Index vs managed funds the great war

firestone

Thrugelmir wrote: »

ETF's are not without their risks. If the stocks held are illiquid or infrequently traded. Offloading large lines of stock isn't as simple as pressing a switch as some people believe. When the Middle Eastern investors offloaded their 25% stake in Sainsburys some years back. Took a 186 broking houses to place the stock (at a slight discount) without causing major disruption to the market.

think its the amount of ETF's that seem to come out everyday,covering new products/markets

talexuser

bostonerimus wrote: »

True if held outside of tax advantages accounts.....most people will have their money in things like SIPPs and ISAs so it's not an issue.

Still true inside a SIPP or ISA since fund trading costs are different between the countries and will affect fund profits. We for example have more dividend orientated funds than the USA which is the most researched market in the world and thus the most difficult to outperform an index, and remains the most suitable for an index tracker. Results show the UK and Europe have a higher % of active index beaters than the USA. Thus USA investing experiences are not absolutely comparable to investing here unless saying the USA market is perhaps the best candidate for index tracking.
http://www.telegraph.co.uk/finance/personalfinance/investing/funds/11512441/Do-trackers-beat-active-funds-Our-new-analysis-has-the-answer.html

Filo25

Rightly or wrongly I am going for passive in the US and Active elsewhere in the new SIPP that I am transferring money into, time will tell if that is a wise decision or not!

username12345678

Filo25 wrote: »

Rightly or wrongly I am going for passive in the US and Active elsewhere in the new SIPP that I am transferring money into, time will tell if that is a wise decision or not!

I think the case for passive in the US is pretty clear cut.

My SIPP (when I finally get my hands on it) will have passive exposure to the US & Japan with active covering the rest.

cloud_dog

TBC15 wrote: »

There is a small skirmish going on over here

https://forums.moneysavingexpert.com/discussion/5719527

That might interest you.

Actives beating passives atm by 30%. Although, really too early to tell and too small numbers for great relevance just yet. It will be an interesting experiment if people can continue with it.

bostonerimus

cloud_dog wrote: »

Actives beating passives atm by 30%. Although, really too early to tell and too small numbers for great relevance just yet. It will be an interesting experiment if people can continue with it.

My passive index portfolio is lagging some actives and beating others.....just as expected. I will not end up with the highest returns, but I don't expect to have the smallest gains either. Being about average is my goal.

Thrugelmir

cloud_dog wrote: »

Actives beating passives atm by 30%. Although, really too early to tell and too small numbers for great relevance just yet. It will be an interesting experiment if people can continue with it.

Hopefully yes. As unlike academic studies that are to a degree flawed. These are actual portfolios.

TBC15

Thrugelmir wrote: »

Hopefully yes. As unlike academic studies that are to a degree flawed. These are actual portfolios.

+1, The theoretical flapping of gums is no comparison to the real world.

All the wisdom purveyors, check your bottom line, then contribute.

fun4everyone

sixpence. wrote: »

Is there a way of researching which sectors are better for index funds? I can see how for a more stable economy like the US I would use an index fund, but for say China a managed fund might be best.

Your thinking about it in the right way, Linton made a good post on the subject in this thread as well.

Thrugelmir

firestone wrote: »

Have seen mentioned more then once over the last 12 -18 months as to what would happen if all the people who have invested for the first time via index trackers panic in the first downturn and remove their money will that cause a bigger run or as some people have said are they at a false high due to the money coming into index funds

People are fickle. Herd investment mentality. When the lion roars then many head for the exits. With more sellers than buyers then prices naturally dip. Offering the opportunity to exploit mispricing of individual stocks.