SIPP portfolio

Prism

BritishInvestor wrote: »

I'm genuinely not sure how you are able to pick outperforming funds!!

You don't always need to. From what I can see unperforming funds tend to miss their benchmark by a small margin. So for example over 5 years about half of the funds in the UK All Companies sector have underperformed by between 1-20%. However at the same time some of the top funds have beteen the index by up to 3 times. You only have to choose ones of those top funds and others that don't miss the mark by too much and you beat the index.

If you start of by ruling out all of the closet active trackers then I have never found picked a decent active fund too hard

bostonerimus

Can we get some testimonials from some of the active losers....I know you are out there....and let's widen it beyond the Woodford investors.

Linton

bostonerimus wrote: »

Can we get some testimonials from some of the active losers....I know you are out there....and let's widen it beyond the Woodford investors.

You can always look at the results of the Invest Off. It seems all the 100% equity growth active portfolios are beating all the passive portfolios. There will be plenty of active portfolios that have performed badly but I believe most of those will show evidence of lack of diversification and fashion investing.

My experience matches Prisms, build a well diversified portfolio and just choose funds that have a fairly good record. Although some may perform badly, others will more than make up for it. You do not have to predict the best fund.

But we really need a major downturn for a proper assessment.

MK62

bostonerimus wrote: »

Can we get some testimonials from some of the active losers....I know you are out there....and let's widen it beyond the Woodford investors.

Pointless tbh.....there are too many ways to "cook the books" with the timing of the period in question (which may be different for each investor too - we don't all buy and sell at the same time).

To use your example of Neil Woodford - it's true that he has had a poor 12 months, no doubt about that, but if you'd invested say £10k in Woodford Equity Income at launch just over 4 years ago, your returns would still be slightly better than £10k invested into Vanguard UK Equity Income Index on the same day (£12241 v £12178).

Of course, change that period to the last 12 months, and the Vanguard tracker would trounce the Woodford fund.......change the period to the 3 yrs prior, 19/6/14-19/6/17, and the reverse is true......

So, in the end it proves nothing either way.
Personally I try to be pragmatic about the passive v active issue - I can certainly understand the reasoning behind passive investing......but I also believe a good active manager can outperform.....it would appear that it's a lot harder to find those in the US though.

I also have some concerns about how trackers will behave in a bear market now that their market share is far more statistically significant, though I suppose only time will tell on that.

pip895

I am on the fence re active v passive - I use active in my SIPP but predominantly passive in my ISA.

Of the regular contributors to this forum I find it entirely plausible that those embracing active management rather than pure passives generally outperform, though my feeling is that a hybrid system could be optimum.

You have to remember the active investors regularly contributing to this forum are a relatively unrepresentative selection of investors. The majority who do underperform trackers, include people who instruct their broker to sell whatever it was performed worst last year and buy the latest hot fund. It also includes an even larger group of investors who were put in some mediocre expensive fund by an ifa 20 years ago and haven't touched it since (while the ifa they never see rakes in a great chunk of their return!).

Passive investing will never be the best - nor will it be the worst. Its a good place to start your investing journey and unless you are particularly interested its probably a very good place to stay.

Advocates of pure passive investing should not fool themselves that it is the best - it clearly isn't. It is however probably the best solution for the majority of people who come on to this forum for advice.

dunstonh

I am on the fence re active v passive .

That is exactly how you should view it. No bias in either direction and use passive where passive is best and active where you think active offers a viable alternative.

though my feeling is that a hybrid system could be optimum.

snap.

It also includes an even larger group of investors who were put in some mediocre expensive fund by an ifa 20 years ago and haven't touched it since (while the ifa they never see rakes in a great chunk of their return!).

Not possible. Commission ended 2013. However, if you disregard your comment about that, then anyone who invested 20 years ago would only have invested based on information and funds that existed 20 years ago. It is very different today. If they are not paying an IFA to provide servicing and they are not doing it themselves and are on funds of that era, then that is a choice they are making.

bostonerimus

Linton wrote: »

You can always look at the results of the Invest Off. It seems all the 100% equity growth active portfolios are beating all the passive portfolios. There will be plenty of active portfolios that have performed badly but I believe most of those will show evidence of lack of diversification and fashion investing.

My experience matches Prisms, build a well diversified portfolio and just choose funds that have a fairly good record. Although some may perform badly, others will more than make up for it. You do not have to predict the best fund.

But we really need a major downturn for a proper assessment.

Yes the invest off is a good place to look and I agree with basically everything else you've said.

Prism

pip895 wrote: »

Of the regular contributors to this forum I find it entirely plausible that those embracing active management rather than pure passives generally outperform, though my feeling is that a hybrid system could be optimum.

Agreed, I hold a mix of both. I currently use passives to track themes mostly. One of my best preforming funds of this year is the L&G global healthcare tracker and my automation ETF is doing pretty well too. My second best performing fund of the last three years was L&G global tech (which I only sold to reduce my tech exposure and get some more UK exposure). I have held a US tracker to for a good while. My next addition is likely to be a US mid cap ETF.

My main global funds are Fundsmith and SMT which cover most of my active allocation but I also use active funds for EM and smaller companies. I am usually between 10-20% passive but if it weren't for Fundsmith and SMT covering all of my US needs I would use a passive for the US too.