What to progress too after passive trackers?

stphnstevey

I have invested what I feel is my comfortable limit in passive trackers and was wondering if their are any recommendations on a type of product to progress too after trackers?

I realize this is subjective, but I imagine others might have reached a similar internal limit at some point and would be interested in what they looked at next

Yes, everyone's circumstances are likely different, but I am just looking for ideas to research and make up my own mind

I would prefer capital growth to income and looking at long term potential

justme111

an obvious option- investments in the funds that are not trackers?

enthusiasticsaver

I have about half my portfolio in trackers and half in managed income funds.

Even though you are looking for growth rather than income the principles are the same. Look at past performance, where the funds are invested and research charges and the investment managers and their investment strategies.

Which trackers do you have and are they well diversified both in geographies and sectors/asset classes?

grey_gym_sock

perhaps there is no progress after passive trackers. just unnecessary complexity. which has its lure - including for me: i don't exclusively hold passive trackers. but i do wonder whether it would be better to resist, and keep it simple.

trying to do something better or more clever can easily (in investing, unlike in almost any other field) end up giving worse results.

and the more complex the portfolio, the more maintenance is required to look after it. what if i don't pay much attention to my investments for a while, because i'm busy doing other things? what if my faculties start to decline?

a totally passive portfolio can certainly work fine up to a value of tens of millions of pounds, or more.

ValiantSon

In what way have you reached your, "comfortable limit in passive trackers"? I don't really understand this. Do you mean that you would like to chase gains that outperform the market? If this is so then you need to think about where you perceive the potential for outperformance coming from, and this means making decisions about asset classes and fund managers who you believe have a strategy that will allow them to consistently outperform.

Looking at historic performance may be an indicator of this, but you need to be conscious of the time period within which these funds have been operating. Many people on here are fans of Lindsell Train and Fundsmith, and while they have performed very well, they haven't been around that long and haven't been through a market crash, so who knows how they would perform in such circumstances (which will come)?

You also need to consider what adding active funds will do to the balance of your portfolio, as it may leave you overweight in certain asset types and geographies. While you may want this, because you have conviction that this is where the best results will be attained over the next 10-20 years, there is also the risk that you end up in that situation by accident, so that your portfolio is not appropriate to your risk tolerance.

Furthermore, you haven't really given any indication of timeframe for which you would hold these investments, or for what purpose. These are pertinent points that should inform your investment decisions.

Is this really just a case of you being bored with passive investing and looking for something more exciting (and perhaps seeing the high growth figures for some active funds over a short period of time, and feeling that you want some of the action)? I'll eave you with a Chinese curse, to ponder, "May you live in interesting times."

Voyager2002

1. You might make an active investment decision for yourself: for example, that rather than having a portfolio that reflects the global capital market you might wish to be "overweight" in Technology; Southeast Asia (or emerging markets in general); Energy; or whatever.
2. Such a decision might lead you on to observing that some of these sectors are ones where active management appears to give real benefits. For example: while I prefer to rely on passive investing for the USA, I would certainly want active management for Russia (in fact there is clear statistical evidence that active management here delivers similar returns to passive but with considerably lower volatility).

Molotov

I don't follow your reasoning that there is a limit to passive investments.

Do you mean you have reached your limit in equity investments? If so there are plenty of other investments to choose from eg bonds, commercial property, gilts, gold, P2P.

If on the other hand you mean that you have reached your 'limit' on
passive investing within your equity investments, then the alternative is managed investments or direct share ownership.

I suggest you visit https://www.monevator.com

rathernot

Mixed asset or "defensives" if capital preservation is the goal.

Active funds if capital growth is the goal keeping in mind with greater rewards usually comes greater risk.

BLB53

I now use a core of passives but have several actively managed investment trusts which are 'satellites' and offer the opportunity but no guarantee of a slightly better return in some areas which I think are 'current'. I particularly like Scottish Mortgage which has done well for the past decade and also Finsbury Growth & Income trust.

Growth investment trusts can be researched via the AIC site
https://www.theaic.co.uk/

also worth a look is the DIY Investor
http://diyinvestoruk.blogspot.co.uk/

Hopefully you can pick up a few ideas to pursue.

bostonerimus

Some might say that you progress to trackers. Why are you looking to complicate your life? You should have a good reason rather than reaching some "internal limit". If you were to say that you think your bond segment or Asia pacific allocation would be better with active management then there's something to discuss. But your question is a little open ended to be convincingly answered.

DairyQueen

BLB53 wrote: »

I now use a core of passives but have several actively managed investment trusts which are 'satellites'

I also use this strategy.

Global passives (two thirds of portfolio) provide the core of my long-term investments. Actively managed satellites provide exposure to sectors/regions that are not represented in the passives. In particular, those regions whose markets are considered less efficient than developed markets (e.g. China, India). I also use actively managed funds to weight my portfolio toward a particular asset class or region depending on my view of the market over the shorter-term. For example, when I rebalanced my portfolio a few months ago, I bought two actively managed fixed asset funds (credit opportunities and short-term, corporate bonds) as neither feature much (or at all) in my passives. I have also used actively managed funds to increase my exposure to Japan and to invest in UK/US smaller companies.

This kind of strategy requires several months of research (at least) before you commit your cash. I am no longer a newbie but still far from experienced (unlike others on this forum). If you don't have the time/interest to research then stay with the passives.