Damien Fahy's 80-20 Investor - thoughts?

aroominyork

Alexland wrote: »

You don't need to use a platform to access Fundsmith as they accept customers directly. Still it is a concentrated higher risk investment than a mixed asset fund so probably not suitable for most people.

It’s interesting that boston (the Index king) mentions Fundsmith, and Alex (who – correct me if I’m wrong – has more recently increased his use of index funds) says it’s not suitable for most people. I think that’s an overstatement, Alex. Fundsmith may be concentrated but it is less volatile than many specialist funds despite its FE currently sitting at 129 (compared, say, to LT Global, FE 106). Bottom line is that an active portfolio is not unsuitable for most people - it’s a matter of choice, even if you are an advocate of passive funds – and Fundsmith has the record and positioning to be appropriate for many people. My equities have an overall FE of 101 (from Trustnet’s Portfolio tool) and I am content with Fundsmith comprising about 25% of that (with another 10% in Smithson and 12% in LT UK).

AnotherJoe

cska wrote: »

Thank you guys. Like you all said, I am new to this so it's helpful to know not to waste my money chasing big investments when it looks likely that over time, most investments will equal out to about the same return. In terms of where I should go, you all mentioned multi-asset funds or trackers. Which platform do you recommend using for an initial amount + monthly drip-feeding (e.g. £10,000 lump sum and a monthly pay in?). Have looked around and whilst Vanguard has lowest fees, you can't diversify more than the funds that it offers. So while I'm interested in VLS I wouldn't mind investing in some of the other funds you mentioned. Is Hargreaves Lansdown the best for what I am proposing to do?

Thanks again for your invaluable advice

You wouldn't really be diversifying if you bought active funds of the type you mentioned. You'd be doing the opposite, or at least you'd be "focussing" your investments in certain areas. All of the companies in say Fundsmith will already be in the various global vanguard funds so you'd just be increasing your % of those that you ultimately held. Nothing wrong with that, it's a matter of opinion, but diversification is probably the wrong word. Perhaps focussing is better. To really diversify you'd choose other funds who constituents aren't much represented in the major global funds, say EM or Smaller Companies and those are available with Vanguard.


End of the day it's down to what you think is the best way to invest. I have for example perhaps 50% general global funds and then 50% "specialist" funds, ETFs and shares in areas and companies I think will do better than average in the long term. Will that work out better than 100% general? I'll let you know in 20 years when it's too late for me to change if it wasn't !

My approach is that it seems clear some areas will do better in future than the generality so I want to be overemphasized in those - for example healthcare, and what is variously called alternative / renewable energy, but i think in ten years time will just be "mainstream" energy. To me thats a fairly reasonable couple of bets to make. Others will have their opinions on different areas or be content to catch everything with a few generalist global funds.
No reason you couldn't start with say an 80/20 split. 80% in general global and then why not take a punt on a couple of areas or fund managers you think will outpace the rest.

jamei305

AnotherJoe wrote: »

End of the day it's down to what you think is the best way to invest. I have for example perhaps 50% general global funds and then 50% "specialist" funds, ETFs and shares in areas and companies I think will do better than average in the long term. Will that work out better than 100% general? I'll let you know in 20 years when it's too late for me to change if it wasn't !

My approach is that it seems clear some areas will do better in future than the generality so I want to be overemphasized in those - for example healthcare, and what is variously called alternative / renewable energy, but i think in ten years time will just be "mainstream" energy. To me thats a fairly reasonable couple of bets to make. Others will have their opinions on different areas or be content to catch everything with a few generalist global funds.
No reason you couldn't start with say an 80/20 split. 80% in general global and then why not take a punt on a couple of areas or fund managers you think will outpace the rest.

Surely the future prospects of these sectors you think will do well is already priced in. Unless you think no one else has realised renewable energy might become more mainstream?

Focusing on particular sectors is risky. For example the healthcare sector might seem attractive because everyone needs more healthcare in the future, right? However it is very sensitive to US politics and court decisions related to "Obamacare" and any future direction a post-Trump administration would go in that respect.

Picking good companies in the manner of Fundsmith seems to me less risky than exposing yourself to trendy sectors.

AnotherJoe

jamei305 wrote: »

Surely the future prospects of these sectors you think will do well is already priced in. Unless you think no one else has realised renewable energy might become more mainstream?

I think there are two factors there. First of all, many companies in this area are too small to be in the global funds. Those funds hold something like 4k-6k companies. Most wind and solar companies will be well below that threshold, eg smaller than say number 6,000 on the list. So, unless you make an effort to own them now, you wont own them until they grow and displace another company from the index. I'd prefer to own them whilst they are cheaper.
And secondly, of course its not true that "no one" else has realised that renewables are a good bet. But I dont think enough have. After all there's huge amount of FUD against them, look at Trumps recent attempts to prop up coal, at the speech he made recently disparaging wind and solar power, and the amounts of money being pumped in by coal and oil proponents like the Koch brothers to disparage these. So, that has an effect on their stock prices which I'd like to capitalise on before it becomes clear to even the dumbest investor that this is where the big money is heading.

jamei305 wrote: »

Focusing on particular sectors is risky. For example the healthcare sector might seem attractive because everyone needs more healthcare in the future, right? However it is very sensitive to US politics and court decisions related to "Obamacare" and any future direction a post-Trump administration would go in that respect.

