Stocks and shares isas down in 2015

ruperts

S&S ISA Portfolio
74% Vanguard 80/20
7% Vanguard Global Smaller Cos
6% Vanguard UK Equity
3% Vanguard EM
4% Aberdeen EM
6% Cash


Drip feeding monthly with increased drip feeds since the middle of the year


Down 1.55%


Bit disappointing considering the Vanguard 80/20 has supposedly gone up by 2.4% this year, but i'm not sure exactly when trustnet calculates those figures so maybe that's from the end of November.


Lost a bit through having a slightly higher exposure to EM, which serves me right for trying to be clever.


Managed smaller company funds seem to have won the year according to trustnet with many funds returning 15%+, so Vanguard's Global Smaller Companies' return of 4% is again disappointing and perhaps suggests a managed fund in that area is best.


Not sure what to do in the new year, I might swap my Vanguard Smaller Companies for a managed fund and my Vanguard UK Equity (which I intended as a 'value tilt') for Woodford. Then again I might just consolidate the whole portfolio into the 80/20 fund and be done with it. One thing I've come to realise, the more thought I put into this stuff, the worse I do.


Still, I'm in the early stages of my investment journey, so I'm not upset to be buying in at cheaper prices and to an extent i'm hoping for further falls next year.

kangoora

Up 1.5% since the April peak after subtracting payments in, presumably better over a full year but cba calculating it out. 54% equities, 46% other (if you count GARS as equity then 67% equities/33% other)

All SL branded funds (starting allocations)
Blackrock aquila tracker USA 12%
Woodford 10%
Henderson select european 12%
Jp morgan EM (dog) 5%
Schroder UK smaller 5%
Asia Pac ex Japan tracker 5%
Japan tracker 5%
SLI GARS 13%
Index linked bonds 10%
Property pension fund 10%
Old mutual corporate bonds 13%

TheTracker

ruperts wrote: »

Managed smaller company funds seem to have won the year according to trustnet with many funds returning 15%+, so Vanguard's Global Smaller Companies' return of 4% is again disappointing and perhaps suggests a managed fund in that area is best.

Vanguard Global Smaller Companies has returned 5.65% YTD. The benchmark index MSCI World Small Cap has returned 5.93%. It should be obvious without saying it, but this is the average that all the money those actively managed funds have returned in this sector. It is a mathematical fact that in any named sector, including small cap, managed funds on average can not be "best" or better than a tracker of the index, since the index is a sum of their performance. You may think that it might be easier to pick an above-average fund in some sectors such as small cap, but that's a different claim to the one above.

gadgetmind

I've got an old pension to which I no longer contribute, and it's up about 3% since January, but it was way over that at the April peak. I tend to track within tax years, and expect to still be well down from peak in April 2016.

My pots to which I'm still contributing look better.

mgarl10024

enthusiasticsaver wrote: »

Yes mine are in passive tracker funds and unfortunately a large lump sum went in just at the wrong time (April-May) which is when the markets were quite high and it has been all downhill from there.[STRIKE] Still the dripfeeding since then has corrected it a bit as it was almost 6% down at one point. A lesson maybe to me not to do lump sums in the future.[/STRIKE] Hopefully when I look at it in five or ten years time it will look more positive. This is the first year of my investing so not a good start

Except for the struck out bits you could have been talking about my experiences this year.

ruperts

TheTracker wrote: »

Vanguard Global Smaller Companies has returned 5.65% YTD. The benchmark index MSCI World Small Cap has returned 5.93%. It should be obvious without saying it, but this is the average that all the money those actively managed funds have returned in this sector. It is a mathematical fact that in any named sector, including small cap, managed funds on average can not be "best" or better than a tracker of the index, since the index is a sum of their performance. You may think that it might be easier to pick an above-average fund in some sectors such as small cap, but that's a different claim to the one above.

I understand the theory but a quick search on trustnet for companies with "smaller companies" in the name returns 74 funds, 63 of which have performed better than Vanguard over a year. The median fund in the list returned 15.6%. http://www.trustnet.com/Investments/Perf.aspx?univ=O&fundName=smaller companies&RowsPerPage=100&Pf_sortedColumn=P12M,UnitNameFull&Pf_sortedDirection=DESC


I appreciate that this is rudimentary analysis but it appears that just randomly selecting from the list at the start of the year would have given me a very good chance of significantly higher returns.


Doesn't the MSCI Index only track developed countries? And Vanguard's small cap index is made up of mostly quite large companies I believe.


It's confusion like this that makes me think putting everything into the Lifestrategy fund and leaving it alone is probably the best idea for me.

