The switch from my OEIC portfolio to my ETF one - one year on

aberlyfid_2000

hedging such a bond investment is like going on a weekend to Paris, but watching Eastenders all day on your hotel TV, and having le fish n chips for dinner. you might as well stay at home ! or it's like buying a Ferrari, and then electronically limiting it to a top speed of 85mph and an acceleration 0-60 in 15 seconds, because that's the speed of an Toyota Aygo 1.0, and they seem to be selling well !

I would love to go further into the mechanics of hedging with you, but i don't want to antagonise the OP any further by hijacking their thread. There's nothing wrong with the LS or the more customised products out there, but its a case of caveat emptor.

OP: can we see the eur funds as an example?

anyway, the best of the festive season's greetings to you sir.

capital0ne

ivormonee wrote: »

A year ago I decided to do a bit of research to learn a bit more about investing. I (think) I learnt that:

(1) actively managed funds generally (much more often than not) fail to beat their respective indecies

This is a well known fact - Mr Bogle told us all that passive investing is the way to go many years ago, 1975 to be exact.

There have been plenty of articles in the press about how charges eat away at your returns over the years.

The other factor to help your portfolio grow is to re-invest divis, another well documented tip.

And a final few tips, don't trade frequently, rebalance once a year if necessary, use your full ISA allowance on 6th April, and ignore a lot of detailed assessments from the experts, they don't know any more than you do. Its your money you should be in charge, why pay someone who has a few doubtful qualifications.

Very final tip - KISS!

Prism

capital0ne wrote: »

This is a well known fact - Mr Bogle told us all that passive investing is the way to go many years ago, 1975 to be exact.

For US stocks then yes and probably EM. Not as clear cut for the rest of the world where active management has a much better chance of doing well. Its pretty easy to find an active UK or Europe fund which beats the index. A good start is to simply avoid all the rubbish index hugging ones.

So to construct a global portfolio for example you could go for 50% US tracker, 15% EM tracker, and then go active for the last 35% (rest of the world).

jamesd

aberlyfid_2000 wrote: »

i mentioned that hedging is confusing, inaccurate and self-defeating. By citing equities, i have shown the first two.

You haven't done any of those three things, except, perhaps, to show that you find them confusing, inaccurate and self-defeating.

By contrast, I obtained the desired results from my hedged holdings this year: not suffering reduced returns due to a strengthening Pound. Which is why I bought those investments.

jamesd

ivormonee wrote: »

Is there a lesson to be learnt?

There are two big lessons to be learned and both are your own failures that you could fix but probably won't:

1. You let price drive your asset allocation decisions, changing allocation when you didn't find what you wanted within the restricted range of investments you wanted to use. Pick the desired investments first, then obtain them as inexpensively as possible.

2. You're a sucker for misleading statistics and non-equivalent comparators. You seem to have bought the claims about trackers whole. So, for UK investors, here's what the recent FCA study found:

A. On average passive US funds investing in the US beat the average of actives. Same for global, which is around 55% US. For all other equities active on average beat passive on average, often substantially.
B. Within each class of investment some firms were able to demonstrate persistent outperformance by some funds, beyond credible chance. Trackers are trying to be average, active's aren't supposed to be and it's a well-merited insult to say that one is a closet tracker: expect more dispersion of results from actives both for the same one year to year and between them, that's their job.

So if you, as a UK investor, follow the evidence applicable to UK investors you'll end up with the sort of thing I have: trackers for US large-cap and global large-cap equities, active for other equities.

Maybe eventually UK investors will find that other markets go the way of the US but we're not there yet.

On the other hand, if you become a US resident investor, pay careful attention to Mr. Bogle, because you're then investing from and probably largely within the area where 100% of trackers is the best choice.

Actives didn't on average do well for fixed interest.

A bonus point: there's more to trackers than cap-weighted trackers and plenty of reason to think that cap-weighted may not be the best choice compared to equal or other allocation choices.

Linton

Prism wrote: »

For US stocks then yes and probably EM. Not as clear cut for the rest of the world where active management has a much better chance of doing well. Its pretty easy to find an active UK or Europe fund which beats the index. A good start is to simply avoid all the rubbish index hugging ones.

So to construct a global portfolio for example you could go for 50% US tracker, 15% EM tracker, and then go active for the last 35% (rest of the world).

Also go Active if you want something that is not naturally catered for by a tracker such as Small Companies or Income.

I think you need to look carefully when choosing EM funds and not blindly go for a tracker, or anything else. Although EM countries vary a lot SE Asia tends to dominate with China increasingly playing a major part in the sector. You may be better advised to go for a specialist Asia fund and if you want the less developed emerging countries try a Frontiers fund - that is my approach.

Also you may need to watch the sector allocations. There is a tendency in many funds to go for very high %s in tech and finance which may unbalance your portfolio. For example the Vanguard EM tracker allocates more than 50% to these two sectors and the Fidelity active EM fund has more than 60%.

A_T

Linton wrote: »

Also you may need to watch the sector allocations. There is a tendency in many funds to go for very high %s in tech and finance which may unbalance your portfolio. For example the Vanguard EM tracker allocates more than 50% to these two sectors and the Fidelity active EM fund has more than 60%.

Really? They should both be the same as they both attempt to track the same index.

Linton

A_T wrote: »

Really? They should both be the same as they both attempt to track the same index.

Fidelity have two EM funds, one is a tracker as you say like the Vanguard one. The other is active with a higher % in the less developed countries in the EM sector.

My comments on the extremely high % in finance and tech in the Fidelity active EM fund come from MorningStar data. Trustnet shows rather different %s for those areas as its definitions seem different.

Prism

Linton wrote: »

AI think you need to look carefully when choosing EM funds and not blindly go for a tracker, or anything else. Although EM countries vary a lot SE Asia tends to dominate with China increasingly playing a major part in the sector. You may be better advised to go for a specialist Asia fund and if you want the less developed emerging countries try a Frontiers fund - that is my approach. .

Yes, I probably should have said invest in an EM tracker if you want to mainly invest in large Chinese tech and insurance companies. For anything else then a bit more thought has to go in. The frontier funds do seem to represent what I think of as an emerging market than the EM funds themself do.

I do exactly like you suggest. I have a small china fund which is heavy in the usual suspects but a much higher weighting in a frontiers fund - both active though.

aberlyfid_2000

jamesd wrote: »

You haven't done any of those three things, except, perhaps, to show that you find them confusing, inaccurate and self-defeating.

By contrast, I obtained the desired results from my hedged holdings this year: not suffering reduced returns due to a strengthening Pound. Which is why I bought those investments.

I admit it, i am confused by them. if I allocate to US equities, I want to do just that.

If i am concerned about FX risks, i will hedge it, myself, on a portfolio level. Mixing and matching hedged and non hedged products only confuses the situation.

you obtained the "desired" results by being lucky this year - what happened the year before when GBP fell?