Your favourite tracker

Linton

darkidoe wrote: »

Interesting chat about passive vs active funds! On market exposure issue, so is it a better strategy to be solely exposed to a market through a single fund? Do people usually buy different funds for a specific market if the funds contain various different investments?

I dont see much advantage on going for multiple funds in exactly the same market, especially if you keeping to the mainstream and you should have a good reason not to. However just because 2 funds are classified in the same sector it doesnt mean they are interchangeable. You may well find that they focus on different things. For example in Emerging Markets different funds may focus on different parts of the world. The UK All Companies sector includes both FTSE All Share trackers and some specialist funds that focus on particular aspects of the market.

So look at what the fund invests in and buy if a second fund adds something new that meets your needs.

Sam_J12

TheTracker wrote: »

No, there are not. It is a myth that active investing is best placed in emerging markets. This appears to stem from some ill placed belief that passive investing works best in efficient markets, and since EM is probably less efficient then it is less suited to passive strategies.

However, the argument for passive investing has nothing to do with market efficiency. To paraphrase swedroe since all emerging markets stocks must be owned by someone, and passive investors earn the market returns less low costs, and in aggregate, active investors must also earn the market return less high costs, in aggregate passive investors must earn higher net returns than active investors. Yes for EM. Active management is just as much a loser's game in emerging markets as it is in developed markets.

Now I should also point out that active investing works best (but not better than passive) in inefficient markets as inefficiencies may be better exploited. But still not better in aggregate than passive.

If you doubt this, please check out the scorecard below. It shows that 80% of actively managed EM funds do not beat the benchmark.

http://www.spindices.com/documents/spiva/spiva-europe-mid-year-2015.pdf

Actually there are good arguments to favour actively managed funds in particular sectors. You probably know what these are already since you seem to know about the topic. Obviously you disagree, but please don't pretend that this is some kind of settled issue that can't be debated. Anyhow, these arguments have been gone over perhaps a thousand times on forums like this, so lets not pollute this thread too.

Sam_J12

darkidoe wrote: »

Interesting chat about passive vs active funds! On market exposure issue, so is it a better strategy to be solely exposed to a market through a single fund? Do people usually buy different funds for a specific market if the funds contain various different investments?

I think if you choose to invest in a tracker fund, there is little point in having more than a single fund in any particular market. Other funds will have different objectives so it may well be worth considering a number of funds depending on what you are hoping to achieve.