passive investing

A_T

EdGasketTheSecond wrote: »

Is passive investing leaving your money in a low-interest paying account for years or buying shares like Carillion and tucking away in a bottom drawer to find years later they have gone bust or buying a Nikkei Index tracker in 1990 and finding out 30 years later that you lost half your money? If so, it doesn't seem a very good idea.

it's none of those things. although a nikkei tracker might form part of a wider portfolio of index trackers that cover the whole world.

eskbanker

Buying a Nikkei tracker would be passive investing, but p***-poor passive investing, in that, as suggested above, diversification is key to any prudent investment strategy (i.e. buying individual shares would typically be even worse)....

A_T

EdGasketTheSecond wrote: »

Is passive investing leaving your money in a low-interest paying account for years or buying shares like Carillion and tucking away in a bottom drawer to find years later they have gone bust or buying a Nikkei Index tracker in 1990 and finding out 30 years later that you lost half your money? If so, it doesn't seem a very good idea.

1990 would not have been a good time to buy a Nikkei tracker - but if you bought in 2003 you'd be 250% up now and if you'd bought in 1983 you'd be 600% to the good

bostonerimus

EdGasketTheSecond wrote: »

Is passive investing leaving your money in a low-interest paying account for years or buying shares like Carillion and tucking away in a bottom drawer to find years later they have gone bust or buying a Nikkei Index tracker in 1990 and finding out 30 years later that you lost half your money? If so, it doesn't seem a very good idea.

You could use a passive approach for those investments, but you'd be a fool to apply a passive strategy to such a focused asset allocation. Of course it would be as foolish to have such a focused active portfolio too. However, if you'd bought a 60/40 total US equity and US bond portfolio in the late 1980s and simply rebalanced you would have an 8.5% annual average return which looks very good to me.

Crashy_Time

dunstonh wrote: »

Multi-asset funds are not passive. They may have underlying passive funds within them. However, the asset weightings are a management decision.

VLS is a fettered fund of funds on a returns-focused strategy. Most of the others are fettered or unfettered fund of funds on a risk targetted strategy. Effectively this means VLS will move around the risk profiles as its allocations are rigid. Whereas the risk targetted ones will adjust their allocations based on the economic cycle and market values. It could be argued that VLS is better at the higher risk end but the others are better at the lower/medium risk end.

You do have to be wary as Vanguard has a bit of a biased following on the internet who pray in the church of Vanguard and will not consider others. Even though others have come along and improved upon Vanguards offering.

Vanguard is fine. Once they were leading in most of the areas they are involved in but that is no longer the case. So, keep an open mind and do not become brainwashed into believing Vanguard is the one true God.

Interesting, people do seem to see them as the best place for cheap tracking products for example, but could you give more detail, who is better and why in your opinion, and on what products? Another question while I`m here, how does a company like Legal and General for example get away with charging noticeably more than a company like Vanguard on similar investment products, are they better or just relying on their "household name" status as an insurance company to draw in customers who may not think too much about how costs can affect long term returns?

Alexland

Although L&G do not have such a low cost retail platform as Vanguard Investor some of their tracker funds are cheaper such as L&G International which tracks the World ex UK index at 0.13% (or less on HL) compared to Vanguard at 0.15%.

L&G are providing the funds for our new workplace pension which is a master trust where we can track the World index for 0.20% total so much cheaper than Vanguard Investor fund plus platform, if they offered pensions yet.

Alex