Vanguard direct to customer offering confirmed

TheTracker

MrWizard wrote: »

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

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

Simply clever marketing. Vanguard launch a platform at ⅓ the cost but only sell vanguard products. HL sow FUD around their flagship product. Zero cost salvo. 12 months time and HL will be ⅓ cheaper than today... the war is just beginning.

hennerz

How does one find an IFA that can pick managed funds that will beat the market?

EdSwippet

dunstonh wrote: »

It has been a bottom half performer in 3 of the last 6 years.

It was also a top half performer in three of the last six years.

Mathematically, this outcome is entirely consistent with something that aims for the average. It should surprise nobody.

mutley74

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

but your gains/income maybe taxable compared to being held in a ISA.

Linton

hennerz wrote: »

How does one find an IFA that can pick managed funds that will beat the market?

The IFA's role isnt to find funds that beat the markets. "Beating the market" investing without objectives and attention to risk is in my view superficial and poor investing. Focusing on investments that have a reasonable chance of beating the market is likely to be far too risky for most people wanting help with life-changing amounts of money.

You use an IFA to identify a coherent set of investments that have a reasonable likelihood of meeting your objectives in your timescales and personal and financial circumstances at a risk you are prepared to accept. You should be the focus rather than the funds.

BananaRepublic

Linton wrote: »

The IFA's role isnt to find funds that beat the markets. "Beating the market" investing without objectives and attention to risk is in my view superficial and poor investing. Focusing on investments that have a reasonable chance of beating the market is likely to be far too risky for most people wanting help with life-changing amounts of money.

You use an IFA to identify a coherent set of investments that have a reasonable likelihood of meeting your objectives in your timescales and personal and financial circumstances at a risk you are prepared to accept. You should be the focus rather than the funds.

And to add to the above, investments that over time provide high gains tend to have high volatility. The IFA may decide to choose investments which had low volatility, and hence provide less potential gain. This would suit someone with a low risk tolerance, or someone who might need access to the money at short notice.

hennerz

How does one find an IFA that can pick managed funds that will beat a tracker with a perfect asset allocation specific to the client over a 30 year horizon?

koru

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?

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).

I've been trying to answer my own questions, using the Citywire website. I can't find any data to work out whether their claimed 68% outperformance is valid. But I did find some interesting data.

Citywire trumpet their Fund Manager Ratings as being the best indication of who is "adding value", because they track the manager, not the fund. To be given a rating, the manager must have outperformed their benchmark over the last 3 years. This is measured once a month.

I started to wonder if, because they track managers, not funds, their ratings are a guide to who will outperform in the future. I found a way to test this.

I had previously looked at these ratings back in 2010, and I happened to print off (on 2 Feb 2010) a list of all the managers (of funds available in the UK) that were rated AAA, AA, or A. I didn't print those with a + rating. As Citywire say that around 25% of managers qualify for a rating (citywire.co.uk/wealth-manager/news/ratings-faq/a703353) and that the bottom 40% of those with a rating get a +, this implies that I had a list of the top 60% of the 25%. In other words, what Citywire considered to be the top 15% of managers in the UK, as at Feb 2010. I have just been through the list to see the current ratings of those managers. If they still have a rating, this indicates they are still outperforming their benchmark (over the last 3 years).

Out of a total of 132 managers, 38 were no longer listed by Citywire as being a manager in the UK. Most have retired or been sacked; a few have moved to manage funds overseas. As we don't know how they were performing when they became unlisted, let's focus on the other 94 who are still managing funds in the UK. Of these, 42 still have a rating (of + or above), so have outperformed their benchmark, and 52 have no rating, so have not.

So, if you had used the Citywire ratings as a filter to decide which active funds to invest in, and had switched your investments to follow managers if they moved to a new fund, 55% of these managers would have underperformed their benchmarks over the last 3 years. (I see no reason to assume that the ones that stopped being a manager would have been any more successful up to the point they stopped than those who are still managing.) So, this strategy would have given you a slightly lower than evens chance of picking managers who would have beaten their benchmarks over the last three years.

Maybe you would get different results if you select by prior outperformance over a longer period than three years, or by excluding anyone who has less than a 10 year track record. Maybe the ratings in Feb 2010 are not representative of the success rate of the Citywire methodology as a predictor of future outperformance if you looked at other months. But it does not seem likely, to me.

This data does not convince me that past performance of managers (as opposed to funds) is a reliable way to tilt the odds in favour of picking active managers who will outperform.

bostonerimus

hennerz wrote: »

How does one find an IFA that can pick managed funds that will beat a tracker with a perfect asset allocation specific to the client over a 30 year horizon?

First you need to get yourself a unicorn..................

bostonerimus

MrWizard wrote: »

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

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

That's so transparent. They roll out the usual active management arguments and dangle the bait of future performance. They are scared.