Vanguard direct to customer offering confirmed

koru

dunstonh wrote: »

http://citywire.co.uk/wealth-manager/news/active-managers-smash-passive-in-the-uk/a897788

That one is a bit more up-to-date. It also comes to the same conclusion as you have with the US equity being 1 in 10. Except it also shows managed UK equity outperforming passive.

Thanks, that's an interesting article. Have they published their detailed analysis somewhere, so that we can assess how robust their methodology is?

In particular, they say "in the UK All Companies sector, of those individuals with a 10 year track record 68% outperform." Outperform over what period? They don't say. How many iterations of that period are they talking about?

And are they talking about a 10 year track record at the end of the period over which performance is measured, or at the start? If at the end, then they have built in a massive survivorship bias, because they are disregarding those managers who leave the business within 10 years, which will often be because they underperformed. But if they are talking about 68% outperformance subsequent to racking up a 10 year track record then that would seem to be evidence of a way to select managers who have a better than evens chance of outperforming (as long as you switch with them, if they move to a different fund).

Edit: I think I misunderstood the reference to 10 year track record. What they meant was that the 68% outperformance was measured over 10 years. So, this necessarily excludes any fund manager who started managing more recently than 10 years ago. Trouble is, it also excludes all the managers who underperformed so badly that they were sacked or quit before the 10 years were up. (It also excludes those who retired, or chose to leave, even though they were performing well, but surely underperforming managers will be less likely to survive 10 years than overperformers?) So, Citywire's analysis does not prove that UK active managers smash passives, unless you know in advance which managers will still be managing in 10 years time.

bostonerimus

koru wrote: »

Thanks, that's an interesting article. Have they published their detailed analysis somewhere, so that we can assess how robust their methodology is?

Yes that would be interesting. The parameters are vital and it would be interesting to see the skew on the curve and compare it with the return of the index.

Linton

TheTracker wrote: »

....... I don't think any passive investor considers that all fund managers have purely random performance.

We must be reading different forums!

Note that outperformance is an odd measure itself. When we talk about lack of outperformance we don't mean lack of skill. Each fund manager may be highly skilled. They select companies that produce the best returns against their objective. When we talk outperformance we talk of relative not absolute performance. There will always be that bell curve around absolute performance, but most of the relative position amongst that bell is random, even (or especially) for those in the top few percent.

Indeed (partially). Performance against the index only makes sense when the fund being compared lives in the same universe as the index. I guess that if you compared UK investing funds with a US index your analysis would identify a large amount of random noise. That wouldnt tell you anything about the funds, but rather more about the index. Similarly with analyses of a wide range of funds against the FTSE100 or All Share. These indexes are a poor choice for a basis for investing (in my view) being volatile and rather undiversified, but many of the funds may not share those characteristics. They would therefore show a random performance against the index. Similar effects could arise from funds being restricted in the shares they can buy - eg ethical funds, high income funds, small companies funds. Even a perfect fund that generated a constant return over time would appear to be highly random.

sorcerer

I hold a trading account with Hargreaves Lansdown with investment trusts, and I don't pay a single penny in fees to HL. They collect £0 a year from me ... at least for now.:D

jamesd

BananaRepublic wrote: »

I find it ironic that you complained about my response to the forum moderators.

If I recall correctly you called another poster an idiot. It'd be surprising if hennerz was the only person who reported it and they may not even have done it at all.

It's my own normal practice to report clear personal attacks whenever I notice them and regardless of whether I agree with the person concerned. The limit being my experience of the threshold at which the team will act. Naturally that means I've at least considered reporting posts by both of you.

jamesd

sorcerer wrote: »

I hold a trading account with Hargreaves Lansdown with investment trusts, and I don't pay a single penny in fees to HL. They collect £0 a year from me ... at least for now.:D

Right, those and ETFs outside a tax wrapper have nil percentage charge at HL Vs 0.15% at Vanguard. It's one of the cases where if sufficient money is involved the Vanguard deal isn't the best.

MarcoM

Am I correct in saying that a vanguard lifestyle fund held under HL ISa is more expensive than the same with Vanguard directly?
Value 100k.


thanks

hennerz

MarcoM wrote: »

Am I correct in saying that a vanguard lifestyle fund held under HL ISa is more expensive than the same with Vanguard directly?
Value 100k.


thanks

Yep. Platform cost is higher, fund charge is the same.

Platform costs:
HL 0.45%
Vanguard 0.15%

There are going to be cheaper options... iweb, halifax and interactive investor come in cheaper still with their fix rate offerings, but you also need to consider how often you will be buying/selling (trading costs)

MrWizard

Now HL are saying VG LS are questionable. Not sure i agree.

https://www.moneymarketing.co.uk/hargreaves-questions-vanguard-lifestrategy-performance/

dunstonh

MrWizard wrote: »

Now HL are saying VG LS are questionable. Not sure i agree.

https://www.moneymarketing.co.uk/hargreaves-questions-vanguard-lifestrategy-performance/

It has been a bottom half performer in 3 of the last 6 years. It's weightings did happen to be favourable in some of those. Their rigidity on the weightings to seem to hamper it in some parts of the cycle.

However, it does seem a bit like sour grapes to be coming out with that just now.