Superscrooge

enthusiasticsaver wrote: »

Some of you have had some pretty good returns. Interesting that on balance it appears that managed funds have done better on the whole than trackers. However I do not know enough about investing yet to be able to work out how to invest in sufficient funds to be globally diverse or pick them for that matter so will stick with my passive trackers and hope for better returns in 2016. It was also interesting to read about comparison of lump sum compared to drip feeding. Next year I will have no lump sum to invest so that may impact on the overall returns.

Managed funds won't have done better than trackers on average because trackers are the average. It's a bit like saying 'Most drivers are better than average'.

Being invested in trackers means that you will never have the satisfaction of adding forum posts showing how you have massively outperformed the market. But likewise you will never make the wrong investment decisions and massively underperform the market. You will just each year be slightly above halfway in the annual fund performance tables (because of cheaper fees).

So whilst each year a tracker might only just sneak into the top 40% of the fund performance tables, Because the 40% of funds that beat the tracker this year aren't the same 40% that beat the tracker the previous year over time the relative performance of trackers improves. So that over longer time periods trackers occupy an ever higher position in the performance tables.

There is a clearer explanation of this on one of the video blogs on https://www.sensibleinvesting.tv but I can't remember which one!

So regularly drip feeding money into a tracker is a good long term strategy. Remember to re-invest the dividends. 'Miracle of compound interest' makes a huge difference over the long term!

TheTracker

ruperts wrote: »

I understand the theory but a quick search on trustnet for companies with "smaller companies" in the name returns 74 funds, 63 of which have performed better than Vanguard over a year. The median fund in the list returned 15.6%. http://www.trustnet.com/Investments/Perf.aspx?univ=O&fundName=smaller companies&RowsPerPage=100&Pf_sortedColumn=P12M,UnitNameFull&Pf_sortedDirection=DESC


I appreciate that this is rudimentary analysis but it appears that just randomly selecting from the list at the start of the year would have given me a very good chance of significantly higher returns.


Doesn't the MSCI Index only track developed countries? And Vanguard's small cap index is made up of mostly quite large companies I believe.


It's confusion like this that makes me think putting everything into the Lifestrategy fund and leaving it alone is probably the best idea for me.

It is easy to get confused.

You've searched for any global fund with Smaller Companies in the name. If you remove the fund name criteria and look at Sectors of UK Smaller, Europe Smaller, Japan Smaller, and US Smaller you'll see that non-US Smaller Companies achieved about 16%, whereas US Smaller Companies only managed 2.2%. The Vanguard Global Smaller Companies fund is market cap weighted and is some 57% US. In other words, you weren't comparing apples with apples.

On the search you did 40 of the 74 funds are UK. And if you do a filter on UK Smaller Company funds you reach 50 funds. They did really well, back in that 16% range.

Unfortunately there are no real UK Smaller Company trackers. There is iShares MSCI Small cap, but its not really Small Cap at all - the FTSE small cap index is the bottom 2% of the market, but the iShares fund is the bottom 14%, so plenty of mid caps too and can hardly be compared to the actively managed funds that play wholly in that bottom 2%.

All this is evidence that its often very difficult to map a fund to a true benchmark.

Hope that helps.

Linton

TheTracker wrote: »

Vanguard Global Smaller Companies has returned 5.65% YTD. The benchmark index MSCI World Small Cap has returned 5.93%. It should be obvious without saying it, but this is the average that all the money those actively managed funds have returned in this sector. It is a mathematical fact that in any named sector, including small cap, managed funds on average can not be "best" or better than a tracker of the index, since the index is a sum of their performance. You may think that it might be easier to pick an above-average fund in some sectors such as small cap, but that's a different claim to the one above.

Sorry, I've pointed this out before.....

Retail managed funds are a pretty small % of the total market. Taking UK figures, it's around 10%. So the average managed fund could be very different to the MSCI Index.

And another point....

If any sector benefits from detailed compant knoweldge it must surely be Small Companies which most investors have neither the time nor interest to research in any depth. So I would be wary of Global Small Company funds - usually better in my view to go for geographic specialists.

For example:
46 out of 50 UK Small companies funds exceeded 5.93% over 1Yr, median 17.4%
18 out of 19 European small companies funds exceeded 5.93% median 18%
5 out of 5 Japan Small Companies funds exceeded 5.93% median 14.5%
But only 3 out of 13 North America small companies funds exceeded 5.93% median 3.7%

Unfortunately Trustnet doesnt have global small companies as a separate sector, but looking at the morningstar figures the median Global Small Companies % is about 4.4% 1 year. So it seems that if you want exposure to global small companies you would be better off creating your own portfolio of geographically based managed funds.

gadgetmind

Superscrooge wrote: »

Being invested in trackers means that you will never have the satisfaction of adding forum posts showing how you have massively outperformed the market.

True, but seeing how well your low-fee portfolio has beaten the high fee multi-asset ones with their star managers is a buzz.