been going for a year, will cost 1.7%., and comprise a mix of assets so the managers can instantly switch between equities, bonds and cash to beat the markets. So that’s a good idea then..

These don’t appear on Morningstar so I can’t even compare like for like, but I'm trying to find more info just in case they are so brilliant that it's worth the annual costs.

Perdu

Thank you again dunstonh, your explanations are most helpful and I am understanding quite a bit more now.

dunstonh wrote: »

In that case, you need to be wary of tax. An offshore bond will see you hit with a tax bill on surrender. Although I dont know French taxation.

This is actually one good thing - being written as a French qualifying Life policy the gain after all this time would be taxed at a fixed 7.5% so cashing the whole lot would come in at a bit under £ 6k - near enough equivalent of a years fees & charges - tempting..

There is normally in France an additional levy of 15.5% on investment income called "Social charges", but recent EU legislation means there might just be a way around this depending on Pension status - I'm looking at this now and will post a question on the Pensions board.

dunstonh wrote: »

The product you have may be out of date by UK standards too. Plus, the names you mention suggest it is not a mainstream provider but a niche one. So, terms are unlikely to be at the better end on non-mainstream.

This seems to sum up my doubts perfectly. As I've replied to Porcupine, they are now proposing switches to a fund carrying even higher charges, but I don't know how to evaluate whether they might be able to beat "the market" plus a few grand of charges..

I guess it's a matter of knowledge or confidence - I don't have much of either right now..

EdGasket

Studies have shown time and time again that actively managed funds do not beat simple index-trackers over the long term. Therefore I see no reason to move to even more expensively managed funds; you are merely subsidising someone else's dinner.

dunstonh

Studies have shown time and time again that actively managed funds do not beat simple index-trackers over the long term.

Although its never as simple as that. There are studies show that managed funds in the US do frequently beat trackers before tax. After tax, they rarely do. Most research is US based. In the UK, tax is not paid on assets.

For most people, it is better to have no bias to managed or passive but to retain an open mind and pick from the best of both as there are some areas where trackers make sense and other areas where managed make sense.