Great British Invest off or Passive V Active Updates

bostonerimus

Just a quick observation. After about 15 months the active funds have an average return of 0.5% and a standard deviation of 4.19% and the passive is at an average return of -0.16% with a standard deviation of 2.6%, I did not include my $ based returns so we are comparing like with like. So maybe this is starting to show the greater spread of returns with active trading as compared to the portfolios following the indexes chosen, or maybe it just reflects the asset allocations. The average DIY active portfolio is slightly ahead of the average passive portfolio, but it's far smaller than a single standard deviation and that would be wiped out by any one paying for management....of course the manager could have done better than the DIY active folks here, but they might have done worse too.

So for now there are arguments on both sides and IMHO no enormous differences. But now that we are flirting with a bear market the active folks will have a chance to do some stock picking and buy low.

Linton

What we are seeing could be simply the result of asset alloccation. Most active investors, or at least the ones who take part in this forum, seem to use their freedom to increase risk/return beyond what can readily be achieved passively. One might expect this effect to be more significant than charges.

I do not think that a short period of 15 months over which the global markets have barely moved Is sufficient to make a long term conclusions.

aroominyork

bostonerimus wrote: »

But now that we are flirting with a bear market the active folks will have a chance to do some stock picking and buy low.

…or to panic sell low. A bear market might have experienced investors rubbing their hands at bargains to be had, but it’s also where less experienced investors are more likely to fall into the second half of the ‘buy high, sell low’ trap. One of the benefits of holding a single or very small number of passive funds is to protect the investor from him/herself.

cloud_dog

finellah wrote: »

Cloud_dog - I think that there's something up with Linton Growth on spreadsheet - number was 96663 or -3.34

Thanks

Corrected.

cloud_dog

Who's keeping an eye on the FTSE Global All Cap?

finellah

That's me - does something look wrong? Its the acc units I've been listing.

cloud_dog

My apologies, I managed to miss that bit of your update for some reason.

bostonerimus

Linton wrote: »

What we are seeing could be simply the result of asset alloccation. Most active investors, or at least the ones who take part in this forum, seem to use their freedom to increase risk/return beyond what can readily be achieved passively. One might expect this effect to be more significant than charges.

I do not think that a short period of 15 months over which the global markets have barely moved Is sufficient to make a long term conclusions.

I totally agree. the slightly higher return and standard deviation of the active portfolios might come from higher stock allocations or overweighting of sectors when compared to the passive portfolios. But I think it is still interesting to observe the greater spread of the active portfolios' returns compared to the passive ones. ie you've got a better chance of being average in the passive group.....which isn't at all surprising.

cloud_dog

I'm quite impressed by the FTSE Global All Cap. Unsure why I should be surprised/impressed by this but there ya go.

Prism

bostonerimus wrote: »

I totally agree. the slightly higher return and standard deviation of the active portfolios might come from higher stock allocations or overweighting of sectors when compared to the passive portfolios. But I think it is still interesting to observe the greater spread of the active portfolios' returns compared to the passive ones. ie you've got a better chance of being average in the passive group.....which isn't at all surprising.

I would say that the 90%-100% for some of the active portfolios have definately helped, mainly due to the last three months of 2017 which gave a big head start. I do have a cash/bond element outside of my pension which i decided not to include in the Invest off because its still very much a work in progress and much harder to track. If I had then my perforance would be much closer to a 70/30 portfolio.