I'm looking longer term and more global than that. The population is getting older and more wealthy. That says, more money will go on healthcare. There are also more areas where it can be spent than before, areas that didn't exist 10 years ago.

jamei305 wrote: »

Focusing on particular sectors is risky. For example the healthcare sector might seem attractive
Picking good companies in the manner of Fundsmith seems to me less risky than exposing yourself to trendy sectors.

Well, I am hedging my bets by doing both

I dont though espouse the theory that perhaps you speak to above that the market is fairly priced. Were the prospects of Carrillion fully priced in the month before it failed ? Or Lehman Brothers? (just to pick a couple of extreme examples off the top of my head) So I dont buy that theory that the market has perfect information. I think peoples understanding is limited and often short term, there's a lot of misinformation (eg anti renewables propaganda) and theres also short term investing, all of which which leaves enough gaps for people willing to make a long term bet. I do acknowledge i might be wrong but i think the odds are decent enough for it to be worth a punt with a proportion of my investments.

Davidooo

I was surprised to see all the adverse comments about Damien Fahy's 80-20 Investor. Three years ago I decided to move money from my cash ISA into a Stocks and shares ISA and after some investigation chose Charles Stanley as my platform. But I then got stuck with how to go about choosing funds to invest in. I have no interest in regularly spending time researching investments so I was pleased to discover the 80-20 Investor that I thought looked good and I decided it was worth trying the free trial. At the end of the free trial, I was happy then to go on and subscribe and have been doing so for the last three years or so.

During that time, I have followed Damien's lead in what funds to invest in and it has been very profitable. And I believe Damien is a genuine person who is certainly not a "Prince Monolulu" as mentioned in a previous post!

Damien gives regular updates on what funds he is buying or selling with a full and detailed explanation as to his reasoning and I just mirror his portfolio.

I should mention that I have also been very pleased with Charles Stanley. There are no charges for switching funds, they are cheaper than Hargreaves Lansdown and they are very helpful whenever I have needed to phone them.

Malthusian

According to Fahy's website, his portfolio has returned 32.5% over the 5 years ending the start of March 2020, massively underperforming the FTSE World TR (64%) despite being higher risk.

(Relying on some guy being able to time the market and pick stocks is higher risk than buy and hold. There is no disclosure on Fahy's website regarding asset allocation / risk targeting so a 100% equities index is a fair comparison. I read the entire FAQ and it's still not disclosed what, if anything, 80-20 relates to.)

This reality contrasts with the gibberish on Fahy's website which says things like "In the first 17 months the portfolio made over 11% while the market made 2.81%". What benchmark is being used for "the market"? If the portfolio is over 5 years old, who cares about the first 17 months? Why that weirdly-specific 17-month period? I can guess but then I'm not the target audience.

And I believe Damien is a genuine person who is certainly not a "Prince Monolulu" as mentioned in a previous post!

Depends. Can he eat fire? If the answer is "no" he's yet to reach Prince Monolulu's level.

As far as I'm aware Price Monolulu never underperformed the market by 50%.

grumiofoundation

Davidooo said:

I was surprised to see all the adverse comments about Damien Fahy's 80-20 Investor. Three years ago I decided to move money from my cash ISA into a Stocks and shares ISA and after some investigation chose Charles Stanley as my platform. But I then got stuck with how to go about choosing funds to invest in. I have no interest in regularly spending time researching investments so I was pleased to discover the 80-20 Investor that I thought looked good and I decided it was worth trying the free trial. At the end of the free trial, I was happy then to go on and subscribe and have been doing so for the last three years or so.

During that time, I have followed Damien's lead in what funds to invest in and it has been very profitable. And I believe Damien is a genuine person who is certainly not a "Prince Monolulu" as mentioned in a previous post!

Damien gives regular updates on what funds he is buying or selling with a full and detailed explanation as to his reasoning and I just mirror his portfolio.

I should mention that I have also been very pleased with Charles Stanley. There are no charges for switching funds, they are cheaper than Hargreaves Lansdown and they are very helpful whenever I have needed to phone them.

And your returns by following this advice  (taking into account the fees* looks like £12 per month is the cheapest if you sign up for 2 years, rising to £25 if you pay month to month) versus just FTSE all-world as mentioned above are? 

*3 years @£12 per month = £432 

Sailtheworld

Damien's got a nice little side hustle going on there. 

george4064

Sounds like he is charging to effectively tell you about the Vanguard LifeStrategy fund range.

No need, you can read about here: https://www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products

Vanguard is cheapest platform for holding Vanguard funds only, for a more diverse platform where you can hold Vanguard + other funds I would suggest taking a closer look at AJ Bell YouInvest: https://www.youinvest.co.uk/

badger09

george4064 said:

Sounds like he is charging to effectively tell you about the Vanguard LifeStrategy fund range.

No need, you can read about here: https://www.vanguardinvestor.co.uk/what-we-offer/life-strategy-products

Vanguard is cheapest platform for holding Vanguard funds only, for a more diverse platform where you can hold Vanguard + other funds I would suggest taking a closer look at AJ Bell YouInvest: https://www.youinvest.co.uk/

Unless you're a lump sum, buy & hold investor, in which case it is probably cheaper to use IWEB for Vanguard (and other) funds