Managed or Tracker fund, which is best?

beamyup

cloud_dog wrote: »

Well go for it.

My 'impression' from your posts is that you have a defined position and are simply trying to reinforce it by demanding data.

My process in reviewing / identifying managed funds is always to ignore those funds that consistently do not perform above the median. By undertaking that simple and basic process I remove the probability that I will under perform the average / index. Additionally, I run an virtual index portfolio which allows me to monitor and evaluate performance should I need to.

I also do use trackers where I feel it is appropriate. As an example I would not use a tracker for emerging markets but would for the US.

This thread was started to examine the data a bit more, I value data more than most it seems.

[Deleted User]

cloud_dog wrote: »

Well go for it.

My 'impression' from your posts is that you have a defined position and are simply trying to reinforce it by demanding data.

My process in reviewing / identifying managed funds is always to ignore those funds that consistently do not perform above the median. By undertaking that simple and basic process I remove the probability that I will under perform the average / index. Additionally, I run an virtual index portfolio which allows me to monitor and evaluate performance should I need to.

I also do use trackers where I feel it is appropriate. As an example I would not use a tracker for emerging markets but would for the US.

I do have a position. Is that bad? So do you. You just summarized it.

Picking active funds that “consistently” outperform does not help. They tend to grow fast and collect more money than can be managed. Also, wonder-boy/girl fund managers tend to make lots of money and retire or be poached. Periods of outperformance are followed by periods of underpeformwnce.

There will be a tiny number of exceptions - “Warren Buffets”. Of cause, Warren Buffett himself recommends Passive.

cloud_dog

beamyup wrote: »

Fantastic - thanks for this!
what criteria/methodology was used to choose the funds here?

But that is the point, they are based on human engagement.

You are obviously very comfortable with a tracker position, and I am very happy for you.

Life is rarely black and white. You are trying to shoe-horn a very broad, personal, and situational based discussion.

Example, currently our (mine / wife's) investments are mostly in managed funds. So, that is the strategy. If I were to pass, I would advise my wife to place all the investments in to trackers, as being average will be fine given the circumstances.

I think ColdIron summed it up best in the 2nd or 3rd post.

beamyup

cloud_dog - please can you on your gsheet add which exact funds these are? it is hard to research the funds you listed here without knowing which is which?

beamyup

cloud_dog wrote: »

But that is the point, they are based on human engagement.

You are obviously very comfortable with a tracker position, and I am very happy for you.

Life is rarely black and white. You are trying to shoe-horn a very broad, personal, and situational based discussion.

Example, currently our (mine / wife's) investments are mostly in managed funds. So, that is the strategy. If I were to pass, I would advise my wife to place all the investments in to trackers, as being average will be fine given the circumstances.

I think ColdIron summed it up best in the 2nd or 3rd post.

Hey currently I am undecided - I come with NO preconceived ideas here - except maybe I don't like to pay fees for nothing generally. At the moment I have a mix of fund types but that is NOT really relevant to the point of this thread.

you say "But that is the point, they are based on human engagement. " - is that basically saying you were using this data in your link to prove a point (that you say all analysis is based on the preconceived views of the analyst perhaps? ) rather than it being useful in the discussion?

greatkingrat

Linton wrote: »

In the income sector, the IUKD ETF fell 60%-70% way beyond the more general indexes during the 2008/2009 crash and only recovered recently. Its problem was that it over-invested blindly in high dividend payers, such as the banks. Most managed funds should not make that mistake.

A passive fund doesn't "over-invest" or "under-invest" in anything - the whole point of passive investing is that it invests in every company within the sector in proportion to its market cap.

No doubt some active funds managed to sell banks before the crash, but by definition, for every active investor who sold just before the crash, there must be another active investor who bought just before the crash.

cloud_dog

Deleted_User wrote: »

I do have a position. Is that bad? So do you. You just summarized it.

No. your position, your belief. Great, no issue whatsoever.

Deleted_User wrote: »

Picking active funds that “consistently” outperform does not help.

Seriously?

Deleted_User wrote: »

They tend to grow fast and collect more money than can be managed.

And so, that is not a consideration for a tracker?

Deleted_User wrote: »

Also, wonder-boy/girl fund managers tend to make lots of money and retire or be poached.

So, if you choose to you can follow the wonder manager.

Deleted_User wrote: »

Periods of outperformance are followed by periods of underpeformwnce.

Quite possibly but, it is not as you imply an absolute.

Deleted_User wrote: »

There will be a tiny number of exceptions - “Warren Buffets”. Of cause, Warren Buffett himself recommends Passive.

Well, let's not obfuscate the truth but I think you should really read what he said and ensure you have your context on that statement before stating it.

I really don't want to go down this road. I am very comfortable with my approach. I am comfortable that I will be better than average / an index. You are very comfortable with your approach and with the guaranteed results from indexes. So be it. Happy days.

Linton

Deleted_User wrote: »

I do have a position. Is that bad? So do you. You just summarized it.

Picking active funds that “consistently” outperform does not help. They tend to grow fast and collect more money than can be managed. Also, wonder-boy/girl fund managers tend to make lots of money and retire or be poached. Periods of outperformance are followed by periods of underpeformwnce.

During the years of growth you would have been rebalancing to spread your risk. When a fund ceases to meet your objectives you sell.

There will be a tiny number of exceptions - “Warren Buffets”. Of cause, Warren Buffett himself recommends Passive.

Warren Buffet certainly does not practice Passive. Why not? If I remember correctly he recommended passive for his wife who I guess is not an experienced investor.


Perhpas you can tell us something about your investments and experience. Just quoting from US popularisations is easy.

beamyup

greatkingrat wrote: »

A passive fund doesn't "over-invest" or "under-invest" in anything - the whole point of passive investing is that it invests in every company within the sector in proportion to its market cap.

No doubt some active funds managed to sell banks before the crash, but by definition, for every active investor who sold just before the crash, there must be another active investor who bought just before the crash.

Yes, I think this is what is described in some detail as "Zero Sum Game" in the pdf's at the top.

[Deleted User]

greatkingrat wrote: »

A passive fund doesn't "over-invest" or "under-invest" in anything - the whole point of passive investing is that it invests in every company within the sector in proportion to its market cap.

No doubt some active funds managed to sell banks before the crash, but by definition, for every active investor who sold just before the crash, there must be another active investor who bought just before the crash.

Agreed. High-dividend ETFs are not passive. This is getting into factor investing and high dividends is the worst factor of all of them. Value/small/momentum/quality - all fun concepts which have better theory behind them and tend to under/over perform passive over various periods.