Frustrated by all this investing lark

intowhere

I am looking to invest only £500 per month for myself. Plus an additional £100 for my 2 children (£50 each). For the kids it will be a nest egg for uni fees (I hope), for me I am just looking at saving as much as I can.

bostonerimus

chelseablue wrote: »

Thank you! Hopefully its a good all rounder for the long term

It will do as well as the underlying indexes that it's component funds track, but I'm invested in a grossly similar way with a portfolio of low cost Vanguard trackers, ie I'm self fettered, and I expect to do ok over 10,20 and 30 year time scales. It's easy to invest when the markets are going up nearly every day, but it's being able to react correctly, or maybe not react, when markets are falling that will be your true test.

username12345678

dunstonh wrote: »

VLS is a fettered fund of funds. it is not a tracker. The underlying assets are passive but the allocations are managed.

I read an article about fettered FoF's outperforming unfettered over 3, 5 and 10 years which seems counter-intuitive (to me at least).

Suggestions that costs and 'tyranny of choice' with unfettered managers unable to select winners being the reason - what do you think?

MPN

username12345678 wrote: »

I read an article about fettered FoF's outperforming unfettered over 3, 5 and 10 years which seems counter-intuitive (to me at least).

Suggestions that costs and 'tyranny of choice' with unfettered managers unable to select winners being the reason - what do you think?

At the end of the day it basically boils down to whether you are totally committed to passive or active funds? Or, if not, like me use both!

username12345678

MPN wrote: »

At the end of the day it basically boils down to whether you are totally committed to passive or active funds? Or, if not, like me use both!

I'm totally committed to whatever methodology gives me the highest likelihood of making money. :rotfl:

bostonerimus

username12345678 wrote: »

I'm totally committed to whatever methodology gives me the highest likelihood of making money. :rotfl:

The highest likelihood of making money is to stick the money in a long term savings bond or maybe index linked gilts.

If we are talking about stocks and you use passive trackers you will never have a year where you beat the best active funds. If you think you can consistently choose those "best " funds and beat the market after costs then you will be in the company of lots of other investors. However, if you think that might be difficult to do you should consider using index trackers as they will maximize the probability if you making money in shares, but they won't give you the maximum possible return. There are many studies that compare these approaches.

Thrugelmir

bostonerimus wrote: »

If you think you can consistently choose those funds and beat the market after costs then you will be in the company of lots of other investors.

That applies to the well researched large cap stocks in markets such as the US. That still leaves sectors of the market which aren't big enough to support institutionalised investing. Where the market capitalisation / nature of the companies is simply too small to warrant passive investment. For those of us that are happy to fish for minnows there's plenty of good value to exploit.

username12345678

bostonerimus wrote: »

The highest likelihood of making money is to stick the money in a long term savings bond or maybe index linked gilts.

If we are talking about stocks and you use passive trackers you will never have a year where you beat the best active funds. If you think you can consistently choose those "best " funds and beat the market after costs then you will be in the company of lots of other investors. However, if you think that might be difficult to do you should consider using index trackers as they will maximize the probability if you making money in shares, but they won't give you the maximum possible return. There are many studies that compare these approaches.

The next downturn (if it hasn't started already :eek:) will be interesting in terms of the active v passive debate. I sort of get the reasoning behind passive performing well relative to active in a rising market but if active can't outperform in a falling market then there must be questions about where the value is being added in view of the additional costs if you're an active supporter.

That said, as it stands for me the only certain is that my exposure in US large cap equities will be passive. Probably Japan large cap as well and possibly a min volatility ETF for Europe but I wouldn't want to drag the thread off on a smart-beta tangent.

dunstonh

I read an article about fettered FoF's outperforming unfettered over 3, 5 and 10 years which seems counter-intuitive (to me at least).

I personally, wouldnt like to say and any result is probably irrelevant as to which is better. You have many rubbish fettered FoFs and many good ones and vice versa with unfettered. I would not use the fettered/unfettered style as a measure of quality.

For those of us that are happy to fish for minnows there's plenty of good value to exploit.

And this is what the pro-tracker/ignore all other options brigade fail to realise.