Passive V Active

bowlhead99

BananaRepublic wrote: »

What is interesting is that in 2012 more than half UK shares were owned by overseas entities. Clearly the UK market is seen as profitable.

Well, it's just seen as potentially profitable, like everywhere else.

Some of the largest multinationals such as Shell or HSBC or BAT or Glaxo or Rio have chosen to list here which inevitably attracts money from everywhere whether or not they care about the UK per se.

Some other FTSE 350 or All-share companies are more local in their assets and revenues (like Lloyds or Tesco or Sky) which also attracts money from investors who want exposure to all parts of the world economy and can only do that by investing outside (e.g.) the US or Japan or China or Germany even though they have perfectly good companies at home.

At first glance, the stat that half 'our' companies are owned overseas seems a bit of a shock. But grossly oversimplifying, if there are 50 million investors in the UK and 5 billion investors around the world, and everyone invested everywhere, then you would expect 1% of the UK market and 1% of the US market and 1% of the French market and Chinese market and Korean market and Israeli market to be made up of UK investors and 99% to be owned by non-UK investors. The fact that 99% of the UK market isn't owned by non-UK investors is down to things like natural home bias, ease of access, and the fact that some of the 5 billion don't have two beans to rub together and are not looking for a savings account, let alone international investments...

Still, in an ever more 'globalised' world economy, 50% foreign ownership isn't surprising when UK all-share is worth $3 trillion and global markets are worth $30-40 trillion; it would be much more surprising if 100% of the UK market was owned by UK people and 100% of the ex-UK market was owned by ex-UK people.

lpgm

I started off as 100% active. I was a stockbroker back in the 90s, and it was hard to be anything but. All those dead cert stock tips. Hmm.

Anyway, now I'm mainly passive. My active bit is Fundsmith, the main fund and FEET. Choose your active fund or funds very carefully - make sure you completely understand how the fund manager's picking stocks, and why they think their method will work over time.

The reassuring thing about a tracker fund is that when it plummets, you know it's because the market as a whole has, and not because your fund manager has c*cked up.

BananaRepublic

lpgm wrote: »

Choose your active fund or funds very carefully - make sure you completely understand how the fund manager's picking stocks, and why they think their method will work over time.

I know absolutely nothing about the active funds that I invest in apart from the sector, the charges, and the past performance. I have seen funds launched, with marketing bumf extolling super duper sure to succeed strategies, and subsequent less than stellar performance. Maybe you can judge whether or not the claims stack up, I can't. And of course there is almost no way to know whether or not they are following their stated strategies either, or how effectively. I suspect it comes down to judgement on the part of the fund manager, an instinct for which companies to back, and when to bail out.

lpgm wrote: »

The reassuring thing about a tracker fund is that when it plummets, you know it's because the market as a whole has, and not because your fund manager has c*cked up.

I prefer funds that don't plummet. Sorry, I could not resist a cheap comment. You make a valid point. And you know that some corpulent waddling pink faced banker, habitually gorging himself senseless on a succession of expense account business lunches, has not trousered a fat wodge of your money from managing a fund that has tanked, and then sauntered off into the sunset, leaving only a wave and a loud breaking of wind as a thank you.

BananaRepublic

bowlhead99 wrote: »

Well, it's just seen as potentially profitable, like everywhere else.

Some of the largest multinationals such as Shell or HSBC or BAT or Glaxo or Rio have chosen to list here which inevitably attracts money from everywhere whether or not they care about the UK per se.

Some other FTSE 350 or All-share companies are more local in their assets and revenues (like Lloyds or Tesco or Sky) which also attracts money from investors who want exposure to all parts of the world economy and can only do that by investing outside (e.g.) the US or Japan or China or Germany even though they have perfectly good companies at home.

At first glance, the stat that half 'our' companies are owned overseas seems a bit of a shock. But grossly oversimplifying, if there are 50 million investors in the UK and 5 billion investors around the world, and everyone invested everywhere, then you would expect 1% of the UK market and 1% of the US market and 1% of the French market and Chinese market and Korean market and Israeli market to be made up of UK investors and 99% to be owned by non-UK investors. The fact that 99% of the UK market isn't owned by non-UK investors is down to things like natural home bias, ease of access, and the fact that some of the 5 billion don't have two beans to rub together and are not looking for a savings account, let alone international investments...

Still, in an ever more 'globalised' world economy, 50% foreign ownership isn't surprising when UK all-share is worth $3 trillion and global markets are worth $30-40 trillion; it would be much more surprising if 100% of the UK market was owned by UK people and 100% of the ex-UK market was owned by ex-UK people.

Obviously, it's globalisation.

frenchplonka

Superscrooge wrote: »

£1,000 lump sum and then £250 a month would be ok for the vast majority of either active or passive funds.

35yrs old is fine. Lots of time for the magic of compound interest to have an effect!

There is plenty of info on financial blogs re the Active v Passive debate.

There will always be actively managed funds that outperform trackers each year and if there was a sure-fire way of picking them, then we would all do it!

However over the long term, because of their lower charges, passive funds tend to outperform the vast majority of actively managed funds.

Some investors are totally committed to passive, others prefer active. Some like me have a mixture of both (although I am about 85% passive 15% active)

I would be grateful if anyone could point me in the right direction as to where to find actively managed funds along with how they go about picking a fund other anohter

dunstonh

frenchplonka wrote: »

I would be grateful if anyone could point me in the right direction as to where to find actively managed funds along with how they go about picking a fund other anohter

Being realistic, with the amounts you are talking about, you are better off going with multi-asset funds. There is no point building a bespoke portfolio. You will neither have the knowledge and probably not the inclination and its just not worth it with your amount of money to use single sector funds.

frenchplonka

dunstonh wrote: »

Being realistic, with the amounts you are talking about, you are better off going with multi-asset funds. There is no point building a bespoke portfolio. You will neither have the knowledge and probably not the inclination and its just not worth it with your amount of money to use single sector funds.

your prob right it just seems a lil boring watch 250 leave my account every month and not really doing anything with it. I kinda wanna have something hands on but agree the money i have is not enough I guess i could plough a little into stuff like P2P lending least i get to pick that.

badger09

frenchplonka wrote: »

I would be grateful if anyone could point me in the right direction as to where to find actively managed funds along with how they go about picking a fund other anohter

frenchplonka wrote: »

your prob right it just seems a lil boring watch 250 leave my account every month and not really doing anything with it. I kinda wanna have something hands on but agree the money i have is not enough I guess i could plough a little into stuff like P2P lending least i get to pick that.

My advice, which I'm not qualified to give because giving financial advice is a regulated activity would be

Invest your real £250 per month in a low cost multi asset fund such as Vanguard Lifestrategy or Blackrock Consensus.

At the same time, set yourself up with a dummy portfolio on somewhere like Trustnet and invest a virtual £250 per month in a selection of funds you have chosen yourself.

That way, you'll have your 'hands on' but it shouldn't lose you an arm and a leg:D

jimjames

frenchplonka wrote: »

your prob right it just seems a lil boring watch 250 leave my account every month and not really doing anything with it. I kinda wanna have something hands on but agree the money i have is not enough I guess i could plough a little into stuff like P2P lending least i get to pick that.

That's the problem many investors have - they feel the need to so something. And that tends to be the worst thing to do, just letting compounding do its magic is far better than tinkering. Easy to say though, far less easy to do!