Don't buy index trackers.........for my sake

bostonerimus

TBC15 wrote: »

Dear Mr McFly I’m reasonably sure you articulated that trackers would beat active funds (not investors) in your first post, and indeed were relishing this fact and still do.

No, I and my indexes, will beat some active investors and active funds, but not all of them. I don't relish the failure that is the ying to the yang of success, but I do recognize that both exist. The active investor usually discounts the possibility of failure because they have skill and can pick the winners. The continuation of that belief is critical to the performance of index trackers. So in my original post I ask that people "Don't buy trackers" for purely selfish reasons.

Malthusian

TBC15 wrote: »

It’s a snapshot in time. Bit like reading CVs who are you going to employ? Give him a year and see how he gets on.

A bad analogy as incompetent people generally stay incompetent and competent people stay competent. However funds which fall after a year may bounce back the next when the underlying investments return to favour, and vice versa.

If you sack your fund manager after a year because he invested in cyclical stocks which were out of favour and invest in the latest "star" manager who's done well out of defensive stocks, then next year cyclical stocks rise and defensive stocks underperform, you might wish you hadn't bothered with CVs at all and had simply employed a computer to do the job like everybody else.

Or you might be one of those people who likes the fantasy of human beings working for him and is almost happy to lose 10% through underperformance because they can "sack" the manager (as if the manager cares in the slightest that someone has withdrawn 0.001% of his fund, which is probably immediately replaced by another active investor who thinks he's spotted a value buy). In which case fair enough and each to his own.

Zola.

Fatbritabroad

username12345678 wrote: »

Apologies for causing any offence with the assumption you were an IFA.

Ultimately the objective for all investors (I would hope) is to achieve whatever their particular aim is. I'm sure not even the most hardcore Boglehead would shun an active fund that had a long-term out performance of a passive alternative - that would be nuts.

My feeling is it gets emotive when there is a feeling that the industry is taking investors for a ride and not adding anywhere near the value that their charges suggest they should. And active fund charges versus performance are one aspect of that.

I think most of that comes from a misunderstanding of what an Ifa is and does. The majority of good ones don't pretend to have a crystal ball (though the client regularly expect them to) they are there for overall advice on risk and perhaps how to then take money out tax efficiently and divvy up investments between various pots to meet their financial goals.

And no I'm not an Ifa either . Nor use one as I do t have enough to